The start of the 20th century transformed transportation. Henry Ford developed a method of mass-producing affordable automobiles, and the Wright brothers took to the skies. By the 1950s, there was a car in every driveway, and commercial flights were all but commonplace.
Forward-thinkers began to imagine the next step in personal transportation: flying cars. Films like Chitty Chitty Bang Bang (1968) and Back to the Future (1985) envisioned a world in which people traveled in personal aircraft. Now, decades into the 21st century, entrepreneurs and engineers are ready to make that vision a reality.
Investors know that if a company succeeds in mass-producing affordable flying cars, it could be bigger than Ford, Honda, and perhaps even Tesla (TSLA).
Who wouldn’t want one? And early shareholders will enjoy substantial returns. The question is, of course, how to invest in flying cars? Are any of these highly-speculative companies public? If so, which is the best buy?
Archer Offers a Roadmap to Sustainable Air Mobility
Consumers are ready for flying cars, but they have seemed to be decades away. After all, autonomous land-based vehicles are just barely ready for road tests. However, Archer co-founders Brett Adcock and Adam Goldstein decided they weren’t willing to wait. They created a company to tackle the challenges of flying cars head-on.
Archer’s mission statement is straightforward: to advance the benefits of sustainable air mobility. The company isn’t just interested in developing new gadgets. Archer’s flying cars will operate using sustainable energy, effectively rendering fossil fuel-driven vehicles obsolete.
In the process, they expect to transform city living by eliminating traffic and reducing the need for costly, high-maintenance infrastructure like roads and bridges.
The two founders are well-aware that they have set lofty goals – goals that may simply prove unreachable. They must overcome obstacles that require development of new technology, and that means they have to raise substantial capital. Archer’s timeline spans decades, not years, and the co-founders admit that success may be elusive.
However, they aren’t alone in believing that success is possible. Financial giant JP Morgan estimates that the flying car market, in conjunction with other electric aircraft, could be worth as much as $1.5 trillion by 2040.
A number of companies are excited about the project, and Archer has taken on several big-name partners in its quest to bring flying cars to average consumers.
Google, Amazon, & Toyota Are All Into Flying Cars
Some of the companies working to make flying cars a reality are well-known leaders in technological, automotive, and aviation innovation. It is no surprise to see Google’s parent company Alphabet (GOOGL), Toyota (TM), Amazon (AMZN), Lockheed Martin (LMT), and Hyundai on the list.
There are also a variety of startups looking to be the first to launch flying cars, air taxis, and automated delivery vehicles. Examples include Blade Urban Air Mobility, Lillium, and Joby Aviation – the company that purchased Uber’s flying taxi business.
Despite the heavy competition, it appears that Archer is generating the most excitement – at least for now.
In early February, it announced that it is going public by way of a reverse merger with special purpose acquisition company (SPAC) Atlas Crest Investment Corp. Once the deal is finalized, the new company will be worth $3.8 billion.
Jet.com’s founder Marc Lore has put money in, and so has billionaire Ken Moelis. In short, Archer has made critical connections with the sorts of partners that can provide much-needed capital, as well as connections with suppliers and manufacturers that will be key to the company’s long-term success.
United has already contracted with Archer to purchase $1 billion worth of the new aircraft, citing the carrier’s commitment to reduce and perhaps reverse climate change through the elimination of carbon emissions from traditional planes.
United hopes to see the first air taxis in operation by 2024. The plan is to shuttle passengers to hub airports to meet commercial jetliners, rather than flying or driving them there with standard planes and cars.
All of this has retail investors ready to buy in, but opportunities to participate through the existing SPAC are strictly limited. So, how does Archer SPAC work, and what does it mean for the average investor?
How Does Archer SPAC Work?
Special purpose acquisitions companies or SPACs aren’t a new concept, but the market volatility in 2020 generated an influx of interest.
Essentially, SPACs are created to raise capital before coming up with a plan for selling goods and services. This is in stark contrast to IPOs, which generate capital for companies that already have a product or service in mind.
SPACs are often referred to as “blank check companies” because investors don’t quite know how their money will be used. Once established, SPACs generally have a time period – perhaps two years – to choose a project and apply the invested funds.
Archer was selected by the Atlas Crest Investment Corp SPAC, so the two companies will come together as one. That gives Archer the financial backing it needs to move forward with the development of flying cars, and Atlas Crest Investment Corp investors get a piece of the action.
Better still, retail investors can add Archer to their portfolios, as the combined company will trade on the New York Stock Exchange under the ticker symbol ACHR.
Best Stock To Invest In Flying Cars: The Bottom Line
Archer appears to hold a lot of promise in the flying car space, and it’s a solid choice for those looking to buy and hold. However, it isn’t the only option.
China’s EHang Holdings initially saw an increase in value after a successful demonstration of its autonomous aerial vehicles (AAVs), and Boeing’s NeXt division has been testing its version of a flying taxi for more than a year.
Ultimately, the decision on how to invest in flying cars depends on risk tolerance. Those willing to bet on growing startups may prefer Archer, while investors interested in companies with stability and a diverse product line are better off with industry giants like Boeing (BA), Google parent Alphabet (GOOG), and General Motors (GM).
Those who want even more diversity might consider an ETF that focuses on next-generation transportation. Popular selections for investors looking to participate in future air travel developments include the First Trust Nasdaq Transportation ETF (FTXR), the First Trust NASDAQ Global Auto Index Fund (CARZ), the iShares Self-Driving EV and Tech ETF (IDRV), and the S&P Kensho Smart Mobility ETF (HAIL).
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.