(This June 28 story has been corrected to add that Archer received certification to conduct flight testing of its demonstrator aircraft in paragraph 7)

(Reuters) – Joby Aviation said on Wednesday the U.S. aviation regulator has given the nod for flight testing of its electric air taxi, taking it a step closer to securing approvals for commercial operations.

The California-based company also said Toyota North America’s CEO, Tetsuo Ogawa, will join its board on Saturday. Toyota is Joby’s largest external shareholder, having invested around $400 million in the company.

Joby’s shares soared 26% to $8.04 in the morning trade.

The company plans to begin commercial passenger operations in 2025. Unlike other electric vertical takeoff and landing (eVTOL) aircraft manufacturers, which plan to sell aircraft to customers such as airlines and logistics companies, Joby’s business model is similar to a rideshare app.

Once certified, the eVTOL maker will compete in a crowded market with dozens of other developers such as Archer Aviation and Vertical Aerospace Ltd vying to revamp urban transportation.

Joby said the Federal Aviation Administration (FAA) had granted a Special Airworthiness Certificate, which allows flight testing of its first production prototype without passengers.

Rival Archer received the green signal for flight testing of its demonstrator aircraft ‘Maker’ in 2021. But certification deadlines for eVTOL makers keep getting readjusted, underscoring the challenges that need to be addressed in the nascent sector.

In May, Vertical Aerospace delayed its entry to service by a year to 2026. “We believe the industry as a whole will experience some timeline corrections and we are already seeing signs of peers acknowledging this,” the company said in a letter to shareholders.

Last year, Germany’s Lilium also pushed back its deadline to 2025 from 2024.

Joby’s aircraft will be delivered to Edwards Air Force Base after completing initial testing, the company said. The delivery is part of Joby’s contract with the U.S. Air Force. Under the deal, the company will deliver the first two electric aircraft in March 2024.

(Reporting by Aishwarya Nair in Bengaluru; Editing by Krishna Chandra Eluri and Saumyadeb Chakrabarty)

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