Flying taxis could revolutionize transportation, and the upside potential is huge. According to Morgan Stanleythe market value of urban mobility could be $1 trillion by 2040 and up to $9 trillion by 2050. Last month, the Federal Aviation Administration (FAA) announced new rules for flying taxis, which outline the operational framework and mark an important milestone in making these vehicles a reality.

While the industry is still in its infancy, Joby Aviation (JOB 4.26%) is one of the best companies making significant progress. Supported by financial support from Toyota EngineJoby is making rapid progress in developing and manufacturing this transformative technology.

With Joby Aviation trading below $7.50 per share, investors may be wondering if now is the right time to enter this burgeoning market. Let’s explore the business, industry dynamics and expectations for the coming years.

Joby’s flying vehicle could change transportation as we know it

Joby Aviation has been developing electric vertical take-off and landing (eVTOL) aircraft for over a decade and a half. eVTOLs are flying vehicles that take off, land and hover vertically, using electric motors powered by modern battery technology. This mode of transportation is like a helicopter, except that the electric motors allow quieter operation while limiting pollution from emissions.

What makes eVTOL appealing is their ability to work in small spaces. The technology could potentially change urban transport as we know it, replacing land-based traffic with grids. It can also transport life-saving medical supplies or other packages quickly and efficiently.

In recent years, Joby has made significant progress with its vehicles, completing over 1,000 test flights and well on its way to receiving an airworthiness certificate from the Federal Aviation Administration (FAA).

Today is one of Joby’s main competitors Archer Aviationbut the two companies have clearly different approaches to their business. For example, Joby is a vertically integrated company which develops and manufactures components and systems in-house, while Archer relies on legacy aerospace suppliers.

By developing its components in-house, Joby could develop a higher performing eVTOL that can reach higher and have a greater range, but it comes at the expense of higher costs. In contrast, Archer’s approach is less capital intensive, allowing it to run a leaner business and potentially get to market earlier.

Image source: Joby Aviation.

Developing this new technology is not cheap and requires the support of investors to make it possible. The company recently received good news when Toyota Motor has committed to invest an additional $500 million in Joby, as it plans to establish a manufacturing alliance to support the first phase of commercialization. This brings Toyota’s total investment to $894 million and gives Joby $1.4 billion in cash and investments, extending its runway as the company continues to burn cash.

What’s next for Joby?

In October, the FAA took a significant step toward the future of advanced air travel (AAM) by releasing its final Special Federal Aviation Regulation (SFAR) on the certification and operation of motorlift pilots. The new rule paves the way for the widespread use of air taxis and is seen as “broadly positive” by the investment bank Canaccord.

This month, Joby Aviation announced that construction of the first vertiport has begun in its planned Dubai air taxi network. Located at Dubai International Airport (DXB), the vertiport is being built by the Dubai Road and Transport Authority, or RTA, and Skyports. The facility will include two take-off and landing stands, each equipped with Joby’s Global Electric Aviation Charging System to support rapid vehicle charging and conditioning between flights.

The Vertiport at DXB is the first of four locations that will form the backbone of Joby’s network of vertiports, with a planned launch in 2025. A further three vertiports are planned for development in Palm Jumeirah, Dubai Downtown and Dubai Marina.

Is Joby Aviation a buy?

Joby Aviation is one of the leading companies developing eVTOL technology, which could change urban traffic as we know it. The company has made excellent progress in getting to this point, and regulators have taken steps to get this technology off the ground. That company is also well capitalized, thanks to recent funding from Toyota.

Like I said, Jobyn the stock is a story driven one for now. It will take some time for Joby to get all the necessary regulatory approvals, scale up its manufacturing and achieve commercial operations.

Even so, it may take longer for the public to accept this mode of travel in a way that moves the needle and generates serious cash flow for the innovator. Joby’s growth story is still early and will take years to play out, making the stock best suited for aggressive investors with a long investment horizon.