China recently announced it plans to invest in the development and promotion of Urban Air Mobility. This investment is great news for China’s EHang Holdings Ltd - ADR EH, but the fledgling UAM market could also be an opportunity for other stocks as well.
What Is UAM? UAM is a system of highly automated aviation transport that can transport cargo and passengers at low altitude within an urban or suburban area, according to the FAA.
Related Link: 6 Lidar Stocks For The Autonomous Vehicle Revolution
EHang is a global leader in UAM technology, and CEO Huazhi Hu said China’s emphasis on the industry will help fuel rapid growth in the technology.
“We look forward to offering UAM operational services to the society soon, leading the vigorous development of the industry in China and globally,” Hu said.
China isn’t the only country investing in UAM technology. EHang shares traded higher on Wednesday morning after UAM pioneer Volocopter announced it plans to launch an air taxi service in Singapore within the next three years.
Who Else Wins? In addition to EHang, other drone stocks and aerospace technology stocks could also benefit from the UAM market. Ageagle Aerial Systems Inc UAVS and AeroVironment, Inc. AVAV are two relatively pure-play drone stocks.
Aerospace and defense companies such as Boeing Co BA and Lockheed Martin Corporation LM also have drone businesses, but they represent a relatively small portion of their overall business. Semiconductor stocks like NVIDIA Corporation NVDA and Ambarella Inc AMBA provide the processing power these UAM vehicles will need to safely navigate passengers and cargo.
Benzinga’s Take: Despite the optimistic three-year timeline Volocopter has in Singapore, Bank of America recently estimated that urban air mobility aircraft transporting people less than 50 miles at a time may be developed within 10 or 15 years. Considering how long and difficult the process has been to develop fully autonomous ground transport systems, investors should understand that buying in UAM stocks may be best for those with extremely long-term investment horizons.
Photo courtesy of EHang.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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