We are short shares of Joby Aviation, a $4.8 billion development stage aircraft manufacturer that we believe is years away from generating operating revenue and which we don’t expect will ever earn an economic profit. Joby has designed an electric vertical-take-off-and-landing (eVTOL) plane and plans to manufacture and operate thousands of them in a global “aerial ride sharing network” for urban “journeys of 5 to 150 miles… at significantly lower cost” than road, rail, or helicopter.

Underlying Joby’s project is the premise that battery-powered electric flight can be cheaper and safer than current alternatives. But is battery-powered flight even possible? Well, barely. Even the most advanced lithium-ion (Li) technology can’t simultaneously optimize on the 3 axes of energy consumption: power, capacity, and rechargeability. Joby’s eVTOL requires all 3: immense power for takeoff, landing, and climbing; capacity to enable range; and rapid recharge for efficient refueling. Joby claims its eVTOL will have 100-mile range and a 10,000-cycle life. But we estimate that, constrained by both Li limits and regulatory reserve requirements, maximum range will be 35 miles and the battery will last a few thousand cycles at best. That’s not a jet; it’s a science project.

Joby’s plan to manufacture hundreds, or even thousands, of eVTOLs annually at a unit cost of just $1.3 million is only slightly less naive. The production forecast ignores the experience of seasoned airplane manufacturers, which – using the same materials from the same vendors – took years to scale their production lines, and even then barely got to 100 units/year. And that’s at a lower degree of complexity and less rigorous demands for airframe robustness. The cost projection ignores, well, everything: there’s no aircraft the size of Joby’s in the world that can be manufactured at that cost, and Joby’s competitors – who are by no means pessimistic – are projecting a number 3 times greater. Is Joby immune from the laws of manufacturing? We think not.

Nor will it be immune from the laws of economics. Joby claims that fuel and maintenance savings will enable eVTOL flights at a fraction of the cost of comparable helicopter flights. But we broke down the cost of flying and found that the savings are negligible and don’t account for the cost of the battery and the aircraft, which, when considered, make the eVTOL flight more expensive than a comparable helicopter. Just another instance of Joby’s selective math and wishful thinking.

Speaking of which, Joby is guiding to type-certification by 2025, boasting of having completed 3 of the 5 certification stages. But those were mostly comprised of paperwork. Little real-life testing, analysis, and verification (Stages 4 and 5) have been achieved for the purpose of certification, and those make up the lion’s share of time, cost and effort expended in the certification process. It’s clear that it’s still early days in that respect, particularly given that major safety concerns – such as battery fires and rotor-related accident scenarios – have yet to be appropriately addressed. The logistical hurdles of pilot training and air traffic control also remain, both of which may take years to clear given recent FAA proclamations.

Building a plane is not like writing code. The combination of unrealistic manufacturing assumptions, naïve demand forecasts, and improbable timelines can be catastrophic for a company trying to produce just thousands of units at million-dollar-plus unit costs. Doubly so for a product that’s so operationally constrained that it has no realistic use cases. The best case for investors here is a rough landing. We think they should be bracing for a nose-dive.

Read our full report here.