Here's My Only Major Concern With Archer Aviation

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The urban air mobility revolution is approaching faster than many realize. Electric vertical takeoff and landing (eVTOL) aircraft -- essentially next-generation helicopters powered by batteries instead of jet fuel -- represent a transformative leap in urban transportation. JPMorgan analysts estimate this emerging market could reach $1 trillion by 2040, as electric aircraft transform transportation between and within cities.

While many start-ups are pursuing this opportunity, one company has rapidly distinguished itself through exceptional execution and strategic partnerships. With strong order flow, key industrial partnerships, and a clear path to production, Archer Aviation (NYSE: ACHR) warrants serious attention from growth investors.

An eVTOL aircraft flying through a city.
Image Source: Getty Images.

Yet beneath this promising exterior lies a potential risk that could significantly impact long-term shareholders. Here's why I'm both excited and concerned about Archer's trajectory.

Breaking ground in Georgia

I'm particularly impressed by Archer's new 400,000-square-foot manufacturing facility in Covington, Georgia. This milestone represents a crucial step in the company's journey from concept to commercialization. Initial production is scheduled for early 2025, with plans to reach two aircraft per month by the end of the year.

The facility's ultimate target of 650 aircraft annually by 2030 demonstrates what I consider a well-balanced approach to scaling production. The manufacturing ramp-up strategy shows both ambition and pragmatism, key traits I look for in early-stage aerospace companies.

Validation through partnerships

What catches my attention next is Archer's recent exclusive agreement with Anduril Industries to develop military aircraft. This partnership becomes even more intriguing when considering Anduril's recent moves in artificial intelligence and autonomous systems. Speaking to this point, the defense technology company just announced a strategic partnership with OpenAI to advance autonomous defense capabilities, particularly in counter-drone applications.

I see powerful synergies between Archer's eVTOL expertise and Anduril's Lattice software platform, which enables a single operator to control multiple autonomous systems across different domains. The development of autonomous or optionally piloted military aircraft could open up entirely new mission capabilities for the Department of Defense.

Furthermore, the $430 million capital raise supporting this partnership, which included participation from strategic investors like United Airlines and Wellington Management, reflects the market's recognition of these possibilities.