Hi, good morning, everyone. My name is Austin Moeller, and today we're joined by Mark Mesler, the CFO of Archer Aviation. So it's great to have you here, Mark.
Yeah, thanks so much, Austin. It's been a great conference. I appreciate, appreciate the hospitality.
Yeah. So just to start, for those that are unfamiliar with the story, can you talk about the genesis of Adam and Brett's interest in eVTOL aircraft and urban air mobility, and why do you view urban air mobility as so critical to modern transportation infrastructure?
Yeah, sure. So our founders were focused on solving a problem, and that problem is urban congestion. So if you think about the demographics of the world today, most societies are moving from rural, you know, from rural demographics to a more urban demographic, and congestion is a real problem. I mean, we all experience it in any major city that you go to, that terrestrial X, Y infrastructure for moving people around is, you know, starting to mature. And just about any city you go in, especially in the US, you have urban congestion, and if you get into some countries outside of the US, it's even worse. So we're really working on solving a problem, and so we addressed that problem in a very data-driven way.
We had hired some really smart people from Uber Pool to come to Archer and model out how people move in non-random ways around major cities around the world. Used anonymous cell phone data to do that. We looked at people's movement patterns from the beginning of the morning to the evening, and we quickly distilled down, and, you know, not surprisingly, that there are tens of millions of trips per day in the US and around the world, that are less than 15-20 miles, but take, you know, take 1, 2, sometimes 3 hours to make that trip. So started questioning, it's like: Well, what could we do to potentially relieve that and provide some ease on the infrastructure and move it into the Z-axis, right? That third dimension.
If you think about how society's evolved, we've got apartment buildings that are... and office buildings in a third dimension, why can't we do that with transportation? So we looked at this industry, electric vertical takeoff and landing. Batteries on the backs of the EV companies are at a point where the power of batteries support our core missions with eVTOL. With the battery packs, the technology we developed is all around a 20- to 50-mile mission. Again, moving people from terrestrial transportation to something in the air. Trying to get that use case to be from 1 hour to 2 hours, down to 15-20 minutes, depending on where you are.
So, we developed a technology around a four-passenger, plus a pilot, aircraft, using existing EV electrical, electric batteries, for electric propulsion. We hired a bunch of smart people from the Teslas of Silicon Valley, Lucids, et cetera, and a lot of smart people from some of the early, earlier programs that were doing eVTOL. We came to market around 2018, is when we started the company, and eVTOL's been around, you know, probably eight, nine years before that. And our founders felt that there wasn't a lot of conviction at the time to get to market. And so Archer was founded on creating the most expeditious path and most capital-light path to get to market. Founders are entrepreneurial. Founders were...
Adam, our CEO, is a former finance guy who started a software company, sold the software company, and then took the proceeds of that company to start Archer. So, that's really the genesis of the company. Again, focused on 20- to 50-mile missions using electric aircraft to move people in 15 to 20 minutes, what otherwise might take 1, 2, 3 hours, and we can go through some examples here later.
Could you go into a little more detail on the manufacturing capability and the relationship that you have with Stellantis and the amount of support that you're able to get from that?
Sure. So, you know, to build this company and to build this industry, we clearly need to rely on partners and, we've been very fortunate to have some really good partners along the way. United Airlines is a partner of ours. They're an investor in the company. They're a customer of ours. They've got an order for up to 200 aircraft from us. They also help us think about operating in these UAM environments. So, we've announced routes with them in the U.S. and New York and Chicago, and we'll continue to announce some routes with them. Stellantis is also a really good operating partner. They're an investor. They've probably invested close to $280 million in the company, plus some incremental investment with people.
I've got a bunch of Stellantis people in my HQ in San Jose. And Stellantis is a the third largest manufacturer of automobiles by revenue in the world. They produce up to 6 million, or 6 million cars per year. So when we think about scale, and we do believe that when this industry gets to market, it will be supply-constrained, Stellantis helps us to think about how to unlock scale in the manufacturing process. These aircraft aren't as complicated as your standard commercial airliners. We're not flying at altitudes where you need compression systems or anything like that. You've got composite materials, you've got electric engines, you've got battery packs, you've got wiring harnesses. The manufacturing process is gonna be a lot closer to an automotive manufacturing process.
So what we've done, along with Stellantis, is we down-selected a site for our scale manufacturing facility. It's in Covington, Georgia, just south of Atlanta. It's on a 100-acre site there. We're building a 350,000 sq ft facility there that'll manufacture in phase one, up to 650 aircraft per year. Stellantis is really thinking, helping us think about how to move from that R&D phase of the company into an operational or manufacturing type environment with the company. Carlos Tavares, the CEO, is very supportive of the company. He came to Adam, our CEO, and said, "Adam, you know, why do you want to take the burden of this manufacturing on yourself? Look at what's happened to a lot of the EV players.
They've ended up in production hell, haven't been able to scale. This is what we do. I build 6 million aircraft a year. It's about 500,000... or sorry, "I build 6 million cars a year. It's about 5 million, 500,000 cars a month."... helping you build a few hundred aircraft, you know, a year should be, should not be a problem. So Stellantis has just been a really good partner with us. We're gonna get the certificate of occupancy of our facility in Delaware later this year, around the November timeline, and Stellantis will help us manufacture there. On our earnings call last week, we announced the framework that we're putting together with them, where they're going to help us.
They've committed up to $400 million of capital to help us get to that 650 aircraft per year scale, and that'll be, you know, in the form of equity capital down the road, when we start to get to those higher levels of production. So can't say enough about the relationship with Stellantis and what they've helped us do as a company.
That's great to hear. Can you talk a little bit about Archer's go-to-market strategy and how right now you're planning just direct sale of aircraft with partners that are mostly overseas, while also building out the urban air mobility capability in the domestic market?
Yeah, that, that's exactly right. So that is our go-to-market strategy. So if you, if we step back, we've talked about the technology, which is a four-passenger plus a pilot aircraft. We're, we're able to manufacture these at scale, and, and we've got a, we've got an indicative backlog that we've announced on our earnings call of over 1,100 aircraft right now. The direct sale of aircraft, we think, will help fund the larger vision of urban air mobility networks. So we do believe that there's longer-term value, not shorter-term value, in building out urban air mobility networks, especially here in the US. There's a little bit of a longer tail to do that because, yeah, there's, you know, charging infrastructure that has to be put in place.
But we have really good partners overseas that we're going to be selling aircraft directly. So, you know, as you put your models together, you think about revenue recognition, we're recognizing revenue as we sell the aircraft to these partners. So, we've announced, like the UAE, we've got partnerships with Air Chateau, Falcon Aviation, which are operators in the UAE. InterGlobe in India, one of the largest operators of aircraft in India. That's. They go by the name IndiGo. We've got a partnership with United here domestically. So we believe that the selling of the aircraft, especially through the first couple years, will help fund those urban air mobility networks that we want to build out domestically.
We have announced a number of really high-profile routes and networks here in the US. With United, we've already announced a route from Newark Liberty International Airport to Manhattan. That's about a 15-mile trip. I mean, it's always, if you go there, it's $100, for me, it's $150 every time I take a cab or an Uber, whatever. We're gonna try to do that with a rideshare, you know, with a ride-sharing type service, which would be on par for that from a pricing standpoint. We've announced Chicago with United. More recently, we've announced a Northern California route. We partnered with Kilroy, an infrastructure firm, to build what's called a vertiport in South San Francisco, and that we'd have access to wine country, to the South Bay, et cetera.
And then last Thursday, on our earnings call, we announced an LA network, where we would have access to SoFi Stadium, we'd have access to other high-value, USC campus, other high-value landing spots in the LA network in preparation for getting ready for, especially at SoFi, there's three major events coming up in the future. There'll be the World Cup, there'll be the Super Bowl, and then the 2028 Olympics. So, you know, we're slowly working to build out that infrastructure internally. Those will be priced like a rideshare. They'd be recognized as revenue like a rideshare. You're paid by the drink, essentially. But initially, we'll be selling aircraft to these operators overseas, and you can expect us to continue to announce high-quality partnerships overseas, so.
Can you talk about Archer's use of third-party aerospace suppliers to facilitate the FAA certification process?
Sure. So, you know, at the genesis of the company, when we were going through that process of thinking about the aircraft, the form factor of the aircraft to build, what the use case would be, and recall that I talked about creating the most expeditious and capital-light path to market. Early on, we felt that by partnering with tier one aerospace suppliers would help us do that, and we would focus internally, focus on developing what we think are key differentiating technologies. And for us, we believe that the key differentiating technologies in this space is powertrain. Powertrain is made up of battery packs and electric engines. So, we are using existing high-quality aerospace suppliers for just about 80% of our parts.
So think about flight computers, think about landing gear, think about your navigation, think about flight controls, things like that. So, you know, Honeywell does our actuators. Actuators are the gears that move and tilt the rotors on the front of our plane forward. Safran does flight computers. We think that that gives us two very good advantages to getting to market in that expeditious and capital-light path. One, I've invested in some of these companies through what's called NRC, non-recurring costs. We help them, you know, with the startup costs or the tooling, et cetera, to help build these parts for us and develop these parts for us.
So I don't have to take on that financial burden to develop each one of these parts. When we think about scaling, much like we're using Stellantis to scale our assembly function in Covington, Georgia, we can rely on that existing aerospace supply base to scale our manufacturing with us. Again, you know, creating that least friction path to market. Finally, we do think there is a certain benefit to getting through the FAA certification process as well, cause we are. This industry, we haven't talked about it yet, but it is regulated by the FAA, it's regulated by the GCAA in UAE and other authorities around the world. You have to get through that certification process as well.
We felt that if we took a component that had what we call certification heritage, where a component had either previously been certified by the FAA or had been developed by a company who had previous certification heritage, that that would decrease some of the friction to get through the FAA process. FAA process for certification clearly is to keep the flying public safe. We think that, you know, what is new and novel to them is what they will focus on, clearly in the FAA in their certification process. So battery packs and electric engines they have not seen for primary power, primary powertrain and propulsion in the past. So we've worked with them and continue to work with them on our certification of our internally developed products.
But we think and what we have observed in working with them, if they've seen an actuator from Honeywell before, or they've seen a navigation system from Garmin or a landing gear from a Mecaer, that they're like: "Oh yeah, I've seen that before, and I know we've certified this in the past," and, you know, so it's just a little bit easier. So that was our framework going in, and so far, I think that framework is largely paying off for us.
Mark, can you discuss the production aircraft that are being built now, and how soon those should be ready for manned or piloted test flights?
Sure. So, our production aircraft, the aircraft that we're taking to the FAA to certify is a 6,500-pound maximum takeoff weight aircraft, 4 passengers, plus a pilot. We're flying that right now remotely, not with a pilot in it. We're flying that remotely in our Salinas flight test facility, currently. This will be the second aircraft that we've been flying in Salinas. The first one was like a just under a 4,000-pound aircraft, which we called Maker. It was more of a 2-passenger aircraft that we proved out our aero design, which is a 12 tilt 6, 12 tilt 6 rotor technology.
So our goal is with the 6,500-pound aircraft that we've transitioned into forward flight now and that we're flying, is we're building the first six of those to be used in the certification process with the FAA. We're actually working on the first three of those right now. We're building three of them in our low-rate production facility in San Jose. And that first one, called T1, the goal is to put a pilot in that before the end of the year and fly that. So for us, that'll be a big milestone where we'll be flying a pilot in a conforming aircraft that we'll... Per your question, we will start then testing beyond that with all six of those aircraft in different capabilities, different tests, et cetera. So that's the goal for the company.
Mark, what can you tell us about your contract with the U.S. Air Force and the Agility Prime program and the test aircraft that you just delivered? And what is the Air Force's vision for military applications for eVTOLs?
It's a real interesting question. So we have a $142 million R&D contract with the Air Force. And if you just step back, the DoD and the U.S. military in general is if you think about it a large logistics company. You know, they move people and parts and supplies all over the world. And so the use cases that we are working with the DoD on are those types of applications. The military of the future is what we've been told, especially given what's going on in Ukraine, is gonna be more of a nimble, you know, distributed type base type system.
Military wants to move away from larger, centralized, bases and comm centers to more of a distributed, and this, the eVTOL, technology fits very well within that, right? Especially the use case, these have ranges up to 100 miles, typically, and that 20- to 50-mile mission is what we're focused on. So the, the use cases that we are working with the, with the DoD and the Air Force on are, you know, you could think about moving, moving people, moving goods and other things around, recovery missions, things like that. So it's, I think that it is a, a potential, a really good potential for the industry. The, the, the military is looking for that next big program of record to, to use these for.
You know, we believe that there's a really good opportunity for this industry to be on a program of record with the Air Force in the future. That would be, you know, that would be just a large, you know, thousands of aircraft orders that would be coming into the industry.
Yeah, that would be really exciting.
Yeah, it would be.
Um-
It would be.
Can, Mark, can you talk about Archer's cash balance today, especially post the raise with institutional investors and also Stellantis that agreement? And do you expect that capital to get the company through final commercialization of the Midnight?
Sure. So, you know, we've always been one of the best capitalized companies in the sector. We are very fortunate, along with others in the industry, to raise, you know, close to $1 billion when we went public back in 2021. As the CFO, I remain very on top of our cash balance. So, we raised $230 million this quarter through a combination of Stellantis' investment, as well as some high-quality financial folks. So we had $360 million at the end of last quarter. So if you put those together, you know, you got close to about a $600 million pro forma cash balance or liquidity.
You know, we've talked about on an earnings call what our burn is. We think that that's a pretty good number to get us, you know, through commercialization. Clearly, I'm not gonna run the balance sheet down to zero, but in order to check off the near-term, immediate-term milestones, we're pretty comfortable with our capitalization right now.
Can you discuss the acoustics of the Midnight aircraft, and how that opens the door for being able to operate at more sites than traditional helicopters have been able to?
Yeah, I mean, one of the... If you think about what is the minimally viable market for this technology, you know, I've got an aircraft that has 12 propellers on it. Its noise signature is roughly 100 times more quiet than a helicopter. Helicopter generally has a single rotor that's spinning near the speed of sound, so you get that large whop-whop sound. And so the minimally viable market for this is just helicopter replacement. Helicopters, even if the dream of urban air mobility, et cetera, doesn't play out, there's, you know, roughly 50,000 commercially operated helicopters in the world, which you could create a very nice business for the industry by just replacing those. That said, one of the big knocks against helicopters, there's a couple knocks.
One is safety, 'cause it has multiple single points of failure on you know, with a single rotor. And eVTOLs generally, in Archer, we've got 12 rotors, we've got 12 engines, multiple points of redundancy. There's no single points of failure, so it's a lot safer. The noise footprint is, is even is also attractive because there's only a few cities that are using, around the world, that are using helicopters at scale, if you could even call it scale. São Paulo, Brazil, New York is another one. And if you talk to the guys at Blade, Blade operates helicopters in the New York City area, they'll tell you their key limiting, their key limiting f- there's three things that limit their growth: noise, noise, and noise. Helicopters are just really loud.
So with a noise signature that is materially less than a helicopter, and with a safer aircraft, we do believe, and the folks we've talked to, this will open up this market, that we will be able to put a lot of these out into the market once people start getting, you know, comfortable with them, once they start accepting them. So the routes that we've announced, the ones that I've talked about earlier, the networks in LA, the networks in San Francisco, and then the routes in New York are really closer than you think. I mean, they're near and present, you know, upon getting FAA certification. And we hope from there to build out and continue to build those networks across more cities.
Do we have any audience questions, or…? Sure.
What's the next one after four? Is it eight people? Is there... What's the next model after this?
It's a good question. I mean, my opinion is I think there is a, there's a technological enabler of that, you know, as batteries get better. But the question is, is the market there? I mean, our data shows that the market we're going after now is a huge market. So then, as batteries improve, the question is what's the trade-off? Do you, do you extend your range or do you increase your payload, right? Those are two... It's probably easier to extend your range 'cause you don't have to do any R&D, like, updates or design updates.
So I think, one, for us, that would be market-driven, 'cause I think at that point you start thinking more about, you know, what's the comfort level of eight people in an aircraft going 10-50 miles? Probably still okay. But those are probably... You know, it'll be driven by battery technology. Batteries are improving 5%-7% a year, so you're probably a few years out before you get into that, unless there was a fundamental change in the, you know, step function change in battery tech. But that said, I mean, I still think that the market that we've designed the aircraft around is big enough for the next decade that we can attack it.
Any other questions from the audience? I've got one. So you mentioned this on the earnings call, but can you highlight your plans to operate the vertiport network in Los Angeles in 2026 to 2028? And how does that fit within the air traffic activity at LAX and being able to operate in that environment?
Sure. What's interesting is with that announcement, the FAA issued a white paper last year called Innovate28, and what it was was a forcing function for the FAA to get conviction around getting this technology certified, such that that we could be operating eVTOL at a meaningful scale during the 2028 Olympics. And Billy Nolen, who's now our Chief Regulatory Officer, was the administrator there last year through June, and he developed that Innovate28. So the route that we announced, actually, the routes, the network that we announced in L.A., it fits right into that Innovate28. If you look out onto our shareholder letter, we sort of, we mapped out what this looks like. Santa Monica, Van Nuys, Burbank, LAX, SoFi Stadium, USC, Long Beach, is how we're thinking about it.
That brings a lot of. You know, those trips in themselves, they are, you know, an hour to two hours from Long Beach to LA. Our goal is to move those, you know, into the 15-20-minute range. There's a number of use cases around that. It doesn't have to be around those big events that I talked about, the just everyday transportation is how we're thinking about it. We would call those trunk routes. They're routes that are the high value, high. When I say high value, I mean there's high capacity on your aircraft, and there's a high number of routes that would operate during the day.
So the economics around that route really, really, play out, and we've got an internal application that helps us model that out. With respect to the air traffic management, you know, especially around these, the airports, it's less of an issue when you're just in the regional airports like the Santa Monicas, et cetera. It's more of an issue when you get into an LAX or a Newark. You know, we're working with our partners at United to help sort of figure out some of the UAM air traffic management things around that. But yeah, we're excited about that network.
Awesome. Well, we've come up to the end of our time here, but thanks again, Mark, for coming and talking about the Archer story. We really appreciate having you today.
Yeah, thanks again.