Breaking News That Joby Aviation and Archer Aviation Investors Can't Afford to Miss

Key Points

• Joby and L3Harris announced a deal to collaborate on developing hybrid electric aircraft.

• Since 2020, Joby has worked with the Department of Defense to explore defense applications of its aircraft.

• Archer Aviation is also exploring the development of its aircraft for military use, thanks in part to its collaboration with Anduril

• 10 stocks we like better than Joby Aviation ›

Undoubtedly, Joby Aviation (NYSE: JOBY) investors are keenly focused on insights into whether the electric vertical takeoff and landing (eVTOL) company is close to receiving the requisite Federal Aviation Administration (FAA) certifications.

But that's not to say that there aren't other news items that can lift investors' spirits. Joby just announced, for example, a new collaboration with aerospace and defense specialist L3Harris Technologies (NYSE: LHX) that both Joby investors and Archer Aviation (NYSE: ACHR) investors will want to know all about.

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The deal that you can't afford to let fly under your radar

New dance partners Joby Aviation and L3Harris announced that they're collaborating on the development of hybrid eVTOL aircraft designed for defense applications. Suited for low-altitude operations, the aircraft will have optionality in whether they're piloted or flown autonomously. With test flights expected to start in the coming months, both companies are targeting demonstrations of the aircraft for the government in 2026.

Referencing the company's market opportunity for defense applications and lauding the partnership, JoeBen Bevirt, founder and CEO, Joby Aviation, stated:

We have worked closely with the Department of Defense over the past decade to give them a front-row seat to the development of our dual-purpose technologies, and we're now ready to demonstrate and deploy it.

Joby's experience in exploring defense solutions transcends the recently announced partnership with L3Harris. In 2020, Joby worked with the United States Air Force, leading up to it receiving airworthiness approval from the military branch -- a first for an eVTOL company. The ability to fly on-base and access government testing facilities has assisted Joby with the development of its aircraft as it strives to launch commercial operations.

Archer also aims to develop a defense solution

Joby certainly isn't the only one with its sights set on expanding the scope of its operations beyond civilian air tax service, Archer Aviation is another leader among eVTOL aircraft developers that's focused on defense applications. Like Joby, Archer has worked for the past several years with the Department of Defense (DoD) to explore development of its aircraft for defense operations.

Following the start of its collaboration in 2021, Archer inked a new contract -- worth up to $142 million -- with the U.S. Air Force to "assess the transformational potential of the vertical flight market and eVTOL technologies for DoD purposes" in 2023. Archer claims that its eVTOL Midnight aircraft provide a better safety profile than helicopters, in addition to representing a more cost-effective option.

In addition to the work with the DoD, Archer further demonstrated its interest in the defense sector last year, when it announced a partnership with Anduril, a defense upstart that focuses on integrating artificial intelligence (AI) into its offerings. Similar to Joby and L3Harris, Archer and Anduril plan on developing a hybrid VTOL aircraft suitable for defense operations.

With Joby finding a new copilot in L3Harris, is now the time to buy shares?

In a neck-and-neck race to get their eVTOL aircraft to the market first, Joby and Archer are, combined, very much the face of the burgeoning eVTOL market, and while civilian electric air taxi service is oftentimes the business vertical most frequently discussed, both companies are committed to the defense industry as well.

Lest Joby investors surmise that the company has a leg up on Archer due to the new L3Harris deal, it's important to recognize Archer's partnership with Anduril, and vice versa. Those who thought that Archer is alone in its ambitions to provide defense solutions must think again.

It's also important to note that eVTOL companies signing deals with major defense contractors isn't a zero-sum game. With the U.S. defense budget possibly rising to over $1 trillion in 2026, there's no doubt that there's plenty of opportunity for both Joby and Archer to thrive in the defense market -- and that's not even taking into account the possibility of selling to NATO allies.

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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends L3Harris Technologies. The Motley Fool has a disclosure policy.