Joby Aviation and Toyota Motor are forming a joint venture to manufacture electric air taxis, marking a new phase in a partnership that has already seen the Japanese automaker invest hundreds of millions of dollars in the California startup.

The two companies announced the agreement on Monday, laying out plans to combine Toyota's manufacturing expertise with Joby's aircraft technology. The venture aims to move Joby closer to commercial production of its electric vertical takeoff and landing aircraft, known as eVTOLs.

Shares of Joby climbed on the news, reflecting investor optimism about the company's path toward launching passenger service.

What the deal covers

Under the agreement, Toyota will contribute production know-how and components to help Joby scale up assembly of its aircraft. The partnership builds on years of collaboration between the two companies, beginning with Toyota's initial investment in Joby in 2020.

Toyota has committed roughly $894 million to Joby over the course of their partnership, making the automaker one of the startup's largest backers. A portion of that investment is being directed toward manufacturing support as Joby prepares for commercial operations.

The joint venture will focus on producing the aircraft at scale, a step widely viewed as one of the hardest challenges facing companies in the emerging air taxi sector. Joby's five-seat aircraft, which includes space for a pilot and four passengers, is designed to take off vertically like a helicopter and cruise like a plane.

Why is Toyota involved

Toyota's role goes beyond capital. The automaker, known globally for its production system, has been sharing engineering and manufacturing practices with Joby to help the startup transition from prototype builds to higher-volume production.

For Toyota, the venture represents a bet on new forms of mobility beyond traditional cars. The company has publicly stated its interest in becoming a broader mobility firm, and air taxis fit into that vision alongside its work on autonomous driving and hydrogen-powered vehicles.

Toyota executives have described the Joby relationship as a long-term strategic play rather than a short-term investment.

Where Joby stands on certification

Joby is working through the Federal Aviation Administration's certification process, a critical hurdle before it can carry paying passengers. The company has said it expects to launch commercial service in Dubai ahead of operations in the United States, with plans to begin flying passengers in the coming year or so.

The company has been running test flights and expanding its production facilities. Joby operates a pilot production line in Marina, California, and is building a larger manufacturing plant in Dayton, Ohio.

Joby has also secured partnerships with Delta Air Lines and other operators to bring air taxi service to major cities, positioning short flights from airports to downtown areas as an early use case.

Competition in the air taxi race

Joby is one of several companies chasing the air taxi market. Competitors include Archer Aviation, which has partnered with Stellantis for manufacturing support, and Germany's Lilium, which has faced financial troubles. Boeing-backed Wisk Aero is developing an autonomous eVTOL.

Analysts see the sector as promising but capital intensive, with certification timelines and manufacturing scale being the main challenges. Building aircraft profitably in high volumes has proven difficult even for established aerospace firms, which is why partnerships with automakers have become common.

The Toyota tie-up gives Joby a potential edge in production, an area where startups typically struggle. Toyota's lean manufacturing methods have influenced factories across multiple industries for decades.

Financial context

Joby went public in 2021 through a merger with a special purpose acquisition company. The stock has traded in a wide range since then, reflecting both enthusiasm about the potential of urban air mobility and skepticism about the timeline to profitability.

The company has continued to raise capital through stock sales and partner investments as it works toward certification. Joby has reported ongoing losses, which is typical for pre-revenue aerospace startups.

The joint venture with Toyota does not change Joby's core business model but is expected to reduce execution risk on the manufacturing side.

What comes next

Joby and Toyota have not disclosed all the financial terms of the joint venture, including ownership splits and total investment. More details are expected as the venture takes shape.

For now, both companies say the focus is on getting the first commercial aircraft through certification and into service. If Joby can begin flying paying passengers on schedule, it will become one of the first companies in the world to operate a certified electric air taxi service.

The broader question for the industry is whether demand for air taxis will grow fast enough to justify the billions being poured into development. Toyota's continued commitment suggests at least one major manufacturer believes the answer is yes.