SEOUL - South Korea's KakaoMobility and U.S.-based Archer Aviation Inc. (NYSE: NYSE:ACHR) have announced a partnership to introduce electric vertical take-off and landing (eVTOL) aircraft, aiming to launch urban air mobility services in South Korea by 2026. The collaboration is part of the Korean government's initiative to commercialize urban air mobility in the mid-2020s.
The partnership includes KakaoMobility's planned purchase of up to 50 Archer Midnight eVTOL aircraft, with a total value of up to $250 million. The agreement also involves a $7 million payment to Archer in 2024 to support early commercialization efforts in Korea, with a subsequent installment expected in the first quarter of 2025.
KakaoMobility, a leading mobility as a service (MaaS) platform, plans to offer electric air taxi flights to its over 30 million registered users on the Kakao T mobile app. The service is anticipated to start in Seoul, where commuters currently face heavy traffic congestion, averaging nearly 90 minutes of daily commute time.
The consortium, which also includes LG UPlus Corp. and GS E&C Corp., has chosen Archer as their eVTOL aircraft partner. The group will participate in the K-UAM Grand Challenge hosted by the Ministry of Land, Infrastructure, and Transport (MOLIT), showcasing public demonstration flights of Archer's aircraft.
Christopher SungWook Chang, Senior Vice President of KakaoMobility, stated that this partnership is a step forward in transforming urban mobility and reducing time lost in traffic. Archer's Chief Commercial Officer Nikhil Goel expressed that the partnership expands Archer's international strategy and commitment to revolutionizing transportation in South Korea.
The consortium aims to build a comprehensive approach to integrate all-electric air taxis into the country's urban transportation landscape, emphasizing the development of infrastructure such as vertiports and air traffic management systems to ensure safe and efficient operations.
This partnership aligns with South Korea's broader goals of reducing carbon emissions and promoting green technology, underscoring the potential role of electric air taxis in a more sustainable future.
The information in this article is based on a press release statement.
InvestingPro Insights
As South Korea's KakaoMobility gears up to redefine urban transportation with its partnership with Archer Aviation Inc. (NYSE: ACHR), investors are closely monitoring Archer's financial health and market performance. Here are some key insights from InvestingPro that could be pertinent to stakeholders interested in the future of urban air mobility:
InvestingPro Data indicates a challenging market environment for Archer Aviation, with a significant Market Cap (Adjusted) of $973.91M USD, but a negative P/E Ratio (Adjusted) for the last twelve months as of Q1 2024 at -2.11. The company's 1 Month Price Total Return as of the latest available data shows a steep decline of -22.42%, reflecting the volatility and the investor sentiment surrounding the stock.
From the InvestingPro Tips, it's worth noting that Archer Aviation holds more cash than debt, which is a positive sign of financial stability (Tip 0). Still, the company is quickly burning through cash (Tip 2), which may raise concerns about its long-term sustainability. Moreover, the stock price has been quite volatile (Tip 5), which could indicate a higher risk for investors.
For those looking to delve deeper into the financial nuances of Archer Aviation, InvestingPro offers a wealth of additional tips. There are 14 InvestingPro Tips available, including insights into profitability, cash flow, and stock performance trends. These tips could be particularly valuable for investors considering the implications of the partnership with KakaoMobility on Archer's financial trajectory.
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