Toyota is increasing its investment in the “flying car” startup, Joby Aviation, by providing additional capital to support the air taxi company’s push for certification and commercial production.
Investors have responded positively to this news, driving Joby shares up by 21% at the market open on Wednesday, with a 10% rise as of 10:15 a.m. ET.
### Cash from an Important Partner
Joby Aviation is among several companies working to commercialize small electric aircraft capable of vertical takeoffs and landings (eVTOLs). These vehicles have the potential to alleviate traffic congestion or connect major airports to outer suburbs, although the technology and certification process remain in early stages.
Toyota, already a partner of Joby, appears satisfied with the startup’s progress. The automaker has committed an additional $500 million investment, to be done through the purchase of two equal tranches of Joby stock. The first purchase is expected to close later this year, with the second in 2025.
This new investment will bring Toyota’s total capital commitment to Joby to $894 million.
Tetsuo “Ted” Ogawa from Toyota stated, “With this additional investment, we are excited to see Joby certify their aircraft and shift to commercial production. We share Joby’s view that sustainable flight will be central to alleviating today’s persistent mobility challenges.”
In addition to the financial investment, Toyota has been assisting Joby with setting up its manufacturing facilities.
### Is Joby Aviation a Buy?
Although Toyota’s investment will initially dilute Joby’s number of shares outstanding, investors seem to be looking past this short-term effect, focusing instead on the long-term benefits of the cash infusion and having Toyota as a strategic partner.
Indicators suggest that Joby is on track to receive the regulatory approvals required to start production as early as 2025.
Potential investors might find Joby an attractive option, but it is important to recognize that commercialization and profitability are still some time away. For those intrigued by its potential, Joby Aviation could be considered a small part of a well-diversified portfolio.
This article originally appeared in The Motley Fool, authored by Lou Whiteman, who holds positions in Joby Aviation. The Motley Fool holds no positions in any of the stocks mentioned.
