Joby Aviation (NYSE:JOBY), a company developing an electric vertical take-off and landing plane, or eVTOL, was the target of a new report by short seller Kerrisdale Capital.
The analysts at Kerrisdale think Joby Aviation shares will eventually fall to $0. The problem, in their view, is Joby Aviation is a pipe dream and its path to almost certain failure will “incinerate billions.”
The short seller explained, “Even the most advanced lithium-ion (Li) technology can’t simultaneously optimize on the 3 axes of energy consumption: power, capacity, and rechargeability. Joby’s eVTOL requires all 3: immense power for takeoff, landing, and climbing; capacity to enable range; and rapid recharge for efficient refueling. Joby claims its eVTOL will have 100-mile range and a 10,000-cycle life. But we estimate that, constrained by both Li limits and regulatory reserve requirements, maximum range will be 35 miles and the battery will last a few thousand cycles at best.”
The analysts also think Joby’s plan to manufacture the planes at a unit cost of just $1.3 million is naïve and ignores the experience of seasoned airplane manufacturers.
“The combination of unrealistic manufacturing assumptions, naïve demand forecasts, and improbable timelines can be catastrophic for a company trying to produce just thousands of units at million-dollar-plus unit costs. Doubly so for a product that’s so operationally constrained that it has no realistic use cases. The best case for investors here is a rough landing. We think they should be bracing for a nose-dive,” wrote the analysts at Kerrisdale.