Joby Aviation Short Report - Kerrisdale Capital Highlights Feasibility, Safety Concerns Over $5B Valuation (UPDATED)

Editor's note: This story has been updated with comment from Joby Aviation on a short report.

Joby Aviation Inc JOBY, a $4.8 billion developmental stage aircraft manufacturer, has been critiqued for its ambitious goals, which could be far from realization. Kerrisdale Capital Management is short shares of Joby Aviation.

Joby promises of revolutionizing urban transportation with its electric vertical-take-off-and-landing (eVTOL) planes face serious questions around feasibility, energy consumption, production capability, and safety.

Joby Aviation has envisioned a future where thousands of eVTOL planes, designed for journeys between 5 to 150 miles, dominate the urban skies. 

However, skeptics argue that the company's claims might not align with the laws of physics and economics. 

A Joby spokesperson told Benzinga Tuesday the company is aware of the Kerrisdale report. 

"These statements were published by a company that has a vested interest in lowering the share price of Joby despite the compelling long-term opportunity to provide consumers with a valuable, carbon-neutral alternative to today’s transportation," the spokesperson said, adding the company encourages investors to review its recent public filings for information.

"In the last two months alone, Joby has expanded testing to include flight with a pilot on board, delivered the first-ever electric air taxi to the U.S. Air Force and announced the location for our first scaled manufacturing facility."

Kerrisdale said the energy consumption required for high-power applications, combined with the need for rapid recharging, casts doubt on these aerial vehicles' promised efficiency and affordability.

When Joby went public, the company forecasted the production of thousands of aircraft annually at a unit cost of $1.3 million "at scale." 

However, such projections are being questioned, especially considering the struggles experienced by established airplane manufacturers. 

Utilizing identical resources, these manufacturers took years to scale their production lines, often barely reaching 100 units per year.

The economic viability of Joby's eVTOL is another area under scrutiny. Although the company maintains that fuel and maintenance savings will make eVTOL flights more affordable than helicopter journeys, critics argue that these calculations are overly optimistic, the report says. 

They claim that when the cost of the battery and aircraft are accounted for, eVTOL flights could be more expensive.

As for safety and certification, Joby aims for type certification by 2025, asserting progression through three of the five required stages. 

However, critics point out that the completed stages are primarily paperwork, with little real-life testing and verification, which constitute the core of the certification process. Outstanding safety and logistical concerns, including battery fires and air traffic control, still loom large.

Price Action: JOBY shares are up 1.08% at 6.55 on the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.