Joby Aviation, Inc. (NYSE: JOBY) saw its shares decline 4.5% to $8.445 in early-afternoon trading on Thursday, erasing earlier gains tied to the announcement of its manufacturing joint venture with Toyota Motor Corp. (NYSE: TM). The stock traded near its session low after moving between $8.44 and $9.085, with approximately 38 million shares changing hands. The market capitalization stood at roughly $7.96 billion. The broader market also trended lower, with the SPDR S&P Transportation ETF (NYSEARCA: XTN) slipping 0.9% and the SPDR S&P 500 ETF Trust (NYSEARCA: SPY) falling 0.7%.
Joint Venture Details Revealed
The decline followed a detailed SEC filing that showed the newly formed manufacturing preparation company, Joby Toyota Aero Manufacturing Preparation Company, will launch with just $2 million in total equity. Toyota will contribute $1.02 million for a 51% stake, while Joby will put in $980,000 for the remaining 49%. Toyota will also hold three of the five board seats, giving it control over the venture. The filing did not specify future funding commitments for the joint venture, leaving investors to question the scale and timing of production plans.
Funding Uncertainty Weighs on Sentiment
The modest initial equity—equivalent to roughly 0.03% of Joby’s current market cap—underscores the early stage of the partnership. Furthermore, Toyota’s next $250 million investment in Joby remains contingent on future agreements, including an exclusive manufacturing supply deal and other commercial and intellectual property arrangements. The filing indicates that capital contribution amounts will be determined later through an amended stockholders’ agreement, adding to the uncertainty. Joby reported $2.47 billion in cash, cash equivalents, and short-term investments at the end of the first quarter, but its operating cash use plus property and equipment purchases totaled $222.4 million in the same period, meaning the potential $250 million inflow would cover just over one quarter of its cash burn.
Market Context and Peer Performance
Joby’s decline mirrored weakness across the eVTOL (electric vertical takeoff and landing) sector. Archer Aviation (NYSE: ACHR) fell 1.1% to $4.865, EHang Holdings (NASDAQ: EH) dropped 5.5% to $6.35, and Vertical Aerospace (NYSE: EVTL) slipped 1.6% to $1.81. Eve Holding (NYSE: EVEX) bucked the trend, rising 0.2% to $2.515. The broader market’s negative tone, ahead of the Independence Day holiday, added to selling pressure. The NYSE will be closed on Friday, July 3, making Thursday the last regular trading day for U.S. stocks before the long weekend.
Certification and Exit Risks
The joint venture agreement includes several conditions that could allow Toyota to walk away. These include Joby failing to maintain FAA type or production certification, the FAA declining to approve the JV as an associate site for Joby’s certificate, Joby not purchasing a set number of aircraft, or Joby allowing a third party to handle S4 Series production without approval. The agreement does include written cure steps, but the clauses highlight the certification risk embedded in the manufacturing setup. Joby CEO JoeBen Bevirt noted that Toyota has worked with Joby for nearly ten years, while Toyota Chairman Akio Toyoda described air mobility as a natural extension of Toyota’s mobility focus.
Outlook and Analyst Perspective
While the joint venture aims to advance certified production of Joby’s S4 Series eVTOL aircraft, the limited initial funding and lack of clarity on future capital raises raise questions about dilution. In its latest quarterly filing, Joby warned that it may tap equity or debt for future funding, which could dilute existing shareholders. The $2 million seed money is too small to materially impact the balance sheet, but the structure positions Toyota as a controlling partner in the manufacturing preparation stage. Investors will be watching for further details on milestone-based funding and production timelines as the partnership evolves.
