Pros/Positives for Toyota Flying Car
If automakers have learned anything from Tesla Inc (NASDAQ:TSLA), it’s that innovation is good for stock prices. It’s easy to win a market that you create. Toyota Motor Corp (NYSE:TM) seems to have taken this lesson to heart, because it’s building…a Toyota flying car.
No, you didn’t misread that.
Toyota really wants to build flying cars. It invested more than $385,000 into Cartivator, a small Japanese firm that is developing the “smallest flying car.” The car is called the “Skydrive.” To be fair, at 9.5 feet by 4.3 feet, it looks more like a large-quadcopter with wheels than it does a car. (Source: “Skydrive,” Cartivator, last accessed June 7, 2017.)
Some of you must have rolled your eyes at the phrase “flying car.” It probably conjures images of science fiction or cartoons, but make no mistake, this is a real trend.
Toyota is not the only one trying to make it happen.
Firms in the U.S., Germany, the Netherlands, and China are also trying to bring flying cars into reality. Google founder Larry Page put his money into one of these companies, and even giant corporations like Airbus SE (EPA:AIR) are working on experimental designs. (Source: “These 7 companies are looking to make ‘flying cars’ a reality by 2020,” Business Insider, June 5, 2017.)
Tesla CEO Elon Musk himself talks about an “electric, vertical take-off and landing” craft that can ferry people back and forth between cities. He considers it the next logical step in transportation technology.
So try to keep an open mind. Good ideas often sounds crazy at first.
Cons/Negatives for Toyota Flying Car
Toyota released a short video of its first “test flight,” and…let’s just say, it did not go well. The thing barely got off the ground before one of the rotors gave out. It crashed back to Earth. (Source: “Takeoff and cruise: Toyota making ‘flying car,’ luxury boat,” Associated Press News, June 3, 2017.)
So don’t expect the “Delorean” from Back to The Future—you won’t see it whizzing about the skies any time soon.
I have yet to see a flying car that looks like a real car. Most of them are effectively small airplanes with wings that fold in. Others look like futuristic helicopters.
While they may be road-worthy in an arcane, technical sense, they bear no resemblance to our basic idea of a car. Here is, for instance, the earliest incarnation of an Airbus “flying car.”
(Source: “Vahana,” A³ by Airbus, last accessed June 7, 2017.)
See what I mean? They didn’t even add wheels to the design. I’m no mechanic, but it seems that would hinder its ability on the road.
Chinese drone operator EHang also falls into the chopper category, except it has a working prototype.
(Source: “EHANG184,” EHang, last accessed June 7, 2017.)
Take this with a grain of salt, but EHang intends to launch a taxi service this summer. The pilot program begins in Dubai, because, well, Dubai is the place where rich people test out their whims. They build islands no one needs, hotels underwater, and give super-cars to their police force. So what’s a few flying taxis, am I right?
Even if you get past the whole “it doesn’t look like a car” thing, flying cars are still a long way from being practical. In order to bring them to market, manufacturers will have to meet stringent safety requirements, which means that it’ll take years and tons of cash to bring this dream into reality.
Conclusion: Trash or Tailwind?
I certainly understand why Toyota is building flying cars. It must have looked at Tesla’s success in popularizing driverless cars and seen its effect on TSLA stock. Tesla’s share price has been on a rocket ride in 2017.
Chart courtesy of StockCharts.com
It’s impossible to disconnect Tesla’s innovation and its surging stock price. The two things are inextricably linked. Of course Toyota wants a piece of that action!
If Toyota can replicate that kind of success—with flying cars rather than driverless cars—of course it should give it a shot.
Perhaps I would have another opinion if Toyota was burning piles of cash. If the firm was investing a billion or two, that would be disturbing. But it only parked around $400,000 in this venture, which is a relatively small amount of money.
Seriously, Toyota’s market cap is $173.86 billion. The flying car investment is a drop in the ocean, yet it opens the stock to enormous upside. Considering that this increased potential comes at such a low cost, I think it was a smart move for Toyota.