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Embraer (ERJ) Gets Nod to Build Electronic Propulsion Systems
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Embraer S.A. (ERJ - Free Report) recently received a nod from regulatory authorities to form a joint venture (JV), Nidec Aerospace LLC, with Japan’s Nidec Corporation. Through the JV, these two companies will co-build electronic propulsion systems for the aerospace sector, thereby promoting sustainable aviation future.
Details of the Joint Venture
Nidec Aerospace anticipates an investment exceeding $77.7 million, with plans to commence mass production in 2026. Per the partnership deal, Nidec holds a majority stake of 51% in the joint venture, while Embraer possesses the remaining 49%.
The partnership deal involves expertise, know-how and resources for the controller from Embraer, while Nidec is tasked with the responsibility of providing expertise, technological knowledge and resources related to electric motors. Going forward, depending on the product’s market availability, the electric vertical take-off and landing (eVTOL) manufacturer, Eve Air Mobility, will serve as the inaugural customer.
Embraer’s Growth Prospects
Concerns about climate change and air quality have fueled the demand for cleaner and greener transportation. This has propelled the demand for electric and hybrid-electric eVTOLs as cleaner alternatives to traditional combustion engine vehicles.
In light of such factors, heavy investments are being made in the Urban Air Mobility (“UAM”) market, which influxes strong confidence in the market’s potential. Per a report from the Markets and Markets firm, the UAM market is poised to witness a CAGR of 33.5% over a period of 2023 to 2030.
Amid this backdrop, the recent JV between Embraer and Nidec Corporation for manufacturing electronic propulsion systems can prove prudent as they are closely tied to global trends in sustainability and transition to cleaner transportation solutions.
Considering the favorable trends, Embraer may substantially benefit from the newly established JV and boost its overall revenue generation prospects as soon as the product becomes commercially available.
Peers to Gain
Apart from Embraer, aircraft manufacturers in the industry that have ventured into the UAM market and stand to gain from the rising demand are as follows:
Airbus (EADSY - Free Report) : Airbus’ CityAirbus NextGen is an all-electric, four-seat eVTOL multicopter concept featuring a wing. It boasts an 80-km range and a cruise speed of 120 km/h, which makes it perfect for zero-emission flight operations for a variety of applications in major cities.
The long-term earnings growth of Airbus is 12.4%. The Zacks Consensus Estimate for 2023 sales calls for a growth rate of 17.8%.
Boeing (BA - Free Report) : Boeing’s subsidiary, Aurora Flight Sciences, is part of Boeing NeXt, an organization that is leading the safe and responsible introduction of next-generation air vehicles for urban, regional and global mobility. Its passenger air vehicle or PAV is a multirotor aircraft designed and developed for Boeing NeXt, which is leading the safe and responsible introduction of on-demand mobility.
Boeing boasts a long-term earnings growth rate of 4%. Shares of BA have risen 40.9% in the past year.
Textron (TXT - Free Report) : Textron’s business segment, Bell, is working on plans to launch an eVTOL, Bell Nexus. Bell Nexus 4EX is a four-duct vehicle, which is configurable in an electric or hybrid-electric platform. With a hybrid platform, Nexus 4EX promises an extended reach to travel farther or to more remote locations based on mobility needs. The company’s other eVTOLs include FCX-001 and Bell AerOS.
TXT has a long-term earnings growth rate of 11.7%. Shares of Textron have risen 20.5% in the past year.
Price Movement
In the past year, shares of Embraer have rallied 30.9% against the industry’s decline of 5.7%.
Image: Bigstock
Embraer (ERJ) Gets Nod to Build Electronic Propulsion Systems
Embraer S.A. (ERJ - Free Report) recently received a nod from regulatory authorities to form a joint venture (JV), Nidec Aerospace LLC, with Japan’s Nidec Corporation. Through the JV, these two companies will co-build electronic propulsion systems for the aerospace sector, thereby promoting sustainable aviation future.
Details of the Joint Venture
Nidec Aerospace anticipates an investment exceeding $77.7 million, with plans to commence mass production in 2026. Per the partnership deal, Nidec holds a majority stake of 51% in the joint venture, while Embraer possesses the remaining 49%.
The partnership deal involves expertise, know-how and resources for the controller from Embraer, while Nidec is tasked with the responsibility of providing expertise, technological knowledge and resources related to electric motors. Going forward, depending on the product’s market availability, the electric vertical take-off and landing (eVTOL) manufacturer, Eve Air Mobility, will serve as the inaugural customer.
Embraer’s Growth Prospects
Concerns about climate change and air quality have fueled the demand for cleaner and greener transportation. This has propelled the demand for electric and hybrid-electric eVTOLs as cleaner alternatives to traditional combustion engine vehicles.
In light of such factors, heavy investments are being made in the Urban Air Mobility (“UAM”) market, which influxes strong confidence in the market’s potential. Per a report from the Markets and Markets firm, the UAM market is poised to witness a CAGR of 33.5% over a period of 2023 to 2030.
Amid this backdrop, the recent JV between Embraer and Nidec Corporation for manufacturing electronic propulsion systems can prove prudent as they are closely tied to global trends in sustainability and transition to cleaner transportation solutions.
Considering the favorable trends, Embraer may substantially benefit from the newly established JV and boost its overall revenue generation prospects as soon as the product becomes commercially available.
Peers to Gain
Apart from Embraer, aircraft manufacturers in the industry that have ventured into the UAM market and stand to gain from the rising demand are as follows:
Airbus (EADSY - Free Report) : Airbus’ CityAirbus NextGen is an all-electric, four-seat eVTOL multicopter concept featuring a wing. It boasts an 80-km range and a cruise speed of 120 km/h, which makes it perfect for zero-emission flight operations for a variety of applications in major cities.
The long-term earnings growth of Airbus is 12.4%. The Zacks Consensus Estimate for 2023 sales calls for a growth rate of 17.8%.
Boeing (BA - Free Report) : Boeing’s subsidiary, Aurora Flight Sciences, is part of Boeing NeXt, an organization that is leading the safe and responsible introduction of next-generation air vehicles for urban, regional and global mobility. Its passenger air vehicle or PAV is a multirotor aircraft designed and developed for Boeing NeXt, which is leading the safe and responsible introduction of on-demand mobility.
Boeing boasts a long-term earnings growth rate of 4%. Shares of BA have risen 40.9% in the past year.
Textron (TXT - Free Report) : Textron’s business segment, Bell, is working on plans to launch an eVTOL, Bell Nexus. Bell Nexus 4EX is a four-duct vehicle, which is configurable in an electric or hybrid-electric platform. With a hybrid platform, Nexus 4EX promises an extended reach to travel farther or to more remote locations based on mobility needs. The company’s other eVTOLs include FCX-001 and Bell AerOS.
TXT has a long-term earnings growth rate of 11.7%. Shares of Textron have risen 20.5% in the past year.
Price Movement
In the past year, shares of Embraer have rallied 30.9% against the industry’s decline of 5.7%.
Image Source: Zacks Investment Research
Zacks Rank
Embraer currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.