eVTOL manufacturer Vertical plans to enter defense market, shares surge

Shares of Vertical Aerospace, a small British air taxi manufacturer, jumped nearly 11% on the New York Stock Exchange yesterday, May 12, after the company announced it would develop a hybrid electric vertical takeoff and landing (eVTOL) aircraft for military and medical uses.

Vertical rose nearly 11% on the NYSE yesterday to close at $4.77 per share. The company announced it will develop a hybrid variant of its VX4 eVTOL aircraft.

According to Vertical, the new model will be able to fly longer distances and carry a greater payload than the standard electric version. This, the company believes, opens up new market opportunities in defense, logistics, and wider commercial markets, including air ambulance services.

“The demand for long-range, high-payload, quiet aircraft is growing rapidly — especially across defense and critical logistics,” CEO Stuart Simpson said in the announcement. The company added that it now faces almost no competition in Europe at a time when defense budgets are rising.

Vertical expects to begin flight tests of its hybrid aircraft in 2026.

Vertical is not the only air taxi developer looking to expand into the defense space. U.S.-based Archer Aviation recently announced the creation of Archer Defense, a new division, and a strategic partnership with Anduril Industries, a defense technology company.

“I believe the opportunity for advanced vertical lift aircraft across defense appears to be substantially larger than I originally expected,” Archer founder and CEO Adam Goldstein said at the time.

JPMorgan estimates that the eVTOL market could reach $1 trillion by 2040 — or even $3 trillion when including the cargo and military spaces. In 2023, Kings Research valued the global air taxi market at $3.68 billion currently.

In March, the investment bank D. Boral Capital initiated coverage of Vertical with a “buy” recommendation and a target price of $15 per share, more than triple its current share price. The bank called Vertical “one of the few remaining” European contenders in the “increasingly challenging” eVTOL market, noting that the company had recently secured new funding.

A month before, German rival Lilium announced it was shutting down operations after first failing to tap into government funding and then failing to complete an acquisition deal with a group of investors.

According to MarketWatch, Vertical currently has three “buy” ratings and one “hold” from coverage analysts. Their average target price is $8.90 per share, implying 86% upside.