Archer Details Stellantis Funding Commitment; Raises $175M

Archer has detailed new terms of its contract manufacturing partnership with global automaker Stellantis, including a commitment to cover nearly $400 million in labor costs and capital expenditures (CapEx) through 2030, part of an effort to keep a lid on costs as production volumes scale up.

At the same time, the startup also announced a new $175 million equity raise, bolstering its liquidity position as it looks to finance the path to type certification and entry-into-service for its Midnight electric vertical-takeoff-and-landing (eVTOL) air taxi.

As part of the updated agreement with Stellantis, the automaker has committed to covering $370 million in labor costs and $20 million toward incremental manufacturing CapEx while Archer scales production at its factory in Covington, Georgia, which is expected to reach a rate of 650 aircraft per year by 2028.

In return, Archer will reimburse Stellantis with new shares on a quarterly basis based upon labor costs incurred.

“The goal is for Stellantis to cover a majority of our capital needs across our manufacturing operations through our ramp to 650 aircraft, substantially derisking our ability to ramp production,” Archer Chief Financial Officer Mark Mesler explains on the company’s latest earnings call.

The $175 million fresh capital raise, meanwhile, comes in addition to $55 million invested by Stellantis in July, building on Archer’s balance sheet which last stood at $360 million at the end of the second quarter (Q2). The funds were raised from institutional investors and existing shareholders including Stellantis and United Airlines, Archer says.

Archer also announced a conditional order from Future Flight Global, a startup founded by executives from business jet operator Titan Aviation, for 116 Midnight aircraft, worth up to $580 million with “significant” predelivery payments to be paid out when the deal is finalized. The new orders bring the company’s orderbook up to 1,141 aircraft worth an estimated $6 billion.

Archer also delivered its first Midnight to the U.S. Air Force in July as part of its $142 million AFWERX Agility Prime program contract. The delivery came after the Defense Department accepted the Midnight’s military airworthiness assessment in June.

The latest developments come as Archer is working to assemble its first type-conforming Midnight, the first of a fleet of six aircraft planned for use in its certification flight test campaign.

The startup said it recently received the bonded wing assembly at its manufacturing facility in San Jose, California, and is now in the process of integrating systems into the wing and preparing to mate it to the fuselage “in the coming weeks.”

Archer has been flight testing with its nonconforming Midnight prototype, as well as its Maker demonstrator, with a goal of increasing operational tempo to 15 flights per day by year’s end. The company says it has completed more than 70 flights since Midnight made its first transition between thrust-borne and wing-borne flight in early June.

Construction also continues on Archer’s high-rate manufacturing facility in Covington, Georgia, which is expected to be fully operational by year’s end. The startup plans to initially build a single Midnight per month in 2025, rising to four per month in 2026, 20 per month in 2027 and 54 per month in 2028.

As production rates increase, unit costs fall and profit margins grow. Costs per passenger mile are expected to be $5-6 at launch in 2025, falling to $3-4 by 2028, revised company estimates say. Gross margins, on the other hand, are expected to reach 40-50% by 2028, up from zero gross margin at entry-into-service next year.

“As our volumes increase, we project that we will be able to drive costs lower while at the same time improving manufacturing efficiencies,” Mesler said.

Archer realized a net loss of $107 million in Q2, down from $117 million in Q1. Spending totaled $96 million, up 7% from the previous quarter, and is expected to total $90-100 million in Q3.

Archer was last tied for fourth place in the latest edition of the AAM Reality Index, published in June by SMG Consulting, with a score of 7.9/10.