A recent research report suggests that eVTOLs have a bright future, indicating that Archer Aviation (ACHR) and its fellow eVTOL companies have huge potential.
Further, Archer is making meaningful progress on the regulatory front, and it appears to be moving steadily towards launching air-taxi services in the UAE, while it also took an initial step toward entering Saudi Arabia.
Another positive point for Archer is its partnership with a major defense tech firm, Anduril, and the two companies’ efforts to develop aircraft that can be used by both militaries and companies.
On the negative side, Archer appears to have fallen meaningfully behind its manufacturing goals, potentially signifying problematic difficulties in this area. Although investors should keep an eye on the latter situation, Archer’s positive catalysts far outweigh its negative issue, while its market capitalization continues to be far below its long-term potential. As a result, I believe that patient, risk-tolerant investors should consider buying ACHR stock.
A Bullish Forecast for eVTOLs
In-line with my own, long-time, optimistic view on eVTOLs’ outlook, ResearchAndMarkets recently predicted that the eVTOL market would expand at a compound annual growth rate of 17.8% between 2026 and 2032, reaching a total value of “$4.45 billion by 2032.” The firm noted that the aircraft can make roads less crowded. Additionally, it contended that “breakthroughs in battery energy density and lightweight materials,” along with other technical innovations, have facilitated the proliferation of eVTOLs.
Archer’s Impressive Regulatory Progress
The firm reached a deal with the FAA regarding the “criteria” by which the “airworthiness” of its eVTOLs will be judged, CEO Adam Goldstein reported. This agreement is called Means of Compliance, he noted. Further, the company predicts that it can start carrying out “Type Inspection Authorization (TIA) activities…as soon as this year.” TIA is the final major stage for aircraft before they are certified by the FAA.
Meanwhile, Archer has begun conducting piloted tests of its eVTOLs, which are known as “Midnight,” and “expects to increase the frequency of those tests this year.”
“We are on track to begin deploying Midnight this year…in American cities,” Goldstein reported.
Archer intends to start using its eVTOLs in the U.S. this year within the framework of the pilot program for the aircraft launched by the Trump administration. As I’ve noted in past columns, I believe that the administration’s support for the aircraft will make it much easier for Archer and its peers to become successful.
Advances With the UAE , a New Deal With Saudi Arabia, and Major Inroads in Asia
Archer is looking to start commercial operations in the UAE this year, and it has been “working closely” with the country’s aviation regulator, Goldstein reported. Specifically, ACHR developed criteria with the regulator and conducted tests of the Midnight in the nation’s hot weather, he noted.
Also encouragingly, a subsidiary of Saudi Arabia’s sovereign wealth fund in November signed a Memorandum of Understanding that is supposed to bring Archer’s eVTOLs to the kingdom. Given the fund’s deep pockets, I believe that there’s a good chance that it will invest a significant amount of cash in the venture, lowering Archer’s costs meaningfully.
And as I pointed out in a previous column, Archer “is partnering with large airlines in both South Korea and Tokyo” as it looks to provide air-taxi services in those places.
Developing a “Dual-Use” Aircraft With Anduril
In partnership with Anduril, Archer is building “an autonomous, hybrid-electric (vertical take off and landing)aircraft.” Militaries will use it as “a wingman (for) armed reconnaissance attack helicopters,” while firms can utilize it for cargo or medevac purposes, Goldstein explained.
The CEO has said that Archer’s aircraft would make significantly less noise than helicopters, and he has noted that they have a low thermal footprint. Moreover, the Pentagon is certainly enthusiastic about unmanned, autonomous drones these days.
Given the positive attributes of the aircraft that Archer and Anduril are developing, the Department of War’s needs, Anduril’s connections with the Pentagon, and the product’s ability to also be used by companies, I believe there’s a high chance of it generating a large amount of revenue for ACHR.
One Potential Problem for Archer
When the company opened its factory in December 2024, it stated that it would begin production early in 2025 and seek to produce two aircraft per month by the end of the latter year. elektrek, a news website, estimated that the company’s forecast “translates to about 15 to 24 builds” in 2025.
But Goldstein, who was generally rather vague during the Q4 earnings call and in his Q4 letter to shareholders about Archer’s progress on the manufacturing front, said “Archer will continue to expand its piloted Midnight fleet throughout 2026, with several aircraft in various stages of completion.”
That sounds like the company has fallen far short of its manufacturing goal, and it may be having problems making its eVTOLs at significant speeds. However, there’s a good chance that it is lagging due to relatively minor issues that can be remedied relatively easily or that it solved the major problems which previously resulted in delays.
And the firm has shown that it has the ability to produce the aircraft because it has tested them. Finally, its partner, Stellantis (STLA). which has a great deal of experience in auto manufacturing, should be able to help Archer alleviate its difficulties.
*This article is intended to be informational only; it is not financial advice.
