Brett Schafer, The Motley Fool

Sun, Jun 22, 2025, 3:05 AM6 min read

• Archer Aviation is close to getting approval for its electric air taxi.

• The company's high costs will likely lead to high ticket prices for its end-to-end air taxi network.

• Its large ambitions make the company exciting, but the stock is extremely risky to buy right now.

• 10 stocks we like better than Archer Aviation ›

People hate traffic. In fact, if you ask, it is one of the most commonly loathed inconveniences of everyday life. Archer Aviation's (NYSE: ACHR) goal is to help alleviate the traffic pressure in major cities around the world. How? With electric vertical takeoff and landing (eVTOL) taxi networks. Electric air taxis take off vertically and go from point-to-point terminals across metropolitan areas, greatly reducing travel times. In theory, at least.

Investors are excited about the prospect, sending Archer Aviation shares soaring in the last year as it gets closer and closer to operating a taxi network. Will Archer Aviation disrupt the transportation market? Should you buy the stock? The answer may surprise you.

Founded in 2018, Archer Aviation has devoted the last few years to designing and building its Midnight model aircraft. It already has some approvals from the Federal Aviation Administration (FAA) to operate an air taxi service, and it is currently working to get FAA approvals for the Midnight model. If approved, the company has already established multiple partnerships to bring the eVTOL concept to cities around the world. eVTOLs are different from helicopters in that they use battery-electric power and much quieter propellers, which will enable them to operate in areas with more people.

For example, Archer Aviation has a partnership with United Airlines to bring a point-to-point network to New York City, helping passengers skip traffic as they head to the airport. It is working with cities around the globe, including Abu Dhabi in the United Arab Emirates. It is even a working sponsor of the Los Angeles Olympic Games, with eVTOL trips set to take place during the 2028 event, if all goes according to plan.

Archer Aviation raised a lot of money to help fund its efforts. As of the first quarter of 2025, it had paid-in capital of $2.79 billion. Recently, it did another capital raise of $850 million with a common stock offering at $10 a share. The company estimates it has $2 billion of liquidity to fund its growth plans. It may need every penny. The company reported $450 million in negative free cash flow this year.

The business model for Archer Aviation is still under development. First, it needs to get full approval from the FAA. Then, it will start selling its Midnight aircraft to customers or work with partners to operate its own taxi networks. Each air taxi will be manned by a pilot and has room for four passengers and their luggage.