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Defense Dollars Are Flowing Into eVTOLs and This Stock Stands to Win Big

Via Motley Fool

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Electric vertical takeoff and landing aircraft (eVTOLs) could change how we think about transportation. Thanks to modern technology, these aircraft can take off like helicopters and transition to flight like airplanes.

While eVTOLs could change how we get around cities, they are also highly appealing for military purposes. Their electric motors are 1,000 times quieter than helicopters, making them harder to detect during missions. They also require less maintenance and are agile enough to perform rescue and reconnaissance missions.

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Archer Aviation (NYSE: ACHR) is an eVTOL developer with a growing defense business alongside its commercial ambitions. Here's why Archer Aviation is so well-positioned to capture defense dollars flowing into eVTOLs.

eVTOLs offer a distinct advantage for military use, including lower acoustic and thermal signatures and the ability to maneuver in tight spaces. The United States Air Force created the AFWERX Agility Prime program to accelerate eVTOL technology. This program grants military airworthiness evaluations and access to military test ranges.

Archer Aviation has positioned itself as a key player in this program. Through its AFWERX partnership, Archer secured defense contracts worth up to $142 million to evaluate its Midnight aircraft for military use cases. Under this program, the Air Force took delivery of Midnight and validated its flight performance, maintenance turnaround time, and tactical use on military ranges.

This comes as Archer scales up its Archer Defense segment. In 2024, Archer teamed up with Anduril Industries, a next-generation defense prime specializing in uncrewed autonomous hardware and command-and-control software.

On July 20, Anduril and Archer Aviation revealed their jointly developed autonomous VTOL aircraft platform. As part of the reveal, Anduril showcased Thunder, an autonomous attack aircraft built using technology from Archer's Midnight aircraft. Archer raised $430 million in equity following this announcement.

Archer continues to build on its defense business. On Aug. 10, Archer announced it would acquire aerospace assets from Boeing in an all-stock deal, giving Boeing roughly a 19.75% stake in Archer after closing.

As part of this deal, Archer will acquire military drone maker Insitu, eVTOL developer Wisk Aero, and airspace software company SkyGrid. Insitu will provide Archer with a company that is already operating and generating over $200 million in annual revenue.

Archer Aviation is seeking Federal Aviation Administration certification for its eVTOLs for commercial use and hopes to begin passenger flights in the next year or two. In the meantime, integrating defense into its business provides an alternative revenue and cash-flow source as it seeks certification and scales manufacturing.

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Courtney Carlsen has positions in Archer Aviation. The Motley Fool has positions in and recommends Boeing. The Motley Fool has a disclosure policy.

Defense Dollars Are Flowing Into eVTOLs and This Stock Stands to Win Big was originally published by The Motley Fool

Read original at Yahoo Finance News

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