Vertical Integration Marks Key Split Between Joby And Archer

In many ways, Archer Aviation and Joby Aviation are highly similar startups. The two front-runners in the nascent U.S. air taxi market are both developing piloted, four-passenger electric vertical-takeoff-and-landing vehicles with the goal of launching commercial service next year.

Both companies plan to start by offering airport shuttles in partnership with major airlines, and both are manufacturing their aircraft in partnership with global automotive companies.

• Joby is developing parts in-house for optimization
• Archer relies on proven suppliers to lower costs and risk

But when it comes to their specific manufacturing strategies, the two companies have staked out sharply different paths: Joby is vertically integrated and largely develops its components and systems in-house, while Archer is pursuing a more traditional model by relying on a roster of Tier 1 legacy aerospace suppliers.

Both strategies come with trade-offs. Developing components in-house allows Joby to optimize for its specific aircraft and improve visibility into the integration process, giving it a higher-performing vehicle at market entry. Archer’s strategy of relying on legacy aerospace suppliers creates a leaner business model with lower capital investment costs—and, all else being equal, a lower certification risk that it says can translate to a faster path to market.

That difference in strategy is evident in many layers of the two companies’ aircraft. While Archer is using more commonly produced cylindrical battery cells, Joby is relying on pouch cells that are more novel and likely harder to certify. Similarly, while Joby is using additive manufacturing and composites to build its vehicle, Archer is sticking to traditional aerospace materials that it expects regulators will greenlight more quickly.

This divergence in supply chain strategy could prove to be the decisive difference between these two neck-and-neck startups.

Archer founder and CEO Adam Goldstein tells Aviation Week that the company’s supply chain strategy was conceived with the goal of getting to market as quickly as possible with minimal capital investment and certification risk—although not necessarily the best-performing first-generation aircraft.

“Our strategy is to create the most streamlined path to market, starting with sourcing 80% of our vehicle’s major components and subsystems through suppliers with a proven track record of FAA certification,” Goldstein says. “This isn’t a flashy approach; it’s efficient and pragmatic so that our commercialization timeline can rapidly advance with less risk.”

Mark Moore, the Uber Elevate co-founder who pioneered distributed electric propulsion technology at NASA and more recently founded quiet electric propulsion startup Whisper Aero, generally agrees with Goldstein’s assessment of the challenges of vertical integration.

“From my interactions with the specific FAA officials, there is a prior relationship of trust that exists with companies that have a proven track record as aerospace suppliers of FAA-approved parts,” Moore says. “It takes time for a new supplier to have this kind of relationship with the FAA, which makes sense to me because that’s true for how I work with our suppliers as well. It is certainly more challenging for Joby to be vertically integrated and provide most of their components, from a certification perspective.”

Bill Johnson, an analyst with Single Seat Consulting, gave a similar assessment, arguing that air taxi startups will be best served by using horizontal integration to maintain their core competencies in manufacturing.

“Perhaps it is most telling that legacy aviation has no truly vertically integrated company,” Johnson observes. “To me, that is a huge signal that it is too broad a task to execute well. In the end, I imagine Joby will divest of some of their operations and become less vertically integrated in the future.”

Joby, however, insists that its vertically integrated model gives it a greater ability to optimize each component specifically for its electric vertical-takeoff-and-landing (eVTOL) aircraft, which will have superior range and speed compared with Archer’s Midnight air taxi.

JoeBen Bevirt, Joby founder and CEO, points to technology companies such as Tesla and SpaceX as examples of the benefits of vertical integration, which he says allows them to manufacture high-performing, state-of-the-art systems while avoiding some of the headaches associated with relying on a web of suppliers.

“When you’re building hardware, there is no substitute to being vertically integrated with the rate of progress that you’re able to deliver and the quality of the products that you’re able to create,” Bevirt tells Aviation Week. Being vertically integrated has “enabled us to build a dramatically better-performing aircraft that is quieter, faster and, most importantly, safer. When your engineers are steeped in the design, manufacturing and testing of the components, you get better, safer and more reliable designs.”

Joby also says its model will make it easier to integrate the various aircraft systems, avoiding the need for late-stage redesigns that can arise during the integration process.

“When you look at a traditional fly-by-wire aircraft that is made with pieces that are cobbled together from different suppliers, the software stacks are different, the hardware stacks are different, and you’re not going to deliver the performance and the integration that we’ve been able to achieve,” Bevirt says. “We all see the inverse of that in a bunch of different aviation companies today that used to be vertically integrated, and they let pieces of the supply chain go. Now that’s causing them significant heartache.”

While most industry-watchers agree that Archer’s strategy offers a lower-risk path to type certification, many also see merits in Joby’s approach, especially given its impressive achievements building and flight-testing full-scale prototypes.

“Joby does have the advantage of having more optimal components that are uniquely designed for the exact application, with tight design coupling to all the internal lessons learned across development,” Moore says. “Like everything in aerospace, it’s a trade-off—and Joby decided to take the more difficult and expensive path that gives them the most control but potentially also more profits.”

Sergio Cecutta, partner and president at SMG Consulting, says Joby’s strategy might have “gone a bit too far” in terms of vertical integration. But given the company’s testing and certification progress, he doubts its vertically integrated model will meaningfully change its time to market.

“I think they have already prepared and put all the items into place to make sure the added effort of vertical integration doesn’t impact their schedule,” Cecutta says.

Which strategy will prove the most efficient and profitable path to type certification and commercialization remains to be seen. But given the high-stakes trade-offs involved, it may be reasonable to expect that the two sharply different approaches to supply chain and production could translate into vastly different commercial prospects for Joby and Archer in the years to come.