Joby Aviation's Stock Is Rising After Teaming Up With Toyota For a New Manufacturing Venture

Much like its next-generation air taxis, Joby Aviation (NYSE:JOBY) stock floated impressively higher after a new manufacturing joint venture with Toyota Motor (NYSE:TM) was announced. Joby’s shares flew to a more than 3% gain on Tuesday, easily topping the 0.8% rise of the benchmark S&P 500 index.

Here are the details of the deal as we know them, along with a few words on why it matters to the company.

Image source: Getty Images.

Deepening partnership

That morning, in a joint press release, Joby and Toyota announced they had formed a joint venture. According to a regulatory filing posted at roughly the same time, the enterprise bears the very chunky name Joby Toyota Aero Manufacturing Preparation Company (JTAMPC). Toyota holds a 51% majority stake, and Joby owns the rest.

The two companies described the formation of JTAMPC as the “initial phase of their strategic manufacturing alliance.”

It will aim to lay the foundations for the commercial production of Joby’s electric vertical take-off and landing (eVTOL) aircraft. These are small craft that seat four passengers and a pilot, and combine elements of airplanes and helicopters. They are to be used for air taxi services initially planned for cities such as New York.

In my view, the timing is very good because Joby has secured the air carrier operator certificate required by the U.S. Federal Aviation Administration (FAA) to operate a commercial air taxi service in this country. It’s also in the concluding stages of earning the remaining two mandatory certificates — aircraft type and production. Its status is similar in the United Arab Emirates, which effectively grants similar approval once a potential licensee receives the FAA’s green light.

JTAMPC is the latest iteration of the years-long cooperation between Joby and the Japanese automotive giant. The latter’s Toyota AI Ventures, an early-stage venture capital firm, led a 2018 funding round for Joby and repeated the feat in 2020 with a much larger fundraising effort. In 2023, the two companies signed a long-term supply agreement under which Toyota will provide certain components for the eVTOLs. Finally, in 2024, the carmaker made a direct, $500 million investment in Joby.

Those fundraising rounds and the $500 million injection have given Toyota a substantial equity stake in its partner. In fact, Toyota is Joby’s single largest institutional investor, with a roughly 13% holding.

Passing the test

The creation of the joint venture is also timely, as it comes just over two months after Joby conducted a series of tests in its target U.S. lead market, New York City. One of its flagship models, the S4, flew a series of runs between JFK Airport in Queens and several heliports in downtown Manhattan. By repeatedly putting the aircraft through its paces, Joby advanced that much further toward securing the FAA’s final nods for full commercial operation.

These are exciting times for the company. Toyota’s ever-deepening involvement is a nice investor morale-booster, sure, but more powerfully, it shows that the Japanese automotive titan believes in Joby’s potential enough to help the American company realize it. I don’t blame investors at all for being bullish on Joby stock following the news.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.