Archer CEO Adam Goldstein on Upcoming Air Taxi Trials In US

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1:34Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. So some news. Back in December, the eVTOL maker Archer Aviation announced it had partnered with cities across the U.S. to submit multiple applications to launch initial air taxi operations. The FAA is set to review applications submitted during this initial phase of what's called the EIPP, the eVTOL integration pilot program. I'm mentioning this because it's important for a conversation with Adam Goldstein. I appreciate that. There's a process to all of this, right?

2:12Yeah. Adam's the founder and CEO of Archer Aviation. It's the$5.6 billion market cap eVTOL company. He joins us from San Jose, California. You were last on with us in early November. A lot has happened since then. And I want to start with this EIPP. You've mentioned in the past plans in California, Texas, Florida, Georgia, and New York, but we don't know much beyond exclusivity in Huntington Beach, so one part of California. Have any more partnerships emerged at this point? Well, the EIPP program was put in place from an executive order from President Trump, which really was to ensure that America takes a leading position in this new advanced air mobility space.

2:51And so as an industry, we had to submit the different cities that we wanted to launch into. And those cities are being reviewed and there's discussions being had now on where the ultimate launch will take place. It's expected that five cities will ultimately get named and then ultimately will start flying later this year in the summertime period. So it's not that they're new partnerships. It's we all submitted as an industry for these individual cities. And we expect that to launch coming up here soon. Okay, can you talk a little more about partnerships that you're working on or the structure of them, what they look like, what the opportunities are?

3:27Sure. You should think about this as the industry's almost like Waymo moment, right? So we have to put these aircrafts in the air, get the local communities comfortable with them, prove that they're safe, prove that they're quiet, and really show that the technology is here and it's ready. That's really what this is all about. It's giving everybody comfort so we can have the community acceptance, so we can really launch this thing forward. So, of course, we're looking at some of the biggest cities that make sense, the New York cities, the Los Angeles, those type of cities, but also cities that are really leaned in that might have some practical type of situation coming up.

4:03So, for example, the Los Angeles 2028 Olympics, where Archer was named the exclusive air taxi partner, was really in our sights. And so we did that by partnering with Huntington as a way to really put us close to the area, allow us to start flying, get to know that environment, that airspace really, really well, start to set up all the infrastructure, and then ultimately scale as we get into and closer to the Olympics. All right. So let's talk a little bit about finances and money, because, you know, we certainly like to do that kind of stuff. Talk to us. The operations are generating, from what we understand, little or no revenue.

4:38What would that mean from a cash burn point of view? Because that's certainly important in terms of viability. Yeah. So if you look at the whole industry, the industry, according to pretty much any analyst, is expected to be very, very big. I think Morgan Stanley is probably the most bullish. They had a multi-trillion dollar valuation on the industry. Now, it's different than autos in the sense that there are only a few players. Like in aviation, You typically will have like a Boeing and an Airbus type of situation. So there's a couple of leading companies in the eVTOL industry. And it's likely that there's only a few companies that ultimately end up getting to market and ultimately scale to some very, very large numbers.

5:14And my guess would be larger than any one individual automaker has been, excluding Tesla, which is more of a pure AI company in my view. So you have this kind of scenario here where it's all about surviving to get through certification and then scaling into a business that's economically attractive. So that's really the goal in the game that we're playing. So we have an aircraft we've built that's become very mature. We're taking it through the certification process and ultimately going to launch it. So how are we going to launch that? We start very slowly and methodically. That's what the EIPP is about.

5:46It's a slow, methodical launch. Very similar to what Waymo did was a slow launch into these cities, gaining the acceptance. So it's really about proving those points today rather than generating revenue today. The revenue will come. There has been an overwhelming amount of inbound interest from countries all over the world that want these aircrafts there. And there's very few OEMs that actually can deliver against that. So the focus really is about the certification side. No, I get it. I get it. And I'm looking, though, and I get it why you guys have a free cash flow that's negative by a lot. But I guess I'm just trying to understand from a perspective, though, as everybody's jockeying for position, what is your cash burn?

6:26And just is it manageable? Sure. So Archer is in a fortunate position where we finished the year with nearly$2 billion of cash on hand. So I think the most in the industry by a long shot. We also had lower burn than our competitors. But as we've been ramping up into, you know, closer into the certification production phase, you know, that burn does go up as we're building materials. And so we are at a very comfortable position today. But it's not something that we're sitting back and getting, you know, lazy about or getting too excited about. We are still driving every single day to make sure we can hit our timelines and actually get these aircrafts to market.

7:05So if I look at the EIPP starting in 2026, and then I look at the Olympics in 2028, we'll get certified, hopefully, sometime in between that time period. And we have plenty of cash to last us through that time period into the commercialization phase. And then ultimately, as the aircrafts are getting sold and deployed, we can start kind of reducing our cash burn and becoming, I think, a long-term viable business. What happens if you're not certified by the Olympics? Well, we also do have an international strategy as well. And so we launched last year in Abu Dhabi. We have a great relationship with the UAE.

7:42Two of the sovereign wealth funds are investors in Archer. And so we have a secondary path that we're going through in certifying those aircrafts around. And so it gives us sort of an alternate as well. But then there's the other side of the business, which is the defense business. And so we announced a partnership with Anderil. We've been working on new vertical lift aircraft with them designed for defense applications. This is the Omen autonomous air vehicle, right? The Omen is not the big aircraft that I was talking about. The Omen is a smaller drone project that Andruil has designed that we are providing the power train for.

8:14We are building a new full-scale vertical lift hybrid aircraft that's designed for defense applications that we do expect a program to get announced into the many, many billions of dollars, tens of billions of dollars type size. We're hopeful that can happen soon. But of course, that's, you know, also not within our control. Hey, Adam, you made a reference earlier in our conversation to sort of the Boeing and Airbus duopoly. And the way those companies, of course, work is they sell or, you know, they sell aircraft to the airlines and then those airlines then operate the aircraft. Are you going to be, is Archer going to be operating the aircraft in addition to manufacturing the aircraft?

8:55Or when you say you're going to sell the aircraft, who do you sell that to? Yeah, we will focus primarily on the sales side of things for the, I'll call it, you know, the early or maybe even really for the first decade, the early years of this industry. And so I think you have to earn the right to operate, meaning that is going to be a very expensive journey to operate. And so by selling the aircraft, it enables us to put, you know, production through the factory, get the pricing down to something that's very affordable for us. And ultimately, over the long term, when autonomy comes, we can really then think about considering scaling our own internal airline.

9:30We will, of course, do things very small on the airline's side of things to begin with, learn over time, and grow that. So I really think it's all about sales. Now, the question that you asked is, who do we sell that to? So there's a couple different categories. But you can think about where vertical lift aircraft exists today, so helicopters, where they're used. Hospitals, tourism, VIP is one category. And then the new category that we're going to add is really the sort of helicopter airport transfer. So we've talked a lot about that. So think like a Manhattan to Newark or a San Jose to San Francisco.

10:05Sign me up. Maybe. Really? Yeah. If this thing is approved, I'll get in. If you think about it from a safety perspective, this is a significantly safer helicopter. That's the easiest way for you to think about that. And that's not an Adam statement or even an Archer statement. That's an FAA statement, right? We're certifying them at very high levels of safety. So, you know, from a perception, a consumer perception perspective, you know, if you were willing to take a helicopter, this is just a safer version of that. In fact, you'll be certifying that levels similar to the big commercial airliners.

10:38All right. So I have to first get ready to be willing to take a helicopter. Just before we let you go, the cost that you would get this to once it is certified per unit, what are you thinking? So our goal is to get the cost of the aircraft down to two and a half million. We sell that. That's the target price. And when you do the math and translate that through to the end user cost where the operator can make money, you get down to prices that are similar to the high end of rideshare. So think like Uber Black. So that's really what we're targeting. And that can be achieved through volume, of course.

11:12And so that's not going to happen year one. That's going to take several years to get there. And so we think once you sort of get across the 500, 600, 700 aircraft units, you can get these aircrafts to something that becomes very affordable. It even looks cheaper than rideshare and ultimately can become a mass-scaled product. So you're talking maybe like a ride from Midtown to LaGuardia that would cost maybe under$100? Similar to like a rideshare type of price. So if you think like Manhattan to JFK, Uber Black, that probably costs you$150,$200. So somewhere around those type of prices. All right.

11:45Looking forward to it. Good stuff. Adam, stay in touch. We love getting the updates from you. Adam Goldstein, founder and CEO of Archer Aviation, joining us.

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