Archer Aviation: An Ecological Player in the Low-Altitude Economy Sector

1. Business Model: An Integrated Air Mobility Service Ecosystem

Archer's business model extends beyond that of a mere aircraft manufacturer, it integrates the entire value chain, encompassing aircraft R&D, operational hub construction, and multi-scenario operations, to build an air mobility network. Archer's business can be broken down by downstream markets:

Commercial: Plans include global sales of commercial aircraft (e.g., Midnight—its first planned production eVTOL aircraft unveiled in November 2022 with a design of four passengers plus a pilot) to aircraft operators, along with related technologies and services (certification, testing, pilot training, demonstration flights, market surveys, early trial operations, maintenance and repair). Via the Launch Edition program, these aircraft, technologies and services will be offered to governments and customers to support Midnight’s commercialization outside the U.S.—for instance, collaborating with local operators and the UAE’s GCAA to deploy relevant resources for air taxi services launch in the UAE. Additionally, in the U.S. and select global metropolitan areas, direct-to-consumer aerial ride share services will be provided (utilizing its own and potentially other aircraft), with rides bookable via an app-based platform ("Archer UAM").

Defense: Plans include the sale of next-generation aircraft and related technologies for defense applications. The initial product is a dual-use, hybrid-propulsion vertical take-off and landing (VTOL) autonomous aircraft co-developed with Anduril. This brings together Archer’s ability to rapidly develop advanced VTOL aircraft using existing commercial parts and supply chains and Anduril's deep expertise in artificial intelligence, missionization, and systems integration, to accelerate the speed to market for critical hybrid VTOL aircraft capabilities at a fraction of the cost of more traditional alternatives. Additionally, since 2021, Archer has partnered with the Department of Defense (DoD) on a series of projects via the U.S. Air Force’s (USAF) AFWERX program, aiming to support the AFWERX Agility Prime program in assessing the transformational potential of the vertical flight market and eVTOL technologies for DoD purposes. The partnership continues to advance, with Archer fulfilling related contracts with the USAF, including delivering Midnight aircraft, sharing flight test data and certification-related test reports, providing pilot training, and developing maintenance and repair operations.

2. Core Competencies Supporting the Business Model

Archer's business model is built on four core competencies: technology, capital, infrastructure, and airworthiness certification, creating a defensible barrier to entry.

A) Technology and Patent Barriers

Through independent research and development combined with strategic mergers and acquisitions, Archer has established a comprehensive patent portfolio in key areas such as ducted fans, high-voltage systems, and flight control, with over 1,000 patents globally. The acquisition of Germany-based Lilium’s patent portfolio has further strengthened its technological advantages. Meanwhile, flight tests of core models continue to achieve breakthroughs: Midnight completed a 55-mile manned flight test lasting 31 minutes, reaching a speed exceeding 126 mph. These technological advancements not only advance the FAA airworthiness certification process but also validate the product’s safety and reliability.

B) Capital and Supply Chain Advantages

Archer has accumulated sufficient capital through various channels, including SPAC listing, equity financing, and strategic partnerships. Global automaker Stellantis is deepening its cooperation with Archer, planning to jointly manufacture the flagship eVTOL aircraft, Midnight. Stellantis will provide personnel, resources, and manufacturing and industrial engineering support, thereby addressing the challenge of eVTOL mass production. Boeing and its subsidiary, Wisk Aero, reached a settlement with Archer, resolving their litigation and agreeing to cooperate in the field of autonomous flight technology. Boeing has also invested in Archer to support the integration of Wisk's autonomous technology into Archer’s future models. Additionally, Archer has secured a purchase agreement for 200 Midnight aircraft and a $1 billion order with United Airlines, deeply binding its products to real mobility scenarios and locking in customer resources in advance.

Table: suppliers of Archer Aviation

C) First-Mover Advantage in Infrastructure

Archer has entered into a series of definitive agreements to acquire control of Hawthorne Airport and certain of the infrastructure there. The company plans to utilize Hawthorne Airport as its operational hub for its air taxis in Los Angeles and as a testbed and showcase for the AI-based advanced aviation technologies it is developing. Archer also intends to acquire a controlling stake in the fixed-business operator service at Hawthorne Airport, enabling the creation of a vertically integrated platform that combines fuel, aircraft handling and UAM operations.

D) Airworthiness Certification

UAM Service Operations: In 2024, Archer obtained the Part 135 Air Carrier and Operator Certificate from the FAA, allowing it to begin commercial aircraft operations to refine systems and procedures prior to Midnight’s official commercial service launch.

Type Certification in the U.S.: Archer initially submitted a comprehensive proposal for Midnight’s Means of Compliance to the FAA in December 2021. The company continues to collaborate with the FAA to finalize remaining compliance requirements, pending the FAA’s publication of final Airworthiness Criteria.

Pilot Programs: Archer plans to design and demonstrate trial aircraft operations under the White House eVTOL Integration Pilot Program ("eIPP") announced in June 2025. The eIPP aims to establish pre-certification operating environments for air taxis in participating localities.

3. Sources of Future Revenue Growth Potential

Although Archer is currently still operating at a loss (the Q3 2025 report shows a net loss of US$429 million), its revenue growth potential is expected to be gradually realized as commercialization progresses, primarily from four core areas: commercial operations, defense cooperation, low-altitude tourism expansion, and technology licensing.

Commercial Operation: Commercial air taxi services serve as the foundational revenue stream. With the launch of commercial services by the end of 2025 and the deployment of services for the 2028 Los Angeles Olympics, air taxi operations will enter a large-scale phase. Leveraging channel resources from partners such as United Airlines and Midnight’s high-frequency operational capabilities, Archer is expected to generate stable passenger transport revenue. Additionally, the combination of self-operated core hubs and authorized partner operations will enable revenue diversification and scalable replication.

Defense Cooperation: This will provide stable early-stage revenue and growth momentum. Archer’s collaboration with Anduril on military eVTOL development has already secured a $142 million contract with the U.S. Air Force. Military orders not only offer a reliable early revenue source but also facilitate technological iteration and brand credibility enhancement. Looking ahead, as global demand for low-altitude equipment grows, the military eVTOL market is poised to become a key growth driver. Archer can leverage its technological advantages to further expand its military customers and scale up defense business revenue.

Low-Altitude Tourism: Currently, there is strong demand in the low-altitude tourism market. Archer's Midnight aircraft is well-suited for short-haul routes between airports and scenic spots, as well as core attractions within scenic areas, catering to the personalized needs of high-end tourists. By collaborating with tourism platforms and scenic spot operators to offer cultural and tourism products such as "aerial sightseeing" and "short-distance transfers", Archer can deeply integrate its product advantages with cultural tourism scenarios, opening up new revenue streams. Furthermore, during the 2028 Los Angeles Olympics, in addition to regular air taxi services, customized cultural tourism flight services can be offered in conjunction with the event, further boosting revenue.

Technology Licensing and Ecological Partnerships: This revenue stream boasts long-term growth potential. As Archer’s advantages in eVTOL technology and air traffic management systems continue to strengthen, its patented technologies and operational management solutions are expected to become industry benchmarks. In the future, fees can be collected from other eVTOL companies and urban transportation operators through technology licensing, operational consulting, and standards dissemination, enabling a transition from a "product provider" to an "industry solutions provider".

Summary

Archer has established a business model characterized by "customized products + integrated operations + global markets," supported by core competencies in technology, capital, infrastructure, and airworthiness certification. Looking ahead, as commercial operations launch, defense cooperation deepens, cultural tourism scenarios expand, and technology licensing businesses progress, Archer’s revenue growth potential will be gradually unlocked.