Aditya Raghunath

Wed, Jun 18, 2025, 10:13 AM4 min read

Valued at a market cap of $5.5 billion, Archer Aviation (ACHR) designs and develops aircraft and related technologies in the U.S. It is a prominent player in the emerging electric vertical takeoff and landing (eVTOL) industry, and has struck commercial deals aimed at transforming urban air mobility (UAM). Although its flagship eVTOL is still going through rigorous testing and securing regulatory approval before commercial launch, Archer is working to secure business in advance.

And, in recent months, the company is also quickly building out its defense business.

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Archer Aviation is strategically pivoting toward defense contracts as commercial air taxi deployment faces extended timelines. In fact, CEO Adam Goldstein recently predicted that defense could become “the biggest part of our business” in the near term. The electric aircraft manufacturer’s shift reflects broader industry trends, as air taxi developers confront slower-than-expected progress in launching passenger services.

On the flip side, President Donald Trump is ramping up military spending with a focus on defense innovation. This presents Archer with an opportunity to capitalize through strategic partnerships, including its collaboration with weapons maker Anduril Industries to develop hybrid-fueled military aircraft.

Archer secured its first major defense contract in 2023, partnering with the U.S. Air Force to provide quieter, cost-effective eVTOLs for supply delivery and non-combat applications. This positions the company to capture immediate revenue while commercial markets mature.

Bloomberg Intelligence analysts project that fewer than 30,000 air taxis will be flying by 2040, a level that would be unprofitable, requiring companies to diversify into defense, cargo, and hybrid variants. This tepid forecast validates Archer’s defense-focused approach, as traditional air taxi timelines extend beyond initial projections.

The defense pivot offers Archer near-term revenue potential while maintaining long-term commercial opportunities. However, investors should consider execution risks and the company’s ability to navigate defense contracts and eventual commercial scaling.

Archer Aviation ended Q1 2025 with more than $1 billion in cash, providing it with a substantial runway for its ambitious commercialization plans. Its UAE deployment remains on track for late 2025, with the first Midnight aircraft currently in flight testing before delivery.