KakaoMobility Selects Archer Aviation As Its eVTOL Partner And Will Fund Archer’s Korean Commercialization Efforts; Together They Will Conduct Public Flight Demonstrations As Part Of Korea’s Grand Challenge As Soon As Q4’2024

Rhea-AI Summary

Archer Aviation has partnered with KakaoMobility to advance urban air mobility in South Korea, aiming to commercialize eVTOL aircraft by mid-2020s. The partnership involves participating in Korea's K-UAM Grand Challenge, funded by the Ministry of Land, Infrastructure and Transport. KakaoMobility will pay Archer $7M in 2024 and make additional payments in 2025, planning to purchase up to 50 Midnight eVTOL aircraft worth approximately $250M. Public demonstration flights are expected in Q4 2024, with commercial operations targeting 2026. The collaboration aims to integrate air taxis into urban transport, reducing traffic congestion and enhancing sustainability.

Positive

• Archer Aviation secured $7M funding from KakaoMobility for early commercialization in Korea, with additional payments in 2025.
• Agreement includes up to 50 Midnight aircraft purchases worth approximately $250M.
• Public demonstration flights planned for Q4 2024, showcasing Archer's technology.
• Commercial operations targeted for 2026, offering air taxi services via Kakao T app to over 30M users.
• Collaboration aligns with South Korea’s sustainability goals, aiming to reduce carbon emissions and promote green technology.

Negative

• Project success depends on regulatory approval and certification, which involves risks and uncertainties.
• Significant financial commitment required for commercialization, including infrastructure development.
• Potential delays in public demonstrations or commercial operations could impact investor confidence.

Insights

Market Research Analyst

This partnership between Archer Aviation and KakaoMobility represents a notable development in the urban air mobility (UAM) sector. The agreement not only includes a $7M initial payment in 2024 and a potential $250M aircraft purchase but also reflects a collaborative effort to transform urban transportation in Korea.

Market Demand: With urbanization and traffic congestion on the rise, especially in mega-cities like Seoul, there's a growing demand for fast and eco-friendly transport solutions. This partnership aims to address this need through electric vertical take-off and landing (eVTOL) aircraft. KakaoMobility's vast user base of over 30M people could provide a substantial initial market for these services, highlighting significant revenue potential.

Regulatory Environment: Participating in Korea's K-UAM Grand Challenge and engaging with regulators to develop certification and operational standards will be critical. If successful, this partnership could position Archer Aviation at the forefront of the UAM market in Korea, influencing regulatory policies and standards.

Long-term Impact: By targeting commercial operations by 2026, the partnership aims for a sustainable and scalable business model. However, the execution of infrastructure, such as vertiports and air traffic management systems will be essential for ensuring safe and efficient operations. This collaboration could set a precedent for similar projects worldwide, potentially expanding Archer Aviation's market reach.

Financial Analyst

Financial Implications: The agreement includes an initial $7M payment in 2024 and up to $250M from the sale of up to 50 eVTOL aircraft. This is a significant financial commitment that stands to boost Archer Aviation's revenue streams over the next few years.

Revenue Growth: The planned payments and potential aircraft sales will contribute to revenue growth for Archer Aviation. The financial inflow is spread across 2024 and 2025, providing a steady cash stream to support early commercialization activities and development costs.

Investment Risks: Despite the significant financial prospects, investors should consider potential risks, including the successful completion of public demonstrations and regulatory approvals. Any delays or regulatory hurdles could impact the financial projections associated with this partnership.

Market Position: This collaboration places Archer Aviation in a competitive position within the UAM industry. Successfully penetrating the Korean market could enhance Archer's valuation and attract further investment, although the high R&D and operational costs must be managed effectively.

• The Korean government has set the goal of commercializing urban air mobility in the country by the mid-2020s, and in support of that objective the Ministry of Land, Infrastructure and Transport (MOLIT) is hosting the K-UAM Grand Challenge, which is a public-private joint demonstration of electric vertical take-off and landing (eVTOL) aircraft intended to build public support.
• KakaoMobility’s consortium, which also includes LG UPlus Corp and GS E&C Corp. will participate in the Grand Challenge as one of only three consortiums to hold public demonstration flights in tandem with Korea’s Ministry of Land, Infrastructure, and Transport. This participation will include, among various initiatives, public demonstration flights of Archer’s aircraft and engagement with regulators to develop certification and operational standards.
• KakaoMobility will pay Archer $7M in 2024 as the first installment to cover early commercialization efforts in Korea, with a second installment expected in January 2025.
• The agreement between KakaoMobility and Archer also covers the planned purchase by KakaoMobility of up to 50 of Archer’s Midnight aircraft worth up to an approximate value of $250M, with pre-delivery payments also expected in 2025 after the Grand Challenge.
• The consortium will be working towards jointly commercializing eVTOL operations in South Korea in 2026 with KakaoMobility planning to offer its over 30M users the opportunity to travel via Archer’s electric air taxis in some of the country’s largest cities.

SEOUL, South Korea--(BUSINESS WIRE)-- Archer Aviation Inc. (NYSE: ACHR), a leader in eVTOL aircraft, and KakaoMobility, Korea’s leading mobility as a service (MaaS) platform service company, signed an agreement to partner for joint participation in the K-UAM Grand Challenge and covers the planned purchase by KakaoMobility of up to 50 of Archer’s Midnight eVTOL aircraft worth up to an approximate value of $250M, including pre-delivery payments.

Image above depicts simulated flight and planned operations of Archer aircraft in partnership with KakaoMobility in Seoul (Photo: Business Wire)

KakaoMobility plans to own and operate Archer’s Midnight aircraft in Korea, offering electric air taxi flights to its over 30M registered users on its Kakao T mobile app starting as early as 2026. KakaoMobility and Archer anticipate starting the service in Seoul, one of the most congested cities in the world, where the average commuter spends nearly 90 minutes per day stuck in traffic.

KakaoMobility, along with its consortium partners LG UPlus Corp. and GS E&C, have chosen Archer as their eVTOL aircraft partner to ensure they reach their goal of conducting public demonstration flights with eVTOL aircraft in the country in late 2024. KakaoMobility will pay $7M in 2024 to Archer as the first installment to help fund early commercialization efforts in Korea, with a second installment in Q1 2025.

Christopher SungWook Chang, Senior Vice President of KakaoMobility, said: “Our partnership with Archer is a leap forward for urban mobility. We can’t wait to debut Archer’s Midnight Aircraft at the K-UAM Grand Challenge in 2024 as a commitment to transforming the daily commute for millions of Kakao T users. The vision is clear – reduce the hours lost in traffic and elevate everyday travel with an electric air taxi service that features Archer’s Midnight aircraft.”

Archer’s Chief Commercial Officer Nikhil Goel, commented: “Archer is expanding its international launch strategy to South Korea through this landmark partnership between Archer Aviation and KakaoMobility. Together, we are committed to revolutionizing transportation with Archer’s eVTOL aircraft, ushering in a future of cleaner, faster, and more efficient travel between and within Korean cities.”

The consortium’s complementary strengths gives it the ability to work collaboratively to build a comprehensive approach to integrate all-electric air taxis into South Korea's urban transportation landscape. Starting with the K-UAM Grand Challenge, the companies intend to demonstrate how eVTOL aircraft can transform daily commutes in Korea. The collaboration will also focus on building best-in-class infrastructure, including vertiports and air traffic management systems, to ensure safe and efficient operations.

The consortium is focused on bringing electric air taxis to Korea because they can play a pivotal role in achieving a more sustainable future, contributing to South Korea’s broader goals of reducing carbon emissions and promoting green technology.

About Archer

Archer is designing and developing electric vertical takeoff and landing aircraft for use in urban air mobility networks. Archer’s mission is to unlock the skies, freeing everyone to reimagine how they move and spend time. Archer's team is based in Santa Clara, CA.

To learn more, visit www.archer.com.

About KakaoMobility

KakaoMobility is a subsidiary of Kakao, a South Korea company that operates a diverse set of services including social networking, entertainment, finance, and gaming. KakaoMobility offers Kakao T, Korea’s leading service for taxi-hailing, designated driver booking, nearby parking space searching, and real-time traffic information.

KakaoMobility’s Media Details
reese.jh@kakaomobility.com

Archer Forward-Looking Statements

This press release contains forward looking statements regarding Archer’s future business plans, including statements regarding the timing, amount and value of the planned purchases of Archer’s aircraft by a third party and certain related pre-delivery payments, the timing development, commercialization, and certification of its eVTOL aircraft, business opportunities, and the expansion of Archer’s business internationally. In addition, this press release refers to an agreement that is conditioned on the future execution by the parties of additional definitive agreements incorporating the terms set forth in such agreement. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors. The risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed in Archer’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, available at www.sec.gov. In addition, please note that any forward-looking statements contained herein are based on assumptions that Archer believes to be reasonable as of the date of this press release. Archer undertakes no obligation to update these statements as a result of new information or future events.

Source: Archer
Text: ArcherIR

View source version on businesswire.com: https://www.businesswire.com/news/home/20240530439560/en/

Archer Media Contacts

The Brand Amp - Archer@TheBrandAmp.com

Source: Archer Aviation

FAQ

What is the partnership between Archer Aviation and KakaoMobility?

Archer Aviation and KakaoMobility have partnered to commercialize eVTOL aircraft in South Korea, participating in the K-UAM Grand Challenge and planning to offer air taxi services by 2026.

How much funding will KakaoMobility provide to Archer Aviation?

KakaoMobility will pay Archer Aviation $7M in 2024, with additional payments expected in 2025.

What is the K-UAM Grand Challenge?

The K-UAM Grand Challenge is a public-private demonstration of eVTOL aircraft hosted by South Korea’s Ministry of Land, Infrastructure, and Transport, aiming to build public support for urban air mobility.

When are the public demonstration flights of Archer's aircraft planned?

Public demonstration flights of Archer's aircraft are planned for Q4 2024 as part of the K-UAM Grand Challenge.

How many eVTOL aircraft will KakaoMobility purchase from Archer Aviation?

KakaoMobility plans to purchase up to 50 of Archer’s Midnight eVTOL aircraft, worth approximately $250M.

When will commercial operations of Archer's eVTOL aircraft begin in Korea?

Commercial operations of Archer’s eVTOL aircraft in Korea are targeted to begin in 2026.

What impact will the Archer-KakaoMobility partnership have on urban transport in Korea?

The partnership aims to reduce traffic congestion and enhance sustainability by integrating electric air taxis into Korea’s urban transport system.