Archer Aviation takes off with new funding, United Airlines deal

Archer Aviation and its battery-powered, short-haul aircraft got a boost recently from new funding and a deal to supply aircraft to United Airlines.

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SEANA SMITH: Air taxi company Archer Aviation. They got a big order from United Airlines this week. And they also announced they were going public via a SPAC. We want to bring in Brett Adcock, he and Adam Goldstein. They are both co-founders and co-CEOs of Archer. And congratulations to you both. You have had quite a big week. Brett, let me go to you first. Just tell us about this small electric aircraft, what we need to know, and what this deal with United really does to boost your business.

BRETT ADCOCK: Well, thank you for having us on the show. As I take a step back here to Archer, we are designing and developing an electric vertical takeoff and landing aircraft to be used for urban air mobility. We believe there's been a large step change in technologies for electric power systems the last 20 years that are enabling a new type of aircraft, one that can take off vertically like a helicopter, fly forward like an airplane, and it'll be using only electric motors and batteries. As we-- as you alluded to, we announced yesterday morning a commercial agreement with United Airlines for a $1 billion preorder of our aircraft with an option for another $500 million order that we will start taking deliveries on in 2024.

ADAM SHAPIRO: So let me throw this to you, Brett. Have you built something that's gone up in the air yet? Because I want to get on one of these electric aircraft. I think it's the coolest thing I've heard about in years.

BRETT ADCOCK: Yeah, absolutely. You know, the industry has been building these for the last 10 years. Here at Archer we're flying every single week out here in California. We'll be unveiling our full-scale electric vertical takeoff and landing aircraft this year, so we're super excited. The technology here is fully mature. We're not taking any large technology bets here at Archer. We're certifying currently with the FAA here in the United States. And we view it as a matter of time here, over the next two or three years, as we bring this to market and enable this service for users.

SEANA SMITH: Hey Adam, how big of a market do you think that this could potentially be five 10, 15, 20 years from now?

ADAM GOLDSTEIN: Yeah. That's a great question. And so just to, you know, really help set the stage here, you know, this step change in technology by allowing these planes to go electric really is just the next innovation of helicopters. So helicopters are these vehicles that we all know that exist in the market. There's something like 10,000 to 15,000 helicopters just in the US, plus DOD helicopters. And here you have these vehicles that are safer, because you can scale down electric motors very efficiently and put on multiple rotors so you don't have any single points of failure on these vehicles like a helicopter. You can also change the frequency and dramatically reduce the noise that these vehicles make. Because unlike a helicopter, which has one big rotor, they're smaller. It doesn't make the deep "wop, wop" sound. And so they're quieter. And then ultimately, these are electric vehicles that can be highly utilized so you can offer them at a much lower cost.

So if you just think about just the, kind of, upgrade cycle or replacement cycle of helicopters, it's actually not very hard to conceive that and understand that. Now if you start to think, OK, well, if I can actually take one of these vehicles and save myself a considerable amount of time, would I be willing to do that? And so when you start to think about it from that perspective, it's so much bigger than just the helicopter market. So one's--

ADAM SHAPIRO: I can imagine. Let me interrupt you real quick because I want to get a lot in here. We got United Airlines, that order. How big will that vehicle be? And I would imagine, too, given the technology you've developed, Adam, it's going to have AI because not everyone knows how to be a pilot. So AI is a part of this, right? So how big is the United aircraft going to be? And will it be AI?

ADAM GOLDSTEIN: Yeah, so the United aircraft will be a piloted vehicle plus four passengers. And that's the vehicle we're in the certification process through. But again, we really just almost have to take a step back and understand the progression of these vehicles. In this decade, we will be largely replacing helicopters. You think about that. It's thousands of vehicles. It's not thousands of vehicles in one city, right? There's 10,000, 12,000 helicopters right now. You don't see thousands of helicopters flying over your head right now. Right? But just even replacing the helicopter fleet is a massive, multi-hundred billion dollar industry.

Over time, as autonomy starts to come to market, which is not the initial go-to-market plan, there's availability to scale this industry beyond. So just the simple cost reduction that these vehicles offer, which are similar prices to Uber, will allow the market to really expand beyond just the existing helicopter market. Which is generally reserved for rich people.

SEANA SMITH: Well, and to follow up on that. I guess, Brett, how affordable are we talking if someone wanted to-- to take a ride in this? How much would it likely cost if you can give that projection now?

BRETT ADCOCK: Yeah. I mean, one of the best things-- one of the best things here is you get a mass-- when you have this massive step change to electric, is you can build, like, a far cheaper vehicle and you can operate at much different prices in a helicopter. Our entry point is around $3 per passenger mile. So we want to make this service affordable to the masses and an everyday use case for folks. You know, not just traveling to and from work or to and from the airport, which are obvious examples. But how about places that are too far to travel to today? Where you're like stuck in gridlock all day long? That you can travel 150 miles an hour point to point. And so we get excited about the near-term case that Adam talked about of, you know, helicopter market and electrifying that. But ultimately, the long-term vision here is start moving people and goods in and around cities. And we think that is a multi-trillion market over the next two decades.

SEANA SMITH: A lot to look forward to, and you guys made me even more excited to hear about the future over the last couple of minutes. Brett Adcock and Adam Goldstein, congratulations. Great to have you on the show. Co-founders and co-CEOs of Archer.

We're going to take one more look at the markets here before we let you go. Again, a mixed picture today with the Dow closing in the red, just barely though, off just around seven points. S&P and NASDAQ both holding on to gains. Coming up next here on Yahoo Finance, stick around for "Influencers." Yahoo Finance Editor in Chief Andy Serwer, he's going to sit down and talk with Gro Intelligence founder and CEO Sarah Menker. That all starts in just two minutes.