For decades, humans have imagined roaming the skies in flying vehicles to take you wherever you want. The idea hasn’t taken off yet, but with modern technology, flying taxis are moving from science fiction to reality – and they could soon be coming to a city near you.

Archer Aviation (NYSE:ACHR) is one of the pioneers of flying vehicles and one of the companies best positioned to lead the charge in a nascent economy. The company has made serious progress and regulators have also made progress in setting rules and regulations for this emerging form of travel. However, Archer Aviation is still a young company and has work to do before flying taxis become mainstream.

Here’s what you need to know if you’re considering buying shares of the company today.

Archer aims to reinvent urban travel

Archer Aviation is at the forefront of a transportation revolution with its revolutionary electric vertical takeoff and landing (eVTOL) aircraft technology. The company seeks to reinvent urban travel with its Midnight aircraft, designed for vertical takeoff, landing and hovering like a helicopter. Unlike traditional helicopters, eVTOLs use electric motorsoffering a more efficient, quieter and more environmentally friendly mode of travel, perfectly suited to busy urban life.

Earlier this year, Archer reached a critical milestone by successfully executing a transitional flight of Midnight. The plane soared vertically before hurtling forward, reaching speeds of more than 100 miles per hour, transitioning effortlessly from hover to wing flight and back to a smooth vertical landing.

As of early September, Archer had completed an impressive 402 test flights and had made significant progress toward obtain your type certification. This crucial certification will mean the Midnight meets rigorous safety standards, paving the way for commercial flights.

Image source: Archer Aviation.

Archer plans to complete type certification by the end of 2025, followed by production certification, which will allow it to manufacture at scale.

FAA paves way for air taxis

Last month, the Federal Aviation Administration (FAA) unveiled its latest Federal Special Aviation Regulations (SFAR) tailored to propulsion pilot certification and operations. This regulation opens the door for the marketing of Advanced Air Mobility (AAM) travel.

With pilot training and certification protocols now in place, the FAA is setting the stage for a safe and efficient operating environment for these innovative aircraft. Canaccord analysts viewed the decision to provide final regulation before the election as overall positive for the air taxi industry.

What’s next for Archer Aviation?

Archer recently signed a memorandum of understanding with Southwest Airlinesaimed at developing operational plans for electric taxi networks at California airports. As part of this, it plans an air mobility network in Los Angeles, with a launch planned by 2026.

But that’s just the beginning: Plans are underway to electrify key locations in the New York metropolitan area, Northern California and South Florida. Globally, Archer has its sights set on the United Arab Emirates, where it hopes to start operations as early as 2025, and India by 2026.

The company has already demonstrated impressive momentum, with an order backlog of 1,141 aircraft with significant advance payments at the end of the second quarter. Leading the way, the United Arab Emirates placed 475 orders, followed by 300 from the United States and 200 from India.

On November 7, Archer signed an agreement with Soracle, a joint venture of Japan Airlines and Sumitomo Corporation, to bring AAM services to Japan. Under the agreement, Soracle has the right to order up to 100 aircraft, bringing its indicative backlog to more than $6 billion.

So, is the stock a buy?

Archer Aviation is an exciting company developing a completely new form of urban transportation. The upside potential is enormous, with Morgan Stanley projecting that the urban air mobility market could reach $1 trillion by 2040.

ACHR Net Income (TTM) data by Y Charts

The company is still in the early stages of growth, pre-revenue and pre-commercial operations, and significant execution risk remains. For example, any problems during the testing or manufacturing of its aircraft could affect its schedule, delay deliveries, delay revenue generation and potentially increase costs.

For this reason, Archer Aviation stock is ideal for investors with a high risk tolerance and a long-term investment horizon. The stock remains story focused for nowas commercialization and cash flow positive operations are still years away. If you buy the stock, don’t risk more than you are willing to lose and make sure it is part of a well-balanced portfolio.

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Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool recommends Southwest Airlines. The Motley Fool has a disclosure policy.