Archer Aviation, a company that designs electric flying taxis, sued Joby Aviation, alleging that its rival spent years deceiving federal regulators and investors by concealing extensive ties to Chinese suppliers.
The suit filed Monday in a California federal court alleges that Joby’s actions undermine national security and run contradictory to its branding as an “American-made” air-taxi manufacturer.
Joby has spent more than a decade operating a manufacturing subsidiary in Shenzhen, China, and that entity benefited from technology-development grants directly from the Chinese government, according to the suit. The suit alleges that the company fraudulently disguised aerospace imports from that subsidiary by misclassifying the parts as thousands of pounds of socks, napkins, hair clips and other items.
Alex Spiro, an attorney for Joby, said the company “doesn’t respond to nonsense.”
“Archer’s constant legal issues and flailing business operations have left it no choice but to resort to invented nonsensical theories,” Spiro said in a statement. “We will see them in court.”
Archer alleges that Joby engaged in false advertising in violation of federal law. Archer also alleges that Joby carried out fraudulent business acts that granted it an unfair advantage and are prohibited by California code. The company is seeking injunctive relief and damages.
“Historically, the aviation industry has not sourced parts from China,” Eric Lentell, Archer’s chief legal and strategy officer, said in an interview.
Archer’s suit escalates a long-simmering feud between Archer and Joby, as the companies race to bring electric vertical takeoff and landing vehicles to market. The vehicles take off similar to helicopters and fly horizontally like traditional planes. Industry officials see them as the next frontier of aviation technology, with the potential to upend urban transit and offer new tools to military strategists. In the industry, they are called eVTOLs.
The suit was filed as a counterclaim to a November lawsuit by Joby against Archer. Joby alleged that Archer engaged in corporate espionage by hiring a former employee and that employee downloaded confidential material before his exit. Joby’s suit alleged Archer induced the employee to breach confidentiality agreements and used that information to disrupt Joby’s business partnerships.
In its counterclaim, Archer denied that it had misappropriated trade secrets, induced the employee to breach their contract or interfered with Joby’s partnerships. It has filed a motion to dismiss Joby’s suit.
Joby was founded in 2009 in Santa Cruz, Calif., and its corporate headquarters remains there. The company has built up its operations in the U.S. since that time. In addition to Shenzhen, it also has operations in Germany, Austria and Costa Rica, according to securities filings.
Archer, which was established in 2018, has worked to close the gap. Both Joby and Archer went public in 2021 via special-purpose acquisition companies. LinkedIn co-founder Reid Hoffman and Zynga founder Mark Pincus led the SPAC deal that took Joby public, and Moelis & Co. founder Ken Moelis sponsored the SPAC that merged with Archer.
The companies are jostling to dominate a passenger air-taxi market that some Wall Street analysts say could reach $1 trillion by 2040.
“This is a race for that next great evolution in airspace and what that evolution is going to be,” Lentell said.