Archer Aviation Inc. (ACHR) Earnings Call Transcript & Summary

Thank you, everyone, for coming out to the Morgan Stanley Technology, Media and Telecom Conference. My name is Steve Farr. I sit on the Morgan Stanley Investment Banking side, and we're honored to have Adam Goldstein, the Founder and CEO of Archer Aviation with us today. So without further ado, let's jump right into it. Adam, thank you, obviously, for coming out.

Maybe just start at a high level. For the folks who aren't as familiar with Archer or the eVTOL space, kind of lay the foundation. What are you guys doing? What's the path forward? What's your strategy?

Yes. It's a new aviation company that's focused on building vertical lift aircraft in both the civil side and on the defense side. On the civil side, people call them air taxis used in and around urban environments where you're replacing trips on the ground that take 60 to 90 minutes in a car that you can fly in 5 to 10 minutes. On the defense side, we're looking at new systems that are what are referred to as autonomous and attributable, lower-cost unmanned systems that can help replace or substitute or complement a lot of what helicopters do today in the global militaries.

Perfect. That's great. Maybe sticking on the commercial side, we saw kind of what you guys had announced, I think, earlier last week along inside earnings, but aiming to launch initially in the UAE. And then in addition to that, you kind of announced the launch addition program. Can you give me a little bit more color? What is that? Why are you trying to start with the UAE? What's the path there?

So on the civil side, the industry has actually been around for quite some time. It started back in 2009, really out of the Stanford PhD program. So we're talking 15, almost 20 years at this point, where the technology has hardened. You get this real benefit from switching from piston and combustion engines to electric engines that allow you to build aircraft that are very safe, very quiet and ultimately, you can bring the cost down to a point that makes it affordable to the masses. So helicopters are typically used by the very select few. This is a product that has the ability to be scaled to be used by a lot more. So that's what has created the excitement. In fact, Adam Jonas, who is the Morgan Stanley auto analyst was the first one to write there's a big initiation report on the industry and said, he thought that this was a multitrillion dollar opportunity over the next several decades as it's a product that actually can scale in a way that helicopters never really could. And so our whole mission has been to figure out how to commercialize that technology. How do we start getting that stuff going. And so it wasn't just about that there are safe aircraft that you could build. It's how do you actually get them into the wild. And so in the U.S., the FAA, the regulator is -- it's the biggest regulator in the world, and the U.S. has the biggest aviation market in the world. And so they set the standard for how to certify these aircraft. They created a new category. They called it powered-lift. It's the first new category that was created in 60 years. So it was a big deal. They said, okay, this is important that we need to go create this. It was important because if there is a Tesla-like moment in the sky, it has to be done and built here in the U.S. The next Boeing cannot be built outside of the U.S. and especially there's a lot of concern it gets built in China. So if we're going to have this new big aviation industry, we have to at least give the opportunity to do that here. So bipartisan, House Senate from the White House all the way on down has been supportive of the category. So they make this new category. But then the question was, okay, how do you get through this really intense long certification process. And so we've been chipping away at that now for a long period of time. But what happened was you saw a bunch of other countries actually step up and say, well, there's actually -- this makes so much sense. Would you be willing to come to our countries and launch here first? And that's what the UAE did. So first, the UAE invested in Archer. So Mubadala, the sovereign wealth fund invested in Archer. And then IHC, which is another one of the big funds, $200 billion fund in UAE invested in Archer. So we know we have deep partnership from a financial side and then also on the partnership side, Etihad, Etihad training and a bunch of the other companies within the UAE aviation ecosystem, all partnered with Archer to launch their first. So they gave us a path to be able to launch ahead of the FAA. So I go back to like my core thesis of like starting Archer and what I'm trying to do is how do we actually get the industry started, how do we launch it? How do we start generating revenue and ultimately profit to start the big dream that Adam Jonas laid out in 2018.

Got it. And the first launch edition program, can you kind of double-click specifically, what is that? What are you doing? I know you mentioned UAE. How does that all fit in there?

So when you build complex new pieces of hardware, the early units that you deploy are -- they take a lot of care. And so you want to do it with -- like a partner that you can do that with. And so the UAE said, look, it's important to us that we launch here first. So we will partner with you across the whole spectrum, maintenance, pilot training, infrastructure, government relations, community engagement. And so they'll pay us for doing it, too. So we announced that. So we have fleets that we'll sell. But before we can deploy fleets, we need to put all the kind of core infrastructure in place. So we announced this program, which we call our Launch Edition program, where we will deploy a small fleet of aircraft. So think like 2 to 5 aircraft, and we will also provide a whole layer of services that will come with it, too, to help set the country up for sort of mass deployment. So in this case, it was 2 aircraft. We're going to spend the next 18 months with them helping stand up all the infrastructure around pilot training, maintenance, community engagements, regulatory affairs, kind of the whole works. They're paying us, we said, $20-plus million to do that, so we can start actually recognizing revenue, and we believe it will be margin positive. So it's a way for it to get going, put a foundation in place that we can ultimately use as a playbook to scale. We also said that there are over a dozen countries that I've engaged with that are very interested in doing something similar.

And the ultimate partners for this Launch Edition program, is that only going to be the aviation authorities locally? Or will you ultimately do that with some of your local partners like Southwest and United? How do you kind of plan to -- will that roll out? Is that on a more governmental basis, on a country basis or an individual airline? How are you thinking about that?

So we always partner with both the government and one of the leading operators. And so the beginning part of the rollout is really focused on sales. And so by selling aircraft, it allows us to generate real revenue and ultimately profit. And so this is a journey, multi-decade-long journey. I think if you start pure air taxi, it's very hard to generate substantial revenues. And so you need to turn this into a real business. So we go to the government and say, here's what we're trying to do. We want you to make an investment as a country into the infrastructure to building this out into a real industry. We will partner with your largest operator or one of the big credible operators to help get it done. So in India, we partner with Rahul Bhatia, who is the founder of IndiGo, which is the largest airline, 63% market share in the country. In Japan, it's Japan Airlines. In UAE, it's Etihad and Abu Dhabi Aviation, which is the largest helicopter operator in the entire Middle East. And so we partner with the government plus the large operators, and then we go work out a plan to deploy the first couple, and then ultimately to build out the broader infrastructure need to scale the entire network. Yes, we will do that in the U.S. as well. So if you think about like -- take the perspective of like United Airlines, who's one of our partners. So if we wanted to go launch Newark, right? Newark Liberty International is the airport they have that's located near New York City. That's complicated. It's not like you can just go drop 50 airplanes in Newark. That's a challenging thing. That's a crowded airport. Where the airplane is going to sleep? How is charging going to work? Who's going to actually maintain them? We need to bring airplanes there, too, and go set Newark up for the future. That's going to take time. By the way, we have to be the SFO at LAX, at Dulles, at IAH and on. And so when you start to look at these partners, we can drop, call it, 2 to 5 aircraft at each one of these different locations times a lot of locations globally and start to build up the core infrastructure. So I very much could see a future where the early years of eVTOL, even like the first 5-plus years of eVTOL, the first even 1,000 aircraft that get deployed, get deployed in this fashion, which is pretty incredible because if you can imagine, there were, say, 200 locations and each one had 5 aircraft, it's 1,000 airplanes times $5-plus million per airplane. In this case, you just do the math, it was a lot more than that for the first one. It's a big business, but we haven't even started yet. This is just the infrastructure in place to go launch fleets, 20, 50, 100 airplanes per location.

Got it. And you mentioned, obviously, this sounds like pretty large global scale. UAE is the first focus. When are you going to -- and you're already shifting a ton of focus on the U.S., but where are the go-to markets that you want to start with?

Everybody has -- like these countries all have goals. And so they all have some thing that they want. And so in the UAE's case, they want to be first. That's what they want. So we really try to find countries that have specific things that they want to accomplish and try to offer that. Some countries want to be relevant or the most technologically forward leaning in Europe. Some want to bring Africa into the mainstream from an aviation perspective. Some -- there's on and on. And so we are finding different locations. We will announce more as they come. We announced the first one, and a lot of people were very excited. I think by the time we announced the fifth, sixth, seventh one, people are like, "Oh my God, I actually see what's happening." And so more to come.

Got you. Got you. And then just circling back to the U.S. Where do you anticipate -- I think you've come out publicly and announced SF and L.A. as likely launch cities. What's the status on that? Is that still targeting those regions? Or what are you thinking?

Yes. New York, L.A., San Francisco, Miami are kind of the core with, I would say, probably New York and L.A. is like the kind of the dream cities. They're still coming along. The way that you can think about the launch edition program influencing what's happening in the U.S., I think they kind of go hand in hand. And so I -- this week was in D.C., and I met with the Secretary of Transportation. I met with the FAA administrator, the Deputy Administrator, who's holding a position now and kind of core group in the House and Senate that from an aviation perspective, that matters, Sam Graves and Ted Cruz and that whole group. And my message to them was -- these are American companies using American technology, building aircraft in America, using yesterday's rules to go certify in other countries or to go launch in other countries. We have to do something about that here. We cannot let the U.S. be last to the game here or even late to the game here. How do we create a pathway for the U.S. to get in the game this year? And that's what we're working on. And so I think there's a nice balance between the international opportunities that are trying to get there early and the U.S. with an administration that does not want to let regulation be the thing that prevents us from launching.

And you're seeing them really engage. Obviously, if you were there earlier this week, you're seeing them demonstrate willingness and putting forth time and effort within the FAA to push the certification process forward for the entire industry?

Secretary [ Buttigieg ] never met with me once. I couldn't get meet. He didn't care. It was just not on his agenda. He had other things. Secretary Duffy has been in place for 5 weeks. And within those 5 weeks, there's been incidents that we haven't seen in years, and he already took the time to meet with me. The new administration wants real change. They want to go do things. It was the first time from when I -- I've been going to D.C. for years. It was the first time that it felt like there were real goals and people wanted to do real stuff. I just have not seen that. It was very entrepreneurial the way that I'm used to communicating with people, and it was very invigorating. And I would say I left very hopeful that we're going to go and get stuff done.

That's great. Sounds extremely positive. Maybe touch a little bit on the initial routes launch strategy. You mentioned Newark, picking new SFO, whatever airport you want. What's the initial launch strategy that you're going to have? Is it going to be the Heliport in Midtown Manhattan going out to JFK? Or what's the -- is it going to be those types of routes? Or is it going to be where do you think?

Again, we'll focus on kind of the routes that will matter and the routes that will get the most exposure. So that's why Manhattan is such a good one. Manhattan to JFK, anyone that's -- I lived in New York for 20 years. Anybody that's been in New York knows that's an absolutely painful route. It's 17 miles and takes you 90 to 120 minutes. It's us. And no one enjoys that. You crawl there, you always think, could I spike faster? This is like a really terrible way to get there. And so if you could fly that route in 5 minutes, and it costs you the same as Uber cost you, it does not like super obvious. And so that one, everybody can understand. And so I think we'll focus on routes like that, that people suffer the terrible sort of pains of traffic every day in the biggest cities across the biggest routes. The other one that I think is really interesting and I think will allow the U.S. to showcase are the routes in L.A. for the Olympics. I think the 2028 Olympics is a huge moment for the country and for aviation and for eVTOL as a category to actually like go out and really put stuff out there in the air. So when Billy Nolen was the administrator, he coined the term what you call Innovate '28, which he said, in 2028, we will have mass use of drones and eVTOLs and autonomous vehicles. That was sort of the vision of what we could present. It was America presenting this kind of new vision of transportation. And I think there's opportunity for that. I think the new administration is excited about that. I think it's a chance for like American really showcase something special. And so that's the real driving point for use of these vehicles in mass. If you're going to do that in mass, I need to start doing something this year. Like we got to get moving like now. And so that's a lot of the -- it's a really good anchor point for us to push on.

Yes. So I mean that's a good point, right? If you want to get the L.A. Olympics in '28, where do you guys sit then on the certification timeline in the U.S. with the FAA to make that achievable, right? Like you can't be bleed enough to get approval the day before the Olympics. Like how does that time line work? Where is Archer sit on that?

I think there's -- how long will it take to get through the machine and then there's how much work is there actually to do. And I think the work there is to do is very doable. I think it's a very doable thing. I don't think that's the problem. I think it is very hard to get to that machine. And so I understand there's a long history of safety, which is obviously critical to the industry, to everyone having the comfort of flying. But we also have to find a way to not create an environment where the safest way to do something is never do anything else. If you don't leave the house, you don't have a chance to get hit by a car. If you don't let an eVTOL fly, guarantee won't crash. So we need to find a way to sort of break through some of that. And I think, again, that's what the new administration is focused on is making sure we can advance technologies while maintaining extremely high levels of safety and cutting through a lot of the unnecessary stuff that kind of sits in the middle.

Yes. And that's on the regulatory side. Kind of where are you guys in your certification process on the developmental side?

Yes. So the biggest challenge that we've had on the regulatory side is there's been some industry-wide, they're called issue papers. It's like a very inside baseball term, but industry-wide things that need to be decided to allow us to advance some of these things. The decisions are not hard. It just pick one, left or right, we don't care. And so whichever ways they go, I need to know to make sure I can build the thing so that I can go conform that article to go do the test against that specific system to show that it's safe. If the rule is never established, I can't go do that. So there's things like that, that just need to get made. And I think that's starting to unclog now, but that's the stuff we're focused. So we have built aircraft today with the majority of the systems we understand, but there are some that we still don't have all the final rules against. So we build them what are called at risk, which means we think they're right. We think it will make sense. We don't think anything will change. But until the things are written, you just never know. And so that's where that kind of -- some of the stickiness is. I think that stuff gets unclogged here pretty soon, and then we can just test and get through the process. But that's where we've really shown. There's a couple of ways people have looked at these categories of where on the charts are you. It's a bit of a circular process where you do something, you test something, you learn something and then they kind of like loop you back to the beginning to go do it all over again. And so it's not as linear as it may appear. That being said, I think we are the furthest ahead by far in terms of the amount of stuff we've gotten done largely because of the strategy we took from the very beginning, which was we have built the core IP that we want to own, which is the powertrain and the software, so all the flight controls. And then we work with partners in Big Aero to build systems that are less like IP-driven. So think of something basic as the environmental control system, air conditioning. Like I don't need to go reinvent air conditioning. Like I can use something that Honeywell has made that works, that's great. It cools from the max temperature and like 120-degree heat down to 70, which is like insane. It's fantastic and it's a light system. So it works well for us. The flight control computers, we use Safran. There are thousands of planes that fly around today with Safran flight control computers. They come with very little certification risk to us. Honeywell actuators, same thing. Every plane out there today has Honeywell actuators on them. And so there's just lower certification risk. Some of the parts are even precertified. I literally do nothing. And so it's just -- I can buy down certification risk where if one of the parts doesn't get certified, you are -- your whole aircraft is not certified or if it's taking long for one of those parts, it just takes longer. So what my whole goal was the path to commercialization -- most efficient path to commercialization meant only building the core IP you had to, minimizing with everywhere else. I'm not in the business of trying to invent the best air conditioning system ever created. I don't care. I want to make sure it works, and I want to get the lowest risk possible to get the planes out there.

Got it. Is there a risk because you've certainly seen others have taken a different approach where they want to develop the full stack. Is there a risk that the product that you're purchasing off the shelf isn't the best possible product for the job? Or is that not a risk from your perspective?

Totally. In a lot of cases, it's not the perfect product for the job, but it works. And so it's just -- it's like I like -- I was giving this example to one of my buddies he was like he runs a hedge fund. He's asked that question. I was like, like what's really core and important to your hedge fund. It's like a lot of the IT solutions like it works out at one of these big pod shops. And I was like, are you going to go like redevelop all of that tech? Or like are you going to go like redevelop Bloomberg? Like wow, Bloomberg works. Is it the best? No, it's like Orange and hard to use and cumbersome, but it works really well and everybody uses it, and so it's fine. So for version 1, to me, feels crazy to go try to reinvent all that. So Tesla, they took a Tesla powertrain and shoved it into a Lotus lease, and that was called the Roadster. Apple did the same thing with the iPads, with the iPhones. They didn't build every single component. But by the third generation or fourth generation, they did. So what we've done is looked at things where we isolated. We said, okay, is it important to build the side stick, the inceptor, the sort of the flight stick that the pilot uses. Is that a core piece of IP that will determine whether we live or die in our certification process? No. Is there a solution off the shelf we use? Yes, the A220 side stick from cruise. It's perfect. I can use it off the shelf. I can repackage the box and put it in the plane. I have to do basically no work there. It does not -- there's extremely low risk to that being -- having any type of certification issues. Great. done, one less thing to go build. This is hard what we're doing. And it's the reason why there's only a handful of companies that have actually built and flown planes because it is very hard. So remove as much risk as you can and get the thing through certification. Version 2, Version 3, Version 4, we will vertically integrate all that stuff eventually. It's just -- we didn't need to do it from day 1 to be successful.

Got you.

How dumb would it be if you died as a company because you couldn't get your -- I'm making this up environmental control system certified. It would be like the dumbest thing in history. It's like all this incredible tech, but you couldn't get the one part done, which prevented you from launching, which spirals you into like a crisis. That would just be -- I wouldn't go to myself. That's why we didn't do it.

Maybe pivoting from the civilian side, which I know we've hit on, on to the defense side. You guys have had a lot of partnership announcements as of late, including Anduril most recently, very exciting. Can you dig a little bit more into that? Are you guys are now looking at a hybrid aircraft? Or kind of give me a little bit more.

I'll start with just a 2-second kind of background just for people to understand what -- kind of how this evolved. When the Ukraine war started, it was very clear that a lot of the systems that the West had built on the defense side were built for different time periods and the modern day conflicts didn't necessarily line up. And so $1,000 drone started blowing up $10 million, $20 million tanks. And it was like they called it asymmetric warfare. It was like how -- do we want to use million missiles to shoot down $1,000, $10,000 drones. It's like that's just not very sustainable. And so when they started thinking about retooling for some of these battles, some of the traditional primes don't make drone and counter drone systems. And so Anduril did. And so Anduril was a really good partner with the defense department and sort of the global defense department to go start providing modern-day solutions for modern-day challenges. They also move at the speed of start-up speed. And so they can do things really fast because when the government needs something right away for a conflict, we don't have time to wait 10 years for a new product to be spooled up from a big prime. So then sort of the next phase down was, okay, well, this is happening on the small scale. What about on the larger scale? Because do we want to be putting in very expensive fixed-wing aircraft, F-35s, F-22s into some of these conflicts that are going to go up against low cost, they call them like autonomous and attributable, low-cost unmanned systems. The answer is definitely not. So instead of building a really expensive next-generation fighter, what if we built kind of larger drones that fly alongside the fixed-wing aircraft. And so that's what Anduril was involved with what they called the CCA or collaborative combat aircraft or loyal wingman, and it was these more drones that fly alongside the F-35s instead of building a next-generation fighter. It makes total sense. Trump tweets about it. Elon tweets about it. Why are we building these really expensive systems? The future is autonomous. Elon says in his earnings calls, he even started saying things like everything is going to go electric, including airplanes, like he starts putting that into his core opening pitch, you can start to hear as well. And so it became really clear that we need new primes to be built for the new stuff. And so Anduril won the first phase of the CCA, which put them into the really big time kind of category, and they beat some of the other primes to go do that. So everybody started looking at that and said, "Wow, that's really amazing on the fixed-wing aircraft. What about vertical lift?" So think like rotorcraft. Anything helicopters do, whether it's replacement, substitute complement to that stuff and new types of things. And so we are designing an aircraft that's hybrid with heavy fuels that will be used in the future vertical lift category to -- that will be unmanned system. And so we haven't given a lot of details on it, just given the nature of what we're building. But what I can say is that there's a lot of excitement around it because it's the same kind of concepts of how do you build unmanned lower-cost systems for all the future scenarios that we're going to go face? And how do you do it with a company that can move really, really fast. And how do you do it with a company that has a big growing commercial business that can leverage a lot of the stuff for the defense business. And so we're building the core base aircraft and Anduril is building the kind of mission systems. So think like any of the like, we'll call it, secret systems or fancy radars or all that kind of stuff or any of the type of payloads. So we build -- there's like almost like a customer to us in a way where like we'll effectively sell the aircraft to Anduril, Anduril sells it to the ultimate end customer.

Got it. And obviously, I can't go too deep on the Anduril side and what you guys are developing. But you guys have long been working with the U.S. military, Agility Prime. I think they changed their name now, but development progress on that side of the defense?

Yes. So Agility Prime was a program that was started to help take some of these new technologies that they thought would be useful in the future and figure out ways to introduce them to the defense industry for potential future use cases. The challenge that they found with it was the all-electric solutions didn't really meet any of the use cases that they wanted. And so actually, the deliveries that we had were, in a way, I'll call, there were successes that we delivered them, but there were failures in terms of they didn't leave anything else. It all led to saying, okay, we need to go do something hybrid and something that's a bit more like proven, which is why we did something with heavy fuels. And so they want new applications, but they want new applications that can be trusted, that they can understand, that can meet the missions that they actually want. So Agility Prime is a great program. It's great for us to go. We still are executing against some of those contracts, but that's kind of like not the big time pool. That's sort of like the shallow end of the pool and like the heavy end of the pool is more of like building stuff that can actually go be deployed in like real scenarios where there's like big programs that are -- I think will be coming here in the future around that.

Got it. So I want to make sure we get a bunch of a couple of other topics, too. Andrew, obviously, very, very exciting. How about the Stellantis partnership in your Georgia factory? What's development of that? Where does that all stand?

Sure. So I'll kind of go back in time. So John Elkann has been a big supporter of Archer. John Elkann is the Chairman and largest shareholder of Stellantis. He's also the Chairman and largest shareholder of Ferrari. And so he's sort of -- has a big industrial complex. And he's a huge like enthusiast and just -- he loves all things of technology. And so he's been a great partner for us since the beginning. I think we've been one of the more successful things in his whole portfolio. So Exor is like the big holding company. And so it's provided like a really good relationship. The things that they have been providing to us are actually -- a lot of it is different than I even thought would be in the beginning. So I'll give you some examples. So one of the big focuses that John had was and really just Stellantis as a whole, was financial discipline in building and scaling factories. So like, we have 80 factories. And what we've seen happen with a lot of the EV companies is they go and they overspend on all these factories and then they lose hundreds of thousands of dollars per car. They just can't reach these breakeven numbers. It's very hard to do it. So you have to figure out ways to get your production per square foot as high as possible and your CapEx per square foot as low as possible. And so how do you like build a factory with all that stuff sort of from a standpoint? Again, this is back to like Archer's whole thing was all about commercialization. It was not about building highest flying, farthest flying, fast flying thing. It was how do you actually build a real business here. And so we focused pretty heavily on this stuff. And so literally, they would walk all of our -- even our like prototype factories, and they would say, and there's like a funny example where we -- we have these like lifts where we've used them to put the batteries into the airplane. And they were like, like shininess of this object, like it's literally like it's like a polished metal. They're like, if you had something like a, you were literally fired. Like if you bought something like that, you are fired. Like that is like an excess. And I was like they literally have this for free. The company is trying to sell this thing to us and they gave it us free, like you could -- even it is free. You would never put that on the floor of Stellantis, never. That is like you are saying that we will spend money on this kind of stuff. You have to be wired the opposite way, the most frugal you could possibly be to survive here. So that's the kind of stuff, the culture they're bringing to us, which is, I think, very helpful, financial discipline around manufacturing because if you want to build a lot of stuff, it's very hard and it's very hard to not lose a lot of money doing that. So they've been very helpful there. We've also worked on some of the longer lead stuff. How do you mass scale composites, things like that. Composites are very hard. How do you mass scale like motor production, do it safely. So things like that, wire harnesses. So there's a lot of like overlap in product that we look at that they've already done, noise vibration harshness, NVH. So cars are very quiet, planes are not traditionally very quiet. They have 200 people that do NVH, we have one, right? And so it's like -- and they've done it for 100 years. And so it's like how do we learn from some of the things that they do very well that we can learn from. So they've been an investor, and they're investing kind of more into the manufacturing side of the business. But a lot of what they've been is kind of like our mentor in manufacturing, which has been helpful.

Yes. No, that's great. And they're putting in upwards of what, $400 million over the next couple of years just to focus on the development manufacturing?

Yes. So they've committed to effectively think about it as like reimbursing the labor cost to building out the sort of the scale production side of things. So -- and they're putting -- contributing people as well as dollars.

Got it. And just maybe sticking -- we only have a couple of minutes left, but sticking on the dollar side of things. You guys have done a couple of recent raises, have a very strong balance sheet now. Where does that sit from a cash runway perspective? And what's your expectation for cash use this year?

The goal is to start generating revenue this year with the Launch Edition program in the UAE and then to expand that. We've put out a chart of showing directional guidance in our 2Q '24 shareholder letter showing like how much we can build. It's basically the concept of that was the first 2 years are really about building tens of planes before we scale up. We have to tweak a bunch of stuff, get our manufacturing costs down, figure out how to actually like build aircraft. That was a big focus there and then ultimately kind of scale it up into the hundreds beyond that. So assuming we can deliver against that too, we're in really good shape from a capital standpoint. Also, the defense programs will be interesting to see what happens. So as the core Midnight program matures, a lot of the employee base starts shifting over into the next generation like the defense aircraft. So think about as like the blessing and curse of like Silicon Valley, where it's like super hot, like really fun place to come and work at for aviation company. But then like your product starts to get like more mature, meaning like in 2018, when you're building all the early systems and the architecture, it's like really fun. But in 2025, a lot of that stuff is built. And so it's kind of like the employees are like, well, where do we -- I'm not going to just sit here passing Jira tickets all day. I need fun stuff to go do 0 to 1 projects. So that's what the defense plan also is for them. It's a fun new project, hybrid powertrain. You have to constantly feed sort of -- or you lose the team, right? That's sort of the way Silicon Valley kind of works. And that's why Tesla for a long time would put out a new car every 2 years, right? And so we have that with the defense side. So that's really helpful, too. So it's not like a huge new team necessarily has to grow. You can kind of roll a lot of the people into that. So you can keep the kind of the core cost structure here pretty flat as well as like the investments into CapEx. We've kind of spent a lot of that in the NRE and standing up the supply chain. That being said, we're opportunistic. I'm still one of the largest shareholders, and so I'm very sensitive to dilution of how we think about that. But we're industrializing. And if there's an opportunity to go build thousands and thousands of aircraft, there may be needs to take in more capital to help accelerate that.

Got it. Got it. Well, look, only a couple of minutes left. Let me open the floor if there are any questions from the folks in the room. Happy to address. All right. Well, look, Adam, maybe just to round it out in the final minute we have here. Can you hit a little bit on the team at Archer itself, who you have running each section, kind of their backgrounds, their strengths?

Sure. So the team is about 1,000 people today. And kind of the core, I'll call it, design team has been together for a long time, really since like 2010. And so they've built a lot of these aircraft. And I think that core capability is what like the Anduril partnership was really focused on. It's like we can iterate and build planes pretty much like a new generation of a plane every 2 years. And so that team has done that now at Archer 3 times in a row, so 3 generations of planes in 6 years. And then the team before that did it 5 generation of planes in 10 years. So it's 8 generations of planes in almost like 16 years. So it's a very well-oiled machine, Tom Muniz, who is the CTO; and Jeff Bower, who's the Chief Engineer. So we have a good core group there. And then Joe Pantalone is a gentleman that came over from Lockheed, who ran the advanced programs at Sikorsky. So think about anything you take from Sikorsky, Black Hawk world that gets modified for typically SOCOM type missions. So very analogous to like what we're doing. You take the core base aircraft. You look for different ways to modify like different applications on the defense side. So Joe runs that side of the business as well. And then the manufacturing side, there's a gentleman named Tony Aghazarian, who ran a new product introduction at Apple. So think the space between prototype land and full production land that like middle zone where we're at now. So he ran that for all the biggest products, whether it was iPhone, iPad, iWatch, VisionPro. So kind of a good group of mix between hardcore aviation designers to mass consumer product scalers.

Excellent. Well, very much appreciate it. Thank you, sir. Thank you for taking the time.