Key Takeaways
- Leading eVTOL companies, including Archer Aviation and Joby Aviation, are increasingly pivoting towards defence applications, securing substantial contracts with the U.S. Department of Defense.
- These military contracts serve as a crucial validation of the technology for logistics, medical evacuation, and personnel transport, while providing a vital source of funding before commercial certification is complete.
- Both companies remain pre-revenue from commercial operations but have demonstrated improving financials with narrowing net losses, supported by strong investor confidence tied to defence milestones.
- The dual-use strategy targets a vast long-term market for low-altitude aerial systems, but success is contingent on navigating regulatory hurdles, proving reliability in demanding environments, and managing high cash burn rates.
The landscape of uncrewed aerial systems is undergoing a profound shift, with electric vertical takeoff and landing (eVTOL) aircraft emerging as a critical component of military logistics and tactical operations. Far from being confined to urban air taxi dreams, companies like Archer Aviation (ACHR) and Joby Aviation (JOBY) are positioning themselves at the intersection of defence innovation, addressing needs such as cargo transport, medical evacuation, and rapid troop mobility. This pivot towards dual-use technology, serving both civilian and military purposes, may well define the next decade of aerial systems development, especially as geopolitical tensions drive defence budgets higher.
Defence Contracts as a Catalyst
Both Archer Aviation and Joby Aviation have secured significant contracts with the U.S. Department of Defense (DoD), marking a strategic departure from purely commercial ambitions. Archer, for instance, entered into contracts worth up to $142 million with the U.S. Air Force in 2023, under the AFWERX Agility Prime programme, to explore eVTOL applications in personnel transport, logistics, and rescue operations. As of early 2025, reports indicate Archer has raised an additional $300 million to bolster its defence-focused aircraft development, reflecting a clear prioritisation of military use cases amid rising global tensions.
Joby Aviation, meanwhile, secured a $55 million DoD contract in 2023 to accelerate its path to market, with recent updates in 2025 showing sustained momentum. The company’s stock has surged 169% in the three months leading to July 2025, buoyed by successful test flights in Dubai and growing interest from defence sectors. These contracts are not mere financial boosts; they validate the technology’s potential to meet stringent military requirements, from operating in contested environments to delivering rapid-response capabilities.
Strategic Fit for Military Needs
The appeal of eVTOLs in defence lies in their versatility. Unlike traditional drones, which often focus on surveillance or small-scale strikes, eVTOL platforms can handle heavier payloads and human transport, making them suitable for missions like medical evacuation or tactical resupply. Archer’s Midnight aircraft, for instance, is designed for a range of up to 100 miles at speeds of 150 miles per hour, specifications that align well with the need for swift, low-altitude operations in urban or remote theatres. Joby’s aircraft, similarly, target short, high-frequency missions, a profile that fits logistical support in forward-operating bases.
The DoD’s interest in expanding uncrewed systems beyond small drones, as highlighted in broader industry discussions on platforms like X (notably by accounts tracking defence tech trends), underscores a shift towards larger, more capable systems. This aligns with estimates from Morgan Stanley, suggesting the low-altitude market, encompassing eVTOLs and drones, could reach $9 trillion by 2050. While such figures are speculative, they point to a long-term opportunity that both companies are keen to capture.
Financial and Market Positioning
Examining recent financials, Archer Aviation reported a net loss of $116.5 million for Q1 2025 (January to March), an improvement from $125.4 million in Q1 2024, reflecting tighter cost controls despite heavy R&D expenditure. Joby Aviation, on the other hand, posted a net loss of $94.6 million in Q1 2025, down from $113.2 million in Q1 2024, with cash reserves bolstered by strategic partnerships. Both firms remain pre-revenue in their commercial operations, relying on investor capital and government contracts to fund development.
Stock performance tells a parallel story of optimism. As of mid-July 2025, Joby’s shares have risen 92% year-to-date, while Archer’s have lagged slightly but still show gains of 48% over the same period, per data from Bloomberg. Investor confidence appears tied to defence contracts as much as civilian certification milestones, with the former offering a more immediate revenue stream.
| Company | Net Loss Q1 2025 (Jan-Mar) | Net Loss Q1 2024 (Jan-Mar) | YTD Stock Performance (as of July 2025) |
|---|---|---|---|
| Archer Aviation (ACHR) | $116.5 million | $125.4 million | +48% |
| Joby Aviation (JOBY) | $94.6 million | $113.2 million | +92% |
Risks and Challenges
Despite the promise, significant hurdles remain. Regulatory certification for civilian use, while progressing, is not yet complete for either company, with full FAA approval still targeted for late 2025 or early 2026. Defence applications, though less constrained by civilian rules, demand rigorous testing for reliability under combat conditions, an area where eVTOLs are unproven at scale. Moreover, competition is intensifying, with other players like Beta Technologies also vying for DoD attention, potentially diluting contract opportunities.
Financial sustainability is another concern. Both firms are burning cash at a prodigious rate, and while defence contracts provide a lifeline, they are not guaranteed to scale. If geopolitical priorities shift or budgets tighten, reliance on military funding could become a liability rather than an asset. A wry observer might note that betting on perpetual global tension is a bold, if somewhat grim, business strategy.
Outlook
The integration of eVTOL technology into defence frameworks represents a pragmatic evolution for Archer Aviation and Joby Aviation. Their ability to address military needs, from rapid cargo delivery to tactical mobility, positions them as frontrunners in a niche yet expanding market. However, success hinges on execution, balancing the demands of defence contracts with the long-term goal of commercial viability. For now, the trajectory is upward, but the airspace remains crowded with both opportunity and risk.
References
AOL. (2025, July 17). Joby Aviation Stock Soars 169% In 3 Months: What’s Driving The Surge? Retrieved from https://www.aol.com/joby-aviation-stock-soars-169-173202838.html
Archer Aviation. (2023, July 31). U.S. Air Force and Archer Enter Into Contracts Worth Up to $142 Million. Retrieved from https://investors.archer.com/news/news-details/2023/U.S.-Air-Force-and-Archer-Enter-Into-Contracts-Worth-Up-to-142-Million-Representing-Landmark-Investment-In-eVTOL-Technology-by-U.S.-Military/default.aspx
Bloomberg L.P. (2025, July). Market data for Archer Aviation and Joby Aviation. Bloomberg Terminal.
FutureFlight. (n.d.). The latest news on eVTOL aircraft and urban air mobility. AIN Media Group. Retrieved from https://www.ainonline.com/futureflight
Garun, N. (2023, April 26). Joby Aviation accelerates path to market with $55M DoD contract. TechCrunch. Retrieved from https://techcrunch.com/2023/04/26/joby-aviation-accelerates-path-to-market-with-55m-dod-contract/
Kolodny, L. (2025, February 11). Archer Aviation doubles down on defense aircraft with $300M raise. TechCrunch. Retrieved from https://techcrunch.com/2025/02/11/archer-aviation-doubles-down-on-defense-aircraft-with-fresh-300m/
MarketBeat. (n.d.). Joby vs. Archer: Which eVTOL Stock Is Better for Your Portfolio? Retrieved from https://www.marketbeat.com/stock-ideas/joby-vs-archer-which-evtol-stock-is-better-for-your-portfolio/
StockSavvyShay [@StockSavvyShay]. (n.d.). [Post]. X. https://x.com/StockSavvyShay/status/1940392724215275750
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The Economic Times. (n.d.). Topic: Archer Aviation. Retrieved from https://economictimes.indiatimes.com/topic/archer-aviation
The Globe and Mail. (2025, July 13). The Low Altitude Market Could Be Worth $9 Trillion by 2050, According to Morgan Stanley. Retrieved from https://www.theglobeandmail.com/investing/markets/markets-news/Motley%20Fool/33370594/the-low-altitude-market-could-be-worth-9-trillion-by-2050-according-to-morgan-stanley-this-cathie-wood-stock-is-my-top-pick-to-dominate-the-opportunity-hint-it-s-not-archer-aviation/
Wikipedia contributors. (n.d.). Archer Aviation. Wikipedia. Retrieved from https://en.wikipedia.org/wiki/Archer_Aviation
