Stellantis to diversify into low altitude aviation

Stellantis NV, the global auto-making company that owns Jeep, Ram and other well-known car brands, is getting into the aircraft-manufacturing business, striking a deal with Archer Aviation Inc. to help it build an electric flying taxi.

The two companies said that Stellantis would help Archer, a publicly traded air-mobility company established in 2018, manufacture its Midnight model at a factory the aviation company plans to build in Georgia.

The Netherlands-based auto maker also plans to provide up to $150 million in equity capital to Archer and aims to be the company’s exclusive contract manufacturer for the forthcoming aircraft, which can take off and land vertically like a helicopter.

The move is an unusual one for the auto industry, which has largely stuck with ventures that involve ground transportation and vehicles with wheels, rather than propellers.

Meanwhile, companies developing electric vertical takeoff-and-landing vehicles all promise that their aircraft will drastically slash travel times by flying above traffic.

But to fulfill that promise, their takeoff and landing sites—or vertiports—will have to be where passengers need them.

Stellantis Chief Executive Carlos Tavares said its decision aligns with the auto maker’s broader strategy of providing other transit services to customers, outside its traditional business of selling them individual cars and trucks.

In recent years, Stellantis has also invested in a car-sharing rental firm, similar to Zipcar, and, like other car companies, is trying to diversify its business model, particularly in urban areas where many people don’t own a car.

Archer, a San Jose, Calif.-based firm that specializes in small, electric-powered aircraft, was among a number of flying-taxi startups that have pursued stock-market listings over the past two years through special-purpose acquisition companies, or SPACs.

Archer has said its goal is to deploy 6,000 aircraft by 2030.

The aviation company’s first model, the Midnight, is designed to carry up to five passengers, including the pilot, and take short-distance trips of about 20 miles with a 10-minute charging time in between, Archer has said.

United Airlines Holdings Inc. has backed Archer, agreeing last fall to pay a $10 million deposit on a 100-aircraft order.

Electric-flying-taxi companies have been developing and testing vehicles but need to secure approval from regulators before they or customers that purchase the aircraft launch commercial service.

In the U.S., the Federal Aviation Administration has been examining aircraft, working on pilot requirements and looking into how to integrate planned vehicles into the airspace.Archer expects to gain certification by the end of 2024 and start commercial operations afterward, the company’s CEO has said.

Archer’s stock has struggled since going public in September 2021, with shares down roughly 80%. Following the announcement of the manufacturing plans, Archer’s shares closed up 9.3%.

Stellantis aims to provide Archer with the personnel, manufacturing expertise and capital to support production at the factory in Georgia, which is scheduled to open in 2024. The two companies said the partnership would help Archer meet its plans to commercialize its aircraft and avoid spending hundreds of millions of dollars during its manufacturing ramp-up phase.

The auto maker, which became a strategic partner for Archer in 2020, said it plans to buy more shares in the company on the open market, after first investing in it in 2021.

Stellantis is cutting back in other areas, as it tries to restructure its business to invest in costly new technologies, such as electric vehicles.

In December, the auto maker said it would indefinitely stop operations at a 1,350-employee assembly plant in Illinois, citing the need to generate savings to fund its transition to EVs.

Stellantis, which was formed through the merger of France’s PSA Group and Fiat Chrysler Automobiles NV in January 2021, said it intends to spend $35 billion in the coming years on new battery-powered models and manufacturing capabilities.

The car company said it aims to have EVs represent half of its sales in North America by 2030. At the same time, Stellantis has scaled back manufacturing ambitions in China, having faced stiff domestic competition and complications with a local partner that built and distributed Jeep SUVs in the country.