A ‘Perfect’ Aircraft Faces a Steep Climb to Success

The late mutual fund pioneer, Sir John Templeton, was fond of saying that the four most dangerous words in business are “this time it’s different.” 

Which brings us to the case of Joby Aviation. By all accounts, Joby has designed a brilliant electric vertical takeoff and landing (eVTOL) passenger aircraft, the five-seat (one pilot and four passengers) Joby S4 2.0. Our editor-in-chief, Matt Thurber, who has flown just about everything except the space shuttle, spent some time in the aircraft’s cockpit simulator and emerged proclaiming it no less than a “sea change in the way pilots will operate aerial vehicles of the future” and far simpler to manage than a conventional helicopter. He concluded, “I have never felt so in control of an aircraft and so free to focus on flying tasks…This was like flying a fictional, imaginary perfect aircraft.” 

(Photo: Joby)

Indeed, the Joby is designed with all the latest touchscreen whiz-bang, including fly-by-wire controls; a very computerized, simple, and safe man-machine interface; a redundant, electrically distributed propulsion system that feeds six articulating proprotors (two electric motors per rotor)—four proprotors mounted on the forward wing and two on the aft v-tail; and a proprietary battery cooling and charging system that can get the aircraft fully juiced in under eight minutes. 

The Joby, which has a maximum takeoff weight of 4,800 pounds, also delivers impressive speed and range: up to 150 miles at 200 miles an hour. Like most eVTOL designs, also, it is exceptionally quiet—basically, no louder than normal conversation on an urban street, so there’s no need to worry about the noise police. The aircraft can be flown remotely without a pilot, and the company has conducted most of its test flights this way; however, it plans to conduct passenger operations with a pilot. The egg-shaped passenger compartment harkens back to the Hughes 500 helicopter series—a design to optimize crashworthiness. 

JoeBen-Bevirt, CEO and Founder of Joby Aviation. (Photo: Joby)

A Well-financed Company

Founded by inventor and engineer JoeBen Bevirt in 2009, Joby has attracted substantial capital in recent years via major investments from Delta Air Lines (for which Joby will operate the aircraft), automaker Toyota, and a public stock offering—nearly $2 billion altogether—making it arguably the best-financed of the legion of nearly 700 eVTOL companies out there. (Other prominent competitors—such as Archer, Eve Air Mobility, Vertical Aerospace, and Lilium—have also logged prospective orders, including from airlines, however.) 

Joby has also attracted the interest of NASA and the U.S. Air Force; it collaborated with the former on its X-57 electric aircraft research vehicle and with the latter as a vendor on its “Agility Prime” program, which ultimately seeks to bring eVTOL solutions to the modern battlefield for applications such as medevac and logistics. Joby worked tirelessly and effectively with the FAA to develop a certification basis for its aircraft. And it acquired Uber Elevate, a division of the auto ridesharing service that was exploring the urban air mobility (UAM) market. It also has designed deals to begin passenger service in locales including Dubai in 2026. 

It has done these things because it intends to design, certify, build, and operate its own aircraft. Joby’s current business model is one of total control that precludes the sale of its vehicles to third parties. And to date, it has been a spectacular cash pyre, spending more than $800 million—losing $256 million from operations last year alone, atop losses of $180 million in 2021 and $114 million in 2020. (The company still has around $1.1 billion in the bank.) Through 2022, it employed 1,422 people. 

To give you a comparative idea of the scope of Joby’s losses, Eclipse Aircraft, a company founded with the goal of producing an “affordable” personal jet, burned through more than $1 billion between 1998 and 2008, vaporizing into bankruptcy after building 260 aircraft. 

A Potentially Rough Ride

The outlook for Joby could be even more turbulent. Building and operating aircraft are distinct disciplines that almost never mix. Experienced business jet makers—including Bombardier and Textron, companies much bigger than Joby—exited the operational side of the business after a few years of trying via their FlexJet and CitationShares/CitationAir programs, respectively. (The former has been restructured and is now successfully operated by Directional Aviation Capital; the latter has been shuttered.)

Even when you don’t own the vehicle, the ridesharing business can be economically brutal. On the ground, both Uber and Lyft are perennial money losers. Uber lost $9.5 billion and Lyft lost $1.6 billion on $4.1 billion in revenue in 2022. In the Air, Blade Air Mobility, a company founded in 2014 that owns no aircraft but provides helicopter ridesharing most closely aligned with what Joby intends, shed $27.3 million on revenues of $146 million last year. Blade’s losses would have been far wider, save for its successful MediMobility division, which is dedicated to human organ transport and benefits from a more inelastic price structure. 

Skepticism surrounding Joby’s business model is reflected in the trajectory of its stock’s value and the opinion of analysts. Since its issue in 2020, the price of a share has dropped from a high of nearly $15 to $3.87 (as of March 27). Company insiders have been significantly shedding shares along the way, chief among them Bevirt himself, who has cashed in more than $3 million since September. 

The company’s market capitalization is currently $2.4 billion. At least one analyst who covers the stock has compared it to buying a lottery ticket, writing that the company’s growth projections “stand out for their sheer audacity.” That included an initial ramp up to 1,000 vehicles in 24 months after the start of production and the charitable assumption that each one could operate for 14 hours each weekday. 

The Steep Climb to Success

Those who follow the aviation industry have seen this kind of hyperbole before—lofty prose that almost always ends in disappointment and insolvency. But that has done little to arrest the torrent of investment capital pouring into the sector—$6 billion in 2021 alone. However, a deeper dive into Joby via its 2022 annual 10-K filing with the U.S. Securities and Exchange Commission (SEC), a document where inserted exaggeration can earn you an orange jumpsuit, paints a more realistic picture of the steep climb that Joby—and every other eVTOL manufacturer—needs to make to get to market. 

Acting FAA Administrator Billy Nolen with Joby Head of Aircraft OEM Didier Papadopoulos. (Photo: Joby)

Although it had planned to initiate passenger service by 2025, Joby has made it through only two of the five stages it has negotiated for FAA certification approval, and those standards could likely change next year, further delaying the program. Joby says it can deliver service at $3 per passenger mile, but without knowing the cost of vehicle production, there is no way to validate that number. It should be noted that the passenger cost per seat mile in a comparable light turbine single-engine helicopter such as the Airbus H125 is $2.44 per seat mile (four passengers, Aircraft Cost Calculator).

Joby mentions in its 10-K report a variety of potential business obstacles, including the inability to convince passengers to use its service at a profitable price, local government opposition, the need to build out infrastructure including electric power, airspace capacity limitations, and the requirement to attract additional capital to build out high-capacity manufacturing. 

At an advanced air mobility panel at the recent Heli-Expo show, this writer noted the heavy capital requirements for vehicle development and challenged senior executives of three leading eVTOL manufacturers, including Joby, to explain future capitalization plans as they transition to passenger service. No one had a really good answer. One defiantly proclaimed, “Electric aircraft are here to stay.” 

Maybe. But so is Templeton’s warning. 

For more on Joby’s aircraft and other eVTOL developers, visit our sister site, FutureFlight. —Ed.