M

Global Foundation

May 6, 2021 10:43 PM GMT

Urban Air Mobility

eVTOL/Urban Air Mobility
TAM Update: A Slow Take-Off,
But Sky's the Limit
The MS team decreases the Urban Air Mobility TAM base case to $1tn by 2040, but rolls
out projections until 2050, when the TAM is projected to be $9tn. We don't think investors
are prepared for the scope of this revolution. However, they must consider a host of
regulatory factors that may slow adoption.

Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment
decision.
For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.

M

Global Foundation

Contributors

Morgan Stanley & Co. LLC

Morgan Stanley & Co. LLC

Adam Jonas, CFA

Kristine T Liwag

Equity Analyst

Equity Analyst+1 212 761-1726+1 212 761-2980

Adam.Jonas@morganstanley.com

Kristine.Liwag@morganstanley.com

Morgan Stanley & Co. LLC

Morgan Stanley & Co. LLC

Morgan Stanley & Co. LLC

Ravi Shanker

Matthew Sharpe

Billy Kovanis

Equity Analyst

Equity Analyst

Equity Analyst+1 212 761-6350+1 212 761-5156+1 212 761-2573

Ravi.Shanker@morganstanley.com

Matt.Sharpe@morganstanley.com

Billy.Kovanis@morganstanley.com

Morgan Stanley & Co. LLC

Morgan Stanley & Co. LLC

Morgan Stanley & Co. LLC

Evan Silverberg, CFA, CPA

Eram Zaghi

Madison J PasterchickResearch Associate

Research Associate

Research Associate+1 212 761-4376+1 212 761-5496+1 212 761-3787

Evan.Silverberg@morganstanley.com

Eram.Zaghi@morganstanley.com

Madison.Pasterchick@morganstanley.com

M

Global Foundation

Urban Air Mobility

eVTOL/Urban Air Mobility
TAM Update: A Slow Take-Off,
But Sky's the Limit
The MS team decreases the Urban Air Mobility TAM to $1tn by 2040, but rolls out
projections until 2050, when the TAM is projected to be $9tn. We don't think investors areprepared for the scope of this revolution. However, they must consider a host of
regulatory factors that may slow adoption.
Marty McFly: "Hey Doc you better back up. We don't have enough roadto get up to 88!"
Dr. Emmett 'Doc' Brown: "Roads? Where we're going we don't need…
roads."

North America Industry View

Autos & Shared Mobility

In-LineStanley salesperson for more details. You wouldn't want to miss it.
What's new in this report? Four main items:- From Back To The Future (Universal Pictures, 1985)… And the DeLorean DMC-12 takes off into the air and travels
through time to the date (get this)… Wednesday, October 21st, 2015.
Following our December 2018 Blue Paper, Flying Cars:
Investment Implications of Urban Air Mobility, we undertake
our first major revisit of our addressable market analysis andscenario framework. The work in this report is the product of across sector collaboration between our US Aerospace & Defense
team led by Kristine Liwag, our Transportation and Airline team led
by Ravi Shanker and our Autos & Shared Mobility team led by Adam
Jonas. We also collaborate extensively across the tech stack ofMorgan Stanley Research, including Internet, Semiconductors,
Software, Technology Hardware, Real Estate and other industries tobetter understand the underlying technology and second derivative
use cases.
BUT FIRST…. If you want to learn more about flying cars, comejoin us for the Inaugural (virtual) Morgan Stanley electric
Vertical Takeoff and Landing Aircraft/Urban Air Mobility or
eVTOL/UAM Summit on May 12. Please reach out to your Morgan

1. Updated TAM assumptions, where we allow for a materi-ally slower ramp through 2035 while rolling out the forecast to 2050 (yes, 3 decades from now) to capture the'inflection.' Our global base case Total Addressable Market(TAM) is lowered to $1tn by 2040 vs. $1.5tn previously. By
2050, our base case UAM TAM reaches $9tn which is modestly lower than the global TAM of light passenger vehicle
mobility/miles traveled market today (>$10tn). This forecast
is based on a range of bottom-up estimates from our US
Autos and Transport teams, extrapolated to the global
market on GDP multipliers. Assumptions incorporate substantial improvements in energy storage, autonomy, growthof final mile business models and imply a significant evolution/curation of the regulatory environment to support suchgrowth.
2. Adapted our scenario framework of TAM vs. Regulations/Certification. We want to temper the extraordinarily large
addressable market potential with nearer-term hurdles
related to regulation and certification. "A pitcher of Kool-Aid
is best served with a side of Curmudgeon" as one FAA expertM
we recently spoke with confessed.

Global Foundation

changes to transportation modality don’t so much ‘canni-

3. Introduced a deep-dive into the regulatory and FAA certi-

balize’ the current/prevailing form of transport as much as

fication hurdles. Our mapping of the regulatory side sug-

totally re-invent and re-scale the size of the market itself, fre-gests investors should assume 'horizontal' (pushed to thequently by orders of magnitude.

right) expectations of commercial introduction at least in theearly years while leaving the door open for the 'vertical' inflec-

Our key message to investors: Temper your excitement withtion at some point in the future, which we currently assume

patience. The market opportunity for eVTOL/UAM could be far

is closer to 2040 or beyond rather than 2030. This reportbigger than you think, but we believe it may require decades toincludes an in-depth analysis of the regulatory and certifica-

reach high volume commercialization. We believe investors maytion landscape as well as a close look at important historicalbe significantly underestimating the commercial potential of eVTOL/

case studies of eVOTL safety to offer important context of

UAM over the long term (think 2040 to 2050 time horizon). At thethe hurdles and impediments that must be overcome. To

same time, we would encourage great patience in the early years asquote Elon Musk on innovation: "Prototypes are easy. Scaling

the hurdles of certification are also likely underestimated. The com-

production is hard."

bination reveals a balance of the opportunities and risks of this

4. Explored historical precedents of new transport modali-ties and how it transformed the pre-existing models into an
entirely new modality. We think eVTOL has the potential to
do the same over time. The point we make is that radical

exciting new revolution in transportation that can be considered
today. In our minds, the birth of eVTOL/UAM at scale is not amatter of 'if' but rather when, how and what must be overcome
along the way.

Exhibit 1:

Exhibit 2:

Key Changes to 2040 TAM by End Market ($Bn)

Key Drivers Behind Change in 2040 TAM ($Bn)

Source: Morgan Stanley Research Estimates
Source: Morgan Stanley Research Estimates

Exhibit 3:

Exhibit 4:

Old 2040 Breakout of TAM by Market (%)

New 2040 Breakout of TAM by Market (%)

Source: Morgan Stanley Research Estimates
Source: Morgan Stanley Research Estimates

M

Global Foundation

Contents
6

Executive Summary: A Multi-Trillion $ TAM Must Climb aRegulatory Mount Everest and Requires a 30-Year DCF

11

It's All Been Done Before, Is It Any Different This Time?

12

Urban Air Mobility: Flying Cars ARE Coming… but Why Now?

13

What Developments We Monitor

20 Gating Factors for Urban Air Mobility – What Do We Need andWhere Are We Now?
27 A New Kind of TAM: Expanding the Pie
30 Scenario Introductions – Assessing the TAM for Urban Air
Mobility
33 Morgan Stanley eVTOL/UAM Total Addressable Market Model
40 A Brief History of New York Airways

Morgan Stanley Research

5

M

Global Foundation

Executive Summary: A Multi-Trillion $ TAM
Must Climb a Regulatory Mount Everest andRequires a 30-Year DCF
Striking the balance… As investors enter the world of eVTOL (elec-

Key highlights of this report:

tric vertical takeoff and landing aircraft) and UAM (urban air
mobility) they will face a range of challenges and dichotomies. Onel Adapted scenario framework. Our bull-base-bear analysis ismust reconcile 'the art of the possible' with the 'buzz-kill of thebased on the overlay of TAM potential vs. regulatory hurdles/

reality.' Investors must stare into the abyss of a 20 or 30 year DCF (orenablement through a 2050 time horizon.

more) to truly understand the full potential use cases of this nextl Regulatory and certification deep-dive. The regulatory require-

revolution in aviation, while mapping the labyrinth of rules and certi-

ments for aviation is one of the most underestimated risks. The

fications that shape the aviation market today. A potentially largehigh safety standards of aviation were achieved through regula-number of new businesses (both private and publicly listed) will pop-

tion. Every single aircraft that is in operation in the U.S. must meetulate this landscape in the very short term, with each offering their

FAA standards. Every aircraft that operates in U.S. airspace must

own take on their path to technological efficacy, certification andfollow FAA rules which vary depending on airspace classification.

commercial use cases. Many of these scenarios will prove to be too

Since the 1960s, aircraft and airspace regulation have matured

rosy, flying into the realm of the non-disprovable bull case. Manyand standards have increased regarding safety. We explore the

eVTOL companies may never see an aircraft reach commercial ser-safety/fatality evolution in aviation, key regulations (Part 23 air-vice.

craft, Part 27 rotorcraft, etc) and lessons from precedents such as
the ill-fated New York Airways in the 1960s/1970s.

We offer this report and its content as 'open source' to help set

l Refreshed TAM assumptions in our global eVTOL/UAM

the scene of both the opportunity and the risks inherent in whatmodel. Our 2040 global TAM forecast is actually lowered to $1tn

our teams see as an inevitable path to disrupting the mobility

as we made significant reductions to our adoption curve in themarket. This report represents the most comprehensive refresh ofearly and medium-term years to allow for a greater 'margin of

our assumptions on eVTOL/UAM since the publication of oursafety' given our understanding of the certification landscape in

December 2018 Blue Paper titled Flying Cars: Investment

the US and Europe. For 2030, we reduced our US TAM estimate

Implications of Urban Air Mobility . We have adapted our scenario

by nearly 75% to $12bn from $45bn previously. For 2035, we cut

framework along the orthogonal vectors of Total Addressable

our US TAM estimate by 40% to $66bn from $108bn previously.

Market (TAM) potential and Regulatory/Certification Environment.

On the other hand, as we rolled out our analysis to 2050 for the

The interplay between these two vectors, as well as the ever evolving

first time, we allow for an inflection in TAM adoption for humantechnological substratum (ranging from batteries, propulsion,and parcel use cases which reaches $2.5tn in the US by 2050,

autonomy, comms, etc...) will shape the curve of adoption in ways

extrapolating to $9tn globally.

that simply cannot be forecasted with specificity today. As such, wel What's changed in the market since our 2018 report. We arepresent our work across a range of scenarios and have displayedfollowing improvements in battery energy density (impacting

them over a time horizon that extends as far out as 2050. Some inves-range, noise, speed of charge, economics), autonomy (impacting

tors and industry experts may say 2050 'is too far out,' while others

safety and economics), communications systems (5G and LEO sat

may say 'it's not far enough.' While the journey to a 'Jetsons-like'comms), final mile fleets (accelerated post COVID), far greater

future may extend beyond our professional or mortal lives, it'slevels of capital formation and enhanced national security con-

not too early to contemplate the rapidly unfolding investment
considerations today.

cerns.
l Case studies on previous transport disruptions. Our autos andtransport teams go back in time to study the rail, automobile andairline markets to gain a sense of the scope and scale of transport
disruption as well as the amount of time required to see itthrough.
6

M

Global Foundation

Exhibit 5 :Exhibit 6 :Global TAM Estimates

VTOL Expected Weight and Range Limitations
Range$20,000$18,000$16,000$14,000

200 miles$12,000$10,000$8,000$6,000••••

Human traffic
Regional logistics / freight
Regional supply chain
Complex military comms. and ordnance

•
•
•
•

Majority of AMZN final mile
Search and rescue
Local supply chain
Battlefield••

Surveillance
Truck-borne
drone
Pizza

1 mile$4,000$2,000$0

2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Bull Case

Base Case

Bear Case

500 feet

Source: Morgan Stanley Research Estimates•

Our thought process and modeling philosophy for eVTOL/UAM

2 lbs

begins with a shared mobility model. You can't unlock the true
TAM potential without highly compelling economics. Think of a

100 lbs

1 ton

WeightSource: Company data, Morgan Stanley Research Estimates

20-mile Uber or Lyft ride home to the suburbs after a night in the city.
At an average speed of 25 mph it takes you 48 minutes to get home

Key changes to our US TAM forecast vs. our prior assumptions:at $1.50/mile for a total cost of $30. At 10 trips per shift (a busy day)this can bring in $300 of revenue for the driver or $110k per year.

Autos: Base case TAM by 2040 lowered to $128bn vs. $150bn previ-

With an autonomous vehicle, that revenue flows to the company. But

ously. This is based on 65b n eVTOL miles travelled (vs. 73bn previ-

what if a large drone or autonomous aircraft could make the 20-mile

ously) which implies a 1.5% share of the US vehicle miles travelled

trip at 100 mph and $2.50 per mile? Assuming you'd be willing to pay(VMT) market. Our bull case is raised to $558bn (vs. $344bn) and oura premium for speed, you'd be home in 12 minutes for a $50 fee. Fasterbear case lowered to $10bn (vs. $44bn) representing a widening ofspeeds mean more trips… as many as 40 in an 8-hour shift. Thus $2k

our bull-bear spread to allow for greater variability of inputs.

of revenue per shift and more working hours could yield close to $1.5
million of revenue per year per flying car.

Transport: Base case TAM by 2040 raised to $144bn vs. $92bn previously. Our bull case is raised to $644b n (vs. $149bn) and our bear

And on the freight side… most package drone prototypes cancase rises to $82bn (vs. $64bn). What stays the same: our view ofcarry a maximum of ~10 lbs. Amazon has stated it plans to flyrural and emergency delivery being the first mass commercializabledrones weighing 55 lbs at speeds of 55 mph for packages of 5 lbs or

end-market for drone delivery - we estimate this end market forless. Sikorsky has begun testing autonomous flying technologies on

eVTOLs at ~$39 billion around 2040. What has changed: our view of

its helicopters. A military-grade helicopter such as the Sikorsky

the Urban parcel delivery market is now considerably larger as we

CH53K, however, has a maximum payload of 15.9 tons and can carry

have switched our focus from last mile delivery of urban packages to

up to 37 soldiers. The chasm between military grade aircraft andend customers to middle mile delivery of urban packages from DCs

urban eVTOL and drone technology exists because battery tech-

to delivery stations/stores close to urban areas. This should permit

nology (the primary noise mitigant) is extremely underdeveloped. A

quicker and easier penetration by eVTOLs while providing a much

50-fold increase in the global annual production of electric cars bymore powerful use case than Air and Truck today and unlocks a ~2030 and as much as $100bn or more of capital investment directed$70bn revenue opportunity around 2040. We have also expanded

at the mass production of EV batteries (>100 gigafactories by 2040)

our scope for heavy freight eVTOL delivery from LTL pickup andcould reasonably drive technology and costs to levels that signifi-delivery to include short-haul truck load (TL) and medium duty truck

cantly enable the eVTOL market.

freight.
Airlines: Base case TAM by 2040 lowered to $5bn vs. $39bn previously. Our bull case is lowered to $21bn (vs. $85bn) and our bear casefalls to $7bn (vs. $9bn). We have lowered our Airline TAM bychanging the definition of the end market to be categorized by ASM's
flown by Length of Haul. Given short haul flying is only a very small

Morgan Stanley Research

7

M

Global Foundation

portion of total air travel today (<200 miles is 1% of ASM, 200-500

Military/Defense: We have not made changes to our Military/

miles is <10 of ASM). The opportunity here is smaller than we had

Defense addressable market assumptions at this time and note that

initially expected. However, this can be upgraded if eVTOLs signifi-

our base case of less than $3bn in the US, while important, is a rela-cantly increase their flying range to 500-1000 miles in the coming

tively minute portion of our overall TAM analysis.

years.
Exhibit 7 :2030 Old vs. New Projected TAM by End Market

($bn)

Old

New
$365

$175
$75
$34

$35

$9

$9

$10

$71
$3

$55
$0

Source: Morgan Stanley Research Estimates

Exhibit 8 :2040 Old vs. New Projected TAM by End Market

($bn)

Old

New
$1,474$1,001

$674
$413

$517

$457
$198

$177
$12 $10Source: Morgan Stanley Research Estimates

8

$17

$0

M
Other considerations and assumptions behind our TAM analysis:

Global Foundation

ters: (1) technology and (2) regulation. Our cases reflect several specific areas of technological capability, including payload, range,

The total addressable markets in our base case use conservative

speed, noise, software, connectivity, battery, and unit cost. A number

estimates, with modest increases in our bull case. Our modelof regulatory inputs also shape our scenarios, such as state/local/

embeds the low-end projected speed range of 150 mph by 2040 for

regional government intervention, FAA/EASA oversight, infrastruc-

both the base and bull case. For logistics, we assume freight payloads

ture barriers, and most importantly public acceptance/acceleration.

of >50 lbs beginning in 2035. Our Autos and Shared Mobility Modelassumes steady average growth in occupancy/overall payload

To size the addressable markets in each scenario, we focused on

through 2040 for eVTOLs , yielding an average occupancy capacity

three broad end markets: (1) transporting humans, (2) trans-of 3.5 (3.6 in bull case) , slightly more conservative than what aircraft

porting goods and (3) military & defense. More specifically, wedevelopers project for more mature eVTOL designs. In our "Airlines"

look at markets directly relevant to personal urban/suburban trans-

model for longer distance flights we assume, by 2040, 15% penetra-

portation, final mile shipping/logistics, short-haul airlines, andtion (30% in bull case) of the <200 miles market, 5% (16% in bulldefense. We note that, to avoid double-counting, our TAM forecastscase) of the 200 to 500 mile market, and no share of the 500 to 700

are calculated as the services derived from transporting civilian pas-mile market and no share of any route >700 miles (1% of 500-700

sengers, goods and troops and do not include the hardware and soft-

miles market in bull case and 0% in 700+ miles marke t).

ware sold into the supply chain for the manufacture of the vehicles
themselves.

Battery technology and advanced propulsion architectures suchas distributed electric propulsion will be critical to the UAM

We then extrapolated this US only bottom-up model globally todevelopment . We also consider advances in autonomy from ourestimate the TAM in China, Europe, and ROW. We did this by taking

transport and autos & shared mobility coverage to understandthe relative percentage of GDP our US UAM TAM forecast represents

the path to enhanced economics/payback period, greaterin the US and adjusted across regions for factors such as shared,

uptime, reliability and safety for eVTOL/UAM networks. We

autonomous, and electric vehicle penetration to arrive at the respec-

believe that current Lithium-ion battery technology is largely work-

tive GDP percentages for each region. While we recognize comparing

able and will near-term be "fit for purpose" to support EV adoption.

terrestrial ground transportation penetration to UAM may not be

However, we believe that a material change in battery technology

entirely apples to apples, we believe they are solid proxies, given thewill be needed to achieve the levels of charge rates, cycle life, andoverlap of AV / UAM technologies. The markets that are relevant

capacity that companies are targeting. Potential battery technolo-

to the UAM ecosystem represent just over $1.0 tn of potential

gies include lithium sulfur or solid state lithium ion batteries, both ofglobal economic value in our base case.

which are years away for operation in terrestrial vehicles, let alone
electric aircraft. In our view, the push for electric vehicles to reach

Exhibit 9 :cost parity with internal combustion engine vehicles will accelerate

UAM TAM Scenario Framework
Accomodative
Regulation

the demand for advanced battery technologies over the coming
decade.

An Aerial Society

Heavy Batteries Keep the
Flying Car Grounded

Regulation and a host of other legal and behavioral factors

Regulation outpaces advancements
in techAdvancements in tech accelerate
regulatory posture

BULL CASE

create a formidable and complex set of obstacles. Nevertheless,we see the development and early commercialization of surface
transport autonomous networks (shared autonomous cars) as an
incubator and accelerator for the framework of regulation, businessmodel and consumer acceptance of flying car tech.

Underdeveloped
Tech

DevelopedTech

The Drone Didn't Sprout
Its eVTOL Wings
Tech/regulation evolve too
slowly for disruption

Baby Steps into the Sky
Major tech advances, but
regulatory delays disruption

BEAR CASE

BASE CASE

To assess the Global Total Addressable Market for UAM webegan with our bottom up forecast of the US Total Addressable

Obstructive
Regulation

Market. Our forecasts are based on scenario analysis with bull,bear, and base total addressable market (TAM) outcomes, given

Source: Morgan Stanley Research

the long-term time horizon and myriad unpredictable technologicaland policy vectors. We roll these vectors up into two broad parameMorgan Stanley Research

9

M

Global Foundation

Base Case: Baby Steps into the Sky: Well developed TAM/

cost-effective, time-efficient method of traveling short toeconomic paybacks gated by highly stringent path to certification. In

medium distances, eventually taking share from car and airline

this case, we envision the technology and capital formation out-

companies. The market opportunity beyond 200 mile range drops

pacing the certification time line, regulations and infrastructure.

off considerably in our base case, leaving the existing airline

Widespread eVTOL/UAM adoption is frustrating ly low throughmarket little changed.

most of the decade even though the technology and pace of pro tol Freight Transportation ( $5.3tn) – Transporting goods: The

typing may make major advances. Global Total Addressable

opportunity is much nearer term than transporting humans, espe-

Market: ~$ 1tn by 2040 and $9tn 2050 (~5 to 6% of projectedcially with smaller, more lightweight drones. While rural parcel

Global GDP).

delivery is likely to be the first and most attractive end market for
eVTOLs by the middle of this decade, by 2050, the real accelera-

Bull Case: An Aerial Society: Economic rationale more clearly evi-tion in Freight TAM comes from Urban parcel delivery and short-dent and taking a far larger share of surface transport market, bol-haul heavy freight. As eVTOL capability improves (especiallystered by relatively more accommodative policy and path torange of 500 miles or more and payload of 1000-10000 lbs), thecertification. eVOTL / drone transportation of goods and people

freight opportunities really open up. We see the opportunity forachieves high levels of mass acceptance and adoption, but again withurban parcel delivery largely coming from the linehaul, middle-

the inflection still closer to a decade away. Technology accelerates

mile move (DC to store/delivery station) rather than directly intoand becomes cost effective for both consumers and businesses; itcustomer homes in cities, which should reduce the likelihood orproves more efficient than existing transportation models. Policy isrunning into operational and regulatory hurdles of flying into

flexible and infrastructure is readily available or easily adapted.

dense urban areas. We also target short-haul freight and good

Regulatory posture encourag es eVTOL / drone usage and adapts tomovement currently targeted by medium-duty trucks and LTL car-changing consumer / final mile business demands. Global Totalriers (palletized freight) though we note that this would need

Addressable Market: ~$4.4t n by 2040 and $18.9tn by 2050 (~11

upgraded payload capacity by 2050. We see greater size andto 12% of projected Global GDP) .

speed-of-adoption potential in freight vis-à-vis human transport
at this stage.

Bear Case: The Drone Didn't Sprout Its eVOTL Wings:
Underdeveloped / unsuccessful technology combined with obstructive policy. Mass rejection / minimal adoption of eVTOL / drone transport of goods and people. Technology stagnates as it is not costeffective for consumers or businesses. It is less efficient than current
transportation models and encounters critical technological barriers
to adoption (weight, noise, range, payload, safety, etc.). Policy is
restrictive and infrastructure cannot support adoption. Regulations
hinder eVOTL / drone usage and impede widespread global adoption.
Global Total Addressable Market: $ 359b n by 2040 and $2.3tn
by 2050 ( ~ 1 to 1.5% of projected Global GDP) .
Our base case Global Total Addressable Market of $ 9tn by 2050

l Military & Defense ($12bn) – Transporting troops/supplies:

The total addressable market for Military and Defense is muchsmaller than the other sectors because we model the market as
a function of US military (DoD) spend. On a relative basis, this isa much smaller revenue pool (~$1bn today) versus the potential
for operating a fleet of autonomous aircraft at a cost of $2 permile. We still view military and defense applications as anextremely important accelerant for UAM technologies, similar to what DARPA and the military did for autonomous
driving in the early 2000s.

Exhibit 10 :assumes significant technological advancement and business

UAM Global Total Addressable Market (Base Case)model development gated by regulatory/policy hurdles and,

$10,000

ultimately, a supportive government/social response. The$8,000breakdown of our 2050 TAM forecast is as follows:$7,000$9,000$6,000$5,000l Autos and Shared Mobility ($3.7tn ) and Airlines ($51bn) –$4,000Transporting humans: We assess the opportunity for a growing$2,000fleet of electric, shared, and autonomous eVOTL aircraft or other$1,000large terrestrial drones. We see the market beginning as an ultraniche add-on to existing transportation infrastructure, similar tohow helicopters operate today. It eventually transforms into a
10$3,000$0

2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050

US
Source: Morgan Stanley Research Estimates

China

EuropeROWM

Global Foundation

It's All Been Done Before, Is It Any Different
This Time?
Vertical lift aircraft to connect urban centers and airports and avoid
ground traffic is not just a theoretical concept. New York Airways

Back To The Future Or Back To 1962?

operated helicopter connections to Wall Street, Midtown
Manhattan, and nearby airports for 30 years. It took only 5 minutes

The debate around Urban Air Mobility today is shaping around theto fly from LaGuardia Airport (LGA) to Wall Street, 10 minutes to flysame debate as in the 1960s. Many of the marketing materials of

from the PanAm Building (now the MetLife Building) in Midtown

eVTOL companies today echo New York Airways’ 1962 commercial:

Manhattan to John F. Kennedy Airport (JFK), and 16 minutes to fly

https://vintageairliners.com/the-skyline-route-videos/.

from JFK to Newark Liberty International Airport (Newark).

selling points are short travel times and costs comparable to ground

The

key

transportation.

Bankruptcy After Helicopter Crash In 1977 and Fuel
CrisisThe debate from opponents and detractors for urban air mobility issimilar to what occurred in 1964 when New York Airways wanted to

New York Airways is now a distant memory since its last operation

expand operations to the PanAm Building.

was 42 years ago when it filed for bankruptcy in 1979. The airline wasunable to recover from the helicopter accident at its heliport atop the

From A New York Times Article In 1964:

Pan Am Building (now the MetLife Building) in Midtown Manhattan
in 1977 and the fuel crisis of 1979.

“…opponents had charged that the operation would be unnecessary,
unsafe, noisy, distracting to motorists, serve private interests andretard other city plans for heliports along waterfront areas.”“The manufacturers accused the opposition of making exaggerated
and alarmist statements based on ignorance and misinformation.
They described elaborate tests and preparations made to insure thesafety of proposed scheduled flights from the roof.”

Morgan Stanley Research

11

M

Global Foundation

Urban Air Mobility: Flying Cars ARE
Coming… but Why Now?
A confluence of economic and technological factors are intersecting,are critical to unlocking greater range, lower cost and lower

such as improved battery efficiency, artificial intelligence, and satel-

noise. Advancements in DC fast charging batteries (and infra-

lite communication along with a need for more convenient transpor-

structure) are also critical.

tation with zero emissions. These considerations, coupled with large

2. Improved autonomy. Autonomy is now being industrialized

amounts of capital infusion, should accelerate the adoption of auton-

at automotive scale through improvements in sensors and AI/

omous, electrified urban air mobility over our 2050 time horizon.

ML. Advancements in the state of the art of terrestrial
autonomy directly apply to pilot removal in UAM which is

Ride-sharing and aerospace companies are leading the charge andshowing that there are more ways to transport people and goods inwidely seen as a less difficult environment in airborne navigation vis-à-vis roads.

a more efficient and economic fashion. In our view, if you are bullish

3. Final mile as an ‘essential service.’ Post-COVID, the role ofon autonomous and electric vehicles, then you are bullish on

logistics in e-commerce/software enabled retail is clearly evi-

Urban Air Mobility as the technologies are extremely comple-

dent. Look for governments assessing sweeping multi-de-mentary, albeit a different time frame.

cade infrastructure projects to give greater consideration to
UAM transport modalities from heliports, to the grid, spec-

What's changed since our 2018 report? Over the past year we havetrum, free air space/ATC, building codes and other regula-

witnessed a number of drivers that contribute to a greater relevancetions. We look for movement of non-human cargo in earlyof the eVTOL/UAM market by investors. Many of our clients may,years to trail-blaze the eventual business models of humanunderstandably, chalk the excitement around flying cars to free

UAM transport.

money and a frothy market environment. Oh sure, that helps… but

4. Development of 5G/LEO sat comms. The role of players like

we believe there are bigger forces at work and worth investor atten-

SpaceX, Kuiper and a host of other mega-satellite constella-tion today.

tions (for comms and EO/metrology/next gen GPS) is a key
enabler for the safe, redundant, resilient and cybersecure

Since the publication of our Blue Paper titled Flying Cars: Investmentcommunication with a proliferating number of airborne vehi-

Implications of Autonomous Urban Air Mobility more than two years

cles.

ago, there have been some significant developments that contribute

5. The climate/ESG revolution. As cars, trucks and delivery

to accelerate the dawn of commercialization of UAM potentiallyvans undergo a rapid transition off of fossil fuels, the next

faster than we originally anticipated. At the same time, however, afrontier for sustainable propulsion is seen as aviation. Major

deep analysis of the prevailing regulatory frameworks tempers thetech firms developing their own in-house drone/UAM logis-

pace and ramp of the adoption, at least in the early years. We high-tics ecosystems (i.e., Amazon Prime Air which got FAA

light 6 key developments below:

approval to carry out drone delivery last year) will seek zeroemission solutions.

12

1. Improved battery energy density… driven by tens (if not

6. Enhanced national security considerations. Do we reallyhundreds?) of billions of investment funded by some of theneed to elaborate here? Let’s just say the words ‘dual-pur-world’s most valuable companies. Improvements in WH/Kg

pose’ and leave it at that.

M

Global Foundation

What Developments We Monitor
In addition to these recent developments, we watch and monitor four

COTS vs. In-House Design

items: 1) Aircraft Technology, 2) Safety Concerns, 3) Regulatory
Hurdles, and 4) Profitability/Business Model.

New York Airways operated off the shelf FAA certified helicoptersthat already had their histories of operations. New York Airways flew

1) Aircraft Technology

the Boeing Vertol V-44, Boeing Vertol 107, and the Sikorsky S61.
What is different with the UAM companies today is that most aredeveloping their own aircraft. Many of UAM companies today do not

Electric Aircraft and Improvement in Batteries

have any history in aircraft certification.

Noise concern about operations in an urban area is the same this time2) Safety Concerns

around vs. in the 1960s. However, we've seen key improvements inaircraft technology, particularly with electric motors. Electric motors
are quieter than combustion engines, but low battery density histori-

Considering that the FAA and New York authorities permitted the use

cally limited the application of electric motors in aviation. Batteryof the helipad atop the PanAm Building, the onus is now on theevolution is enabling the practical use of electric motors in aircraft asindustry to prove the safety of operating aircraft in an urban environ-increased battery density is increasing range and payload of electric

ment. Safety concerns regarding frequent flights in dense population

powered aircraft. The shift to electric motors plus improvements inareas remain a significant concern for urban air mobility providers

rotor design paved the way for quieter aircraft. Some Urban Air

just as it was a concern for New York Airways. Not only will the focus

Mobility aircraft are promising a 20 decibel reduction in noise com-

be on aircraft and passenger safety, but also the safety of people inpared to conventional helicopters. There remains a debate on

the flight path. Public support for Urban Air Mobility providers could

whether the battery density and weight advancements are enough towane if the industry were to see another accident like in 1977.

operate these electric aircraft within FAA standards for the routes
marketed.

Aviation today is the safest mode of public transportation. The
industry’s safety record is attributed to strict regulatory standards

Better Field Performanceon aircraft capabilities and aviation, which we will discuss in theRegulatory Hurdles portion. If Urban Air Mobility operators eventu-

Helicopters initially were not designed to have frequent starts andally replace significant ground transportation travel, the industry

stops. Helicopters from the 1960s were operated to minimize starts

could shift from a niche mode of travel to that of mass transit.

and stops in order to have operational efficiencies. Modern helicopters have overcome many operational reliability issues regarding fre-What’s the Accepted Level of Risk?

quent starts and stops on engine cycles. However, an Urban Air
Mobility aircraft that is purposefully designed and optimized for fre-In this case, the key question is, what’s the accepted risk rate for urban

quent starts and stops and short turn-around times could provide

air mobility in the long-run? Will the industry be held to the same

better field performance.

standards as aviation today or will the industry be held to the safety
standards similar to automobiles?

Advancements in Materials, Software, andManufacturing

The Safety Evolution of Air Travel

In the past 60 years, we have seen significant advancements in air-

In 1960, it was safer to travel by car than travel by commercial flight.

craft technology since the beginning of the jet age with advance-

According to data from the U.S. Bureau of Transportation Statistics,

ments in aerospace grade materials like carbon fiber, automation in

the fatality rate in 1960 was 44.16 per 100 million aircraft-miles trav-

flight control systems, fly-by-wire instruments, more efficient manu-

elled with U.S. Air Carriers vs. 5.06 per 100 million vehicle-miles infacturing processes, etc. These advancements could mean that air-cars. However, travelling by airplanes has become significantly safer

craft could be lighter and more energy efficient and easier totoday. In 2019, the fatality rate per 100 aircraft-miles for U.S. carriers

manufacture.

was 0.05 vs. 1.11 per 100 million vehicle-miles for cars. This is a partic-

Morgan Stanley Research

13

M

Global Foundation

ularly impressive feat considering that aircraft-miles traveled grew 7

bility, trim, stability, stall characteristics, vibration, buffeting and highfold in that period. Aviation transformed from the least safe mode of

speed characteristics, performance in icing conditions, etc), structure

travel to the safest mode of travel.

characteristics (structural load, aeroelasticity, etc), etc.

Exhibit 11:

One important aspect of certification is that manufacturers need to

Fatalities per 100 Million Aircraft/Vehicle-Miles

decide if they are certifying their Urban Air Mobility aircraft as a fixed

Fatalities rates per 100 million aircraft/vehicle-miles

wing or as a rotorcraft. Depending on this path, there are different
certification requirements. See below more details on Part 23

50.00
45.00

Aircraft Certification and Part 27 Rotorcraft Certification.

40.00
35.00
30.00
25.00

Part 23 Aircraft

20.00
15.00
10.00
5.00
0.00

2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1985
1980
1975
1970
1965
1960
Motor Vehicle Safety Data

U.S. Air Carrier Safety Data

Transit Safety and Property Damage Data

Fixed wing aircraft that weigh 19,000 pounds or less and with 15 or
fewer passenger seats must be certified under the FAA’s Part 23
Airworthiness Standards for normal category airplanes. The safety

Source: Bureau of Transportation Statistics

3) Regulatory Hurdles

parameter for Part 23 is a one in a ten million chance of an accident.
For more details of the requirements - see here.

Part 27 Rotorcraft
The regulatory requirements for aviation is one of the most underestimated risks. The high safety standards of aviation were achieved

Rotorcraft with maximum weights of 7,000 pounds or less and ninethrough regulation. Every single aircraft that is in operation in theor fewer passenger seats must be certified under the FAA’s Part 27

U.S. must meet FAA standards. Additionally, every single aircraft that

Airworthiness Standards for normal category rotorcraft.

operates in U.S. airspace must follow FAA rules. FAA rules varydepending on airspace classification. Since the 1960s, aircraft and air-For more details of the requirements here.

space regulation have matured and standards have increased
regarding safety.

EASA Special Condition for eVTOL

FAA Aircraft Certification

EASA provided its Special Condition for eVTOL and Means ofCompliance. Historically, EASA has been more stringent regarding

Just because an experimental aircraft can take off, fly, and land safely

operations in urban environments for rotorcraft and single engine

does not necessarily mean the aircraft is airworthy for passenger use.

piston aircraft. It is no surprise that it has taken a stricter view on

The onus is on the manufacturers to prove to the FAA that their air-eVTOL due to expected operations in dense urban areas. The safety

craft is safe for passenger use.

parameter under EASA is similar to large commercial aircraft transport with a one in a billion chance of an accident. For EASA's proposed

The FAA requires the manufacturers to understand the normal oper-

means of compliance, see here.

ating performance of their product and for the product to meetindustry standards on safety. This requires understanding the air-Airspace Challenges and Air Traffic Control

craft’s capabilities and limitations. Manufacturers must prove what
is normal operating performance for the aircraft and that its perfor-

All US airspace is regulated. There is no such thing as unregulated

mance conforms with industry standards. The manufacturer must

airspace. However, rules around different airspaces vary depending

prove that a single failure in the aircraft system does not prevent con-on location. Since the 1970s, air traffic has now become a mass formtinued safe flight and landing of the aircraft.

of transportation. Busier skies mean that regulating air traffic has
become more mature. Lessons learned from historical accidents

The certification could include testing of the aircraft’s operating per-have led to regulation changes in order to improve safety. For lessons

formance like the aircraft’s flight performance (takeoff performance,

learned from civil aviation accidents, see here.

climb requirements, landing, etc), flight characteristics (controlla14

M
Challenges Around Dense Urban Environment

Global Foundation

Exhibit 12:
US Airspace Classification

Areas near airports and dense urban environment are generally classified as Class B airspace. In the New York area, Class B airspaceencompasses almost the entire New York metro area including partsof New Jersey and Connecticut. All operations in Class B airspacerequire Air Traffic Control (ATC) Clearance. Class B airspace is visually like an upside-down tiered cake. Navigating the air space restrictions in order to offer convenient flights to passengers will be achallenge for the Urban Air Mobility providers.

Air Traffic Control Clearance
Unlike the auto industry where drivers can freely travel from
Hoboken to Manhattan without seeking permission from theSource: Federal Aviation Administration

Understanding VFR Corridors

Department of Transportation, depending on the flight path and altitude of operations, an aircraft operating the same route may need

For illustrative purposes, see the Terminal Area Chart (TAC) for the

specific ATC permission for every flight. Additionally, the current ATC

New York Area on the following Exhibit. What this chart shows in thesystem is not equipped to handle the expected volume predicted bylarge circle overlays is the Class B Airspace. The numbers on the chart

Urban Air Mobility companies.

direct where VFR could operate. For example, the area around
Governor’s Island is encompassed in a section labeled 70/13. This

Visual Flight Rules (VFR)

means that aircraft in the region cannot fly above 1,300 feet in altitude without entering Class B airspace. Additionally, some areas also

However, there are lower altitudes 5 miles outside of airports thatfall under Special Flight Rules Area (SFRA).

may be accessible under Visual Flight Rules (VFR) or Special Visual
Flight Rules. This is currently how helicopters operate today without

Minimum Altitude Requirement

ATC clearance. Under VFR, the pilot can operate the aircraft withvisual reference to the ground and avoiding other obstructions and

Depending on the area, there may also be a minimum altitude

other aircraft visually. Pilots also need to have statute miles visibility

requirement. The general rule is 500 feet above the surface.

and at least 1,000 foot ceilings. Operating purely on VFR could be

However, over open water or sparsely populated areas, the aircraft

challenging in areas where visibility is challenged due to bad weather.

must not be closer than 500 feet to any person, vehicle, vessel, or
structure. In congested areas or open assembly of people, the min-Fixed wing and rotorcraft that operate in the VFR corridor do notimum altitude is 1,000 feet above the highest obstacle and 2,000

need to have ATC clearance. However, at any point that the aircraft

feet horizontal radius. These rules could vary for fixed wing aircraft

enters Class B airspace, Class B airspace ATC rules apply.

and rotorcraft depending on the location of operations.

Morgan Stanley Research

15

M
Exhibit 13:
Terminal Area Chart for New York

Source: Federal Aviation Administration

16

Global Foundation

M

Global Foundation

Exhibit 14:
Terminal Area Chart for Los Angeles

Source: Federal Aviation Administration

Morgan Stanley Research

17

M

Global Foundation

Exhibit 15:
Terminal Area Chart for San Francisco

Source: Federal Aviation Administration

Exhibit 16:
FAA Requirements for Airspace Operations

Class Airspace
Class AClass BClass CClass DClass EClass G

Entry Requirements
ATC clearance

ATC clearance

Two-way radio communications
prior to entry
Two-way radio communications
prior to entry
None for VFR
None

Source: Federal Aviation Administration

18

Equipment*
IFR equipped

Minimum Pilot Certificate
Instrument rating

Two-way radio, transponder
with altitude reporting capability

Private-(However, a student orrecreational pilot may operate atother than the primary airport if
seeking private pilot certification and if
regulatory requirements are met.)

Two-way radio, transponder
with altitude reporting capability

No specific requirement

Two-way radio

No specific requirement

No specific requirement
No specific requirement

No specific requirement
No specific requirement

M
Zoning for Heliports/Vertiports and Flight Paths

Global Foundation

What’s surprising to us is that we did not see any successors to New
York Airways. In our view, this reflects the challenges in operating

Another regulatory challenge for Urban Air Mobility operators is thethis business model and it remains to be seen how newer players willzoning for the location of heliports/vertiports and approval of their

be different. That said, the ride sharing evolution could change theflight paths. State and local government will need to provide permis-

long-term business model of the Urban Air Mobility industry.

sion for takeoff and landing sites and municipalities and other stakeholders like landowners would need to be consulted. Additionally,

While it may take decades to fully develop the UAM economy, we

any accidents that highlight the safety risks of living in flight paths

believe it is not too early for investors to contemplate the con-could change the possibility of community acceptance and state andsiderations right now. In many of our simulations, we can come up

local government approval.

with more miles traveled than cars and potentially more units soldthan cars over time. While Tesla CEO Elon Musk has historically dismissed UAM transport modality (citing truly legitimate concerns of4) Profitability/Business Model

noise, privacy and general annoyance) we would not bet against Tesla
unveiling a concept in the UAM arena in the near future. In fact, we

One of the key questions for the Urban Air Mobility providers is if

see it as a natural extension for sustainable electric transport andthey can lower the operating cost enough and build a profitable busi-

autonomy. But again, to our knowledge, the company has not com-ness model. New York Airways offered helicopter rides cheaper thanmented recently on this topic.

taxi fares.
Morgan Stanley has assembled a cross-sector research team to track
According to Bloomberg, in 1962, riders could go from Newark to

key developments on the UAM market and will continue to monitor

Wall Street by helicopter for just $6 as opposed to an $8 cab ride or

events closely. Urban Air Mobility adoption comes down to 5 pri-from Newark to Idlewild (now JFK) for $9 instead of paying $19 for amary drivers:

cab. New York Airways received subsidies from the U.S. federal government. New York Airlines filed for bankruptcy in 1979 as the com-

1. Technology (Autonomy, 5G, Energy Storage)

pany was unable to recover from the 1977 PanAm Building accident

2. Regulation/Consumer Acceptanceand the 1979 fuel oil crisis. Similarly, many Urban Air Mobility pro-

3. Capital Formation

viders are targeting prices comparable to an Uber Black ride.

4. Sustainability/Building Road Congestion
5. National Security

Exhibit 17:
The 5 Core Drivers of Urban Air Mobility Acceleration

Regulation/Consumer
AcceptanceTechnology

Sustainability& Traffic Congestion

Capital Formation

National
Security

Source: Shutterstock, Morgan Stanley Research

Morgan Stanley Research

19

M

Global Foundation

Gating Factors for Urban Air
Mobility – What Do We Need andWhere Are We Now?
Exhibit 18:

in battery technology in likely a non-linear manner. Electric motor

UAM Key Accelerants

size, weight, and advanced propulsion techniques are meant to help
compensate for the inherent disadvantages in battery energy density
vs. gasoline that are more limiting in aircraft applications than in
automotive applications. Sensors, compute power, and software aremuch further developed, to our knowledge, due to military applications, and current advancements in autonomous vehicle technology.
In aviation, two additional differences versus cars are weight requirements and reserve energy requirements.

Source: Morgan Stanley ResearchTechnology

Weight of the aircraft is very important in aviation as it is one of theforces acting on an aircraft. Weight pulls the aircraft downward dueto the force of gravity. The heavier the aircraft, the more lift the aircraft needs to generate in order for the aircraft to fly. This could

Unmanned aircraft technology has been a domain for military appli-require a larger airframe. A heavier aircraft may also need more pro-cation for decades. In recent years, there have been a rapidly growing

pulsion and currently, increased thrust generally means morenumber of startups and efforts by established aerospace and tech-weight. Therefore, the weight of the battery is even more importantnology firms who have directed resources towards all-electric

in aviation than in autos.

unmanned aircraft. To our knowledge, battery technology as appliedin drones and unmanned aerial vehicles is near parity with the cost,

Cars can pull over if it runs out of energy. Meanwhile, aircraft needsafety and energy density of lithium-ion battery technology used in

to be able to land safely. Aviation regulation is structured to provide

electric cars. However, the force required to move a car on wheels

safety for passengers and also for bystanders. Therefore, there are

and axles against its 2 primary forces of friction (rolling resistanceadditional safe operating parameters and reserve energy require-

and aerodynamic resistance) enable rather massive batteries to pro-ments for aircraft to ensure that if something were to go wrong, thevide power and range. In short, if you want to add range to an electric

aircraft could land safely. This means that the compliant operatingcar… just add a bigger battery (with cost… or financial friction…

performance of an electric aircraft could be significantly below the

being the primary barrier).

maximum capacity.

For aircraft, batteries are an unorthodox choice of stored energy

This leaves the problem of noise, which is a function of all aspects ofbecause the energy density of gasoline is roughly two orders of mag-the aircraft’s design, including mass, number of rotors, rotor design,

nitude higher than lithium-ion batteries. The energy required to lift

rotor material, propulsion, speed, altitude, etc.

the same mass of a car off the ground vertically (without Bernoulli’s
principal in an airfoil) are far higher than to move a car along a road.

In summary, we would describe the current state of technology for

As such, today’s applications for electric flying cars are only in theelectric autonomous aircraft as still far from fully mature, but rapidly

development stage, with small payload (parcel delivery) and short

improving in areas of pilot substitution, safety, and efficiency. Whiledistances (line of sight). Advancements in solid state battery tech-

limited by battery technology, which may need to improve to a level

nology (2x the power/50% of the mass of current lithium ion bat-significantly greater than that of conventional EVs for road transportteries), battery chemistry, and software are eking out improvements

over the next 10 years, we believe that the pathway to widespread

20

M

Global Foundation

adoption is clear, with billions in public and private investment set to

Exhibit 20:

occur over the next few years.

Urban Air Mobility Tech Developments
UAM Technology Developments

In order for heavily adopted, economically feasible, electric,

Technology

autonomous Urban Air Mobility, many advancements need to bemade technologically. Below, we have identified 8 core technologies that, in our view, are currently "gating factors" for bringing

Satellite
Communication

Urban Air Mobility to the masses, while making it both time andenergy efficient.
Compute Power/
Availability

Developments

•
•
•
•

Launch costs falling dramatically
Rising demand for bandwidth
Significant levels of capital formation
Estimate Space economy to be $1.1tn by 2040

• Price of processing power and memory at all-time lows
• Increased speed and capacity likely coming from new 5G
infrastructure• Moore's Law• Large amount of investment and development inautonomous driving• AI derived business value is expected to reach $3.9
trillion by 2022

A Word on 5G...
AI/Software

While 5G connectivity is an important input in an eVTOLs sensory/• Increased usability/cost efficacy of LiDar and othersensor technology• Companies using sensors in a range of use cases, suchas smart cities or autonomous driving/flying

connectivity suite, we do not believe lack of a widespread network
will be an obstacle to rolling out an eVTOL network, especially out-

Sensorsside of urban areas. We have already seen commercial drone use inrural areas and continuous network / data access is not needed forthe aircraft to operate. As such, we believe the bulk of regulatory

Advanced Material
Systems

focus is likely to remain on the airworthiness of the aircraft and scal-• Becoming a cheap and practical method of manufacturing
complex parts• This technology can create lighter and more durable parts
that are not possible with traditional metalllurgicalmethods• $/kWh coming down steadily - target of $50/kWh by 2030
• Increased EV adoption accelerating need for better
battery technology

ability of the business model.
Battery
Technology

Exhibit 19:• Cost, weight, and volume decreasing significantly withimproved performance• Cost targets for 2022 50% below current prices

Enabling Technologies

Electric
Motor/Propulsion

Electric Motor

Battery
Technology• Companies continue to develop different use cases for
robotics, combining developments in AI/machine learning• Allows for faster assembly of more complex mechanics
systems
Robotics
Source: Shutterstock, Medium, Dept. of Energy, Morgan Stanley Research

Robotics

Enabling Technology

Sensors

Many questions still remain for battery advancement, whichleads to our additional concerns around the range and safety ofurban electric aircraft. A key message to investors is that we believe
the advancements in technology, manufacturing, form factor andcost that will be driven from the scale production of BEVs in the lightvehicle market may very likely drive innovation that could be applied

Advanced
Material
Systems

AI/Software

Satellite
Communication

to electric aviation.

ComputePower

Source: Shutterstock, Morgan Stanley Research

Morgan Stanley Research

21

M

Global Foundation

Joby Aviation show that DEP has reached levels of power similar

Exhibit 21:

to helicopters but with nearly 3x the efficiency.

Global BEV Sales Penetration (Milestone years)
100.00%92.29%

90.00%l Safety – The number one cause of helicopter accidents today isengine failure. DEP creates an interlinked network of electric

79.30%
80.00%
70.00%

motors, controls, and battery architecture that allows redun-

60.00%

dancy across the aircraft. This level of redundancy allows the

50.00%

vehicle to lose efficiency in the event of a failure, but "fail grace-

40.00%

fully" and mitigate the risk of accidents. DEP, in turn, will allow

31.50%

electric aircrafts to become much safer than helicopters today.

30.00%
20.00%

13.46%

10.00%

Exhibit 22:

0.00%
2025

2030

2040

2050

Benefits of DEP

Source: Morgan Stanley Research Estimates

Distributed Electric Propulsion (DEP)

Efficiency

Distributed electric propulsion has important ramifications forsafety, efficiency, and reliability of Urban Air Mobility. There are manydifferent designs ranging from aircraft with 10+ medium sized rotors

Simplicity

Safetyto aircraft with no rotors at all. Rotors are the primary cause of noiseon helicopters today, which is why in San Francisco, out of the 40
helipads in the city, only 1 is active (except for emergencies).

DEP

DEP provides three main components that are imperative to the realistic use of small, commercial aircraft in dense city centers: (1)Simplicity, (2) Efficiency, and (3) Safety.

Source: Joby Aviation, NASA, Morgan Stanley Research

Exhibit 23:

interact well without relatively more complex mechanical parts.
Using a fully electrified system allows controls to be far simpler
than what helicopter or plane controls are today, which means

VTOL Expected Weight and Range Limitations
Range

l Simplicity – DEP allows electrical systems architectures to

200 miles

less certification requirements for pilots. The goal is for pilots (ifthere is a pilot) to have to only control the vehicle in a situationsuch as poor weather. Coordination of the powertrain and autonoand technological improvement such as payload weight and maxl Efficiency – DEP allows aircraft designers to use several smaller

motors rather than one large one, but also allows the mechanicalarchitecture to increase the total number of electric motors
without a trade-off in terms of weight. Each motor produces
enough thrust to compensate for its own weight as they are positioned in such a way that allows the aircraft to achieve the optimallevel of thrust spread across the aircraft. Studies by NASA and

22

Human traffic
Regional logistics / freight
Regional supply chain
Complex military comms. and ordnance

•
•
•
•

Majority of AMZN final mile
Search and rescue
Local supply chain
Battlefield••

Surveillance
Truck-borne
drone
Pizza

1 milemous functionality will be crucial for economic efficiency, safety,
imum trip distances.

•
•
•
•

500 feet•

2 lbs

100 lbs

Source: Company data, Morgan Stanley Research Estimates

1 ton

WeightM

Global Foundation

Exhibit 24:
Levels of Autonomous Flying

Levels of Autonomous Flying
L0

Human pilots responsible for safe operation of aircraft. Spacious, well defined distances in whichplanes can fly near eachother. Drones allowed to fly in visual line of sight (VLOS) of the pilot.

L1

Computer systems assist human pilots - automation is introduced in the form of autopilot, navigation
in form of GPS/navigation aids. Drones can be used commerically, but with limited access to airspce.

L2

Onboard automation systems control the majority of activities. Pilots supervise the systems/take overwhen it is necessary. Aircraft/drones coordinate using ground based systems to coexist at low density
levels.

L3

Automation systems perform the entirety of flight operations. Pilot control when certain performance
conditions cannot be met. Drones and aircraft can operate in proximity with each other (i.e. near
airports).

L4

Supervisors monitor fleets that coordinate amongst themselves rather than requiring a pilot for anindividual aircraft. Drones can fly in large, automated fleets, while commercial aircraft is capable offlying with one pilot. Automation systems actively assess risk and provide advanced notice to humansupervisors.

L5

Autonomous systems are certified for use in all conditions and during all phases of flight. Drones
coexist with all forms of aviation in complex urban areas. Onboard systems combined with service
providers determines when and how the airpsace is used.

Source: Airbus, Morgan Stanley Research

Morgan Stanley Research

23

M

Global Foundation

Exhibit 25:
Technology: What does development look like – what are areas that need improvement?
Development Framework System
Relative Development

Description

Extremely developed technology

Moderately developed technology

Highly underdeveloped technology

Moderately underdeveloped

We cannot accurately say

Key Technologies
Technology

Rationale

Battery Density/Fast Charging

Currently represents, in our view, the largest technological barrier
to UAM adoption in the near term. According to our European
Chemicals team, it will require a significant technologicalbreakthrough to reach range specifications UAM companies aretargeting.

High Power Electric Motors

Electric motor architecture is fairly robust relative to othertechnologies on this list. Distributed electric propulsion provides
enough redundancy to mitigate penalties for the failure of one
motor. Even today, 3-4x more efficicent than ICE powertrains.

3D Manufacturing

3D manufacturing allows companies to more easily create parts
with complex geometric structures. This technology has rapidly
evolved over the past 5 years and is already being used in thedesign of many aircraft parts.

Advanced material systems (weight +weather)Comms Infrastructure

Cybersecurity

Autonomous Systems

Source: Morgan Stanley Research

24

RatingAdvanced materials are not as talked about as technologies such asbatteries or autonomous systems, but designing an ultra
lightweight super strong composite will be very important formaking every ounce count and extending the range of electric
aircrafts, especially if there is a pilot.
On a relative basis, we believe current comms infrastucture isrelatively sufficient for connected aircraft and secure operating
systems
We believe that due to future regulatory concerns surrounding
UAM aircraft, cybersecurity will have to improve by orders ofmagnitude before a significant number of aircraft are allowed to fly
at onceA large amount of investment and resources are going into theadvancement of autonomous driving systems, which is why we areultimately constructive on autonomous aviation systems - theoverlap between the two is immense, autonomous tech overall isstill in its early innings.

M
Exhibit 26:

Global Foundation

Regulation

The Electric Propulsion Evolution

Similar to our views on autonomous vehicles – we believe that
the Urban Air Mobility Market will be one that is highly regu-

BatteryTechlated by two primary agencies: the Federal Aviation
Administration (FAA) and the European Aviation Safety Agency(EASA) – organizations that control 50% and 30% of air traffic,
respectively.

Electric
MotorsDistributed
Electric
Propulsion

When looking at aerial regulation, it is important to note the differences in certification processes for everything from the development
to the infrastructure to the actual operations. Regulation is also inpart determined by the type of aircraft that is being examined,
whether it be a small hobby drone or a 747.

FAA Part 23 or Part 27 Certification
For operations in the US, these short-haul aircraft fall under the FAA
FAR Part 23 Certification for small airplanes and FAR Part 27= More distance/efficiency + Less charge time

Certification for rotorcraft. The safety parameter under these certifi-

Source: Shutterstock, Morgan Stanley Research

cation is to have a one in a ten million chance of an accident.

Exhibit 27:
Autonomous Cars to Flying, Autonomous Cars

Advancements inAutonomous Cars...

EASA Special Condition for eVOTL...Accelerate Flying
Car Development

Software
Computer
Sensors
Batteries
Regulations
Consumer AcceptanceComparatively, the EASA provided its Special Condition for eVOTL
and Means of Compliance. Historically, EASA has been more stringent regarding operations in urban environments for rotorcraft andsingle engine piston aircraft. It is no surprise that it has taken a stricter
view on eVOTL due to expected operations in dense urban areas. The
safety parameter under EASA is similar to large commercial aircrafttransport with a one in a billion chance of an accident.

Source: Shutterstock, Morgan Stanley Research

New Technologies Need Approval
Historically, aviation legislation and certification processes havebeen largely incremental, step-by-step processes, but technologies
such as Distributed Electric Propulsion and autonomous sense andavoidance technologies will need to be addressed as they become
fully developed. Companies such as Uber Elevate are constantly incontact with regulators to ensure a smooth transition from helicopters or airline flight today to a service where hundreds to thousandsof trips per hour are being fulfilled. However, aviation regulators
move slowly as the focus is on high standards of safety.

Morgan Stanley Research25

M

Global Foundation

Exhibit 28:
DoD UAS Group Descriptions

Group
5
4
3
2
1

Classification/Description
Penetrating
Persistent
Tactical
Small Tactical
Micro/Mini Tactical

Weight (lbs)>1,320> 1,320< 1,320
21 - 55
0 - 20

Altitude (ft)
> 18,000< 18,000< 18,000< 3,500< 1,200

Speed (kts)
Any
Any
<250
<250
<100

Source: Unmanned Aircraft System Airspace Integration Plan, Morgan Stanley Research

Exhibit 29:
DoT Notional UAS Vehicle Classification and Categorization:UAS Description
Nano
Micro
Small UAS
Ultralight Aircraft*
Light Sport Aircraft*
Small Aircraft*
Medium Aircraft*

Weight (lbs)<1
1 - 4.5
4.5 - 55
55 - 255
255 - 1,320
1,320 - 12,500
12,500 - 41,000

Overall Size (ft)
<1
<3
< 10
< 30
< 45
< 60
TBD

Mission Altitude (ft)< 400
< 3,000< 10,000< 15,000< 18,000< 25,000< 100,000

Mission Speed (mph)< 25
10 - 25
50 -7575 - 150
75 - 150
100 - 200
TBD

Mission Radius (mi)<1
1-5
5 - 2525 - 75
50 - 100
100 - 200
TBD

Mission Endurance (hrs)
<1
1
1-4
4-6
6 - 1224- 36
TBD

Source: Unmanned Aircraft System (UAS) Service Demand 2015-2035, Morgan Stanley Research

Besides the aircrafts themselves – we have concerns around air traffic/airspace management systems. How will Urban Air Mobility services
be able to handle the added capacity of hundreds to thousands of low to the ground, close proximity aircraft in dense urban environments?
What are the cybersecurity and terrorist implications? These are all items that need to be addressed. We forecast 830,000 drones/eVTOL
aircraft in the skies in the US alone by 2040 and recognize the significant regulatory risk that comes along with this.
Exhibit 30:
UAM Regulatory Considerations

FAA/EASA
Approval
Artificial
Intelligence

Certification
Specifications

Noise
Concerns

Infrastructure
Approval

Airworthiness
Certifications
Source: FAA, EASA, JARUS, Morgan Stanley Research

26

Pilot
LicensingM

Global Foundation

A New Kind of TAM: Expanding the Pie
Much of our TAM analysis of the Auto, Transportation, Airline andIf we assumed the average horse traveled 10 miles/day in 1900,

A&D revenue opportunity for eVTOLs has been driven by the share

this would reveal a prevailing equestrian TAM of approximatelythat we believe technology can take from the existing market. But

60 billion ‘horse miles.’ Sounds like a big number, right?

what if, in addition to this, eVTOLs can grow the pie or create a newpie?

While the horse and the automobile frequently shared the road forthe better part of 25 years (from the late 19th century until around

Imagine living in NYC and going to a dinner at a hot new restaurant

1920), we of course saw changes that vastly exceeded the expecta-

in Boston before coming back home to sleep in your own bed intions of the market at the turn of the 19th century. According to the

Manhattan. Imagine visiting a friend or relative living in a neighboring

FHA, the number of motor vehicle miles traveled (VMT) increased

state for a day-trip. Imagine living in upstate NY, a 3-hour drive fromfrom just 100 million miles in 1900 to 3.6 billion by 1910.

your nearest international airport, but being able to connect to yourinternational flight in under 30 min. These are all use-cases that

But things really started to change in 1913 when Henry Ford installed

would not exist or be very difficult to achieve using existing modes

his first moving assembly line which drove a dramatic reduction in theof transportation with existing infrastructure. However, all of thesecost to acquire an automobile. By 1920, automobile VMT had

possibilities could become a reality with eVTOL. As such, we do notmatched the previous 1900-level horse-mile TAM of around 50 or 60

believe that the size of the eVTOL TAM should be framed by thebillion miles and things compounded from there. Today there areexisting passenger and freight transportation modes - we believe theapproximately 3 trillion vehicle miles travelled or conservatively 50x

new and unique capabilities offered by an entirely new means ofthat of the horse-mile market over a century ago. The automobiletransportation could unlock revenue opportunities that are not pos-achieved the elimination of one living being in the transportation eco-sible today.

system (the horse). But it still required another living being (thedriver). In our investment lives, we will witness this next change.

This has happened before. There is precedent to new methods oftransportation unlocking new TAMs before – twice. With the intro-

With respect to autonomous and shared mobility… is it time toduction of the passenger automobile at the end of the 19th century

think outside the horse?

and its subsequent mass production early in the 20th century. We
not only saw the passenger car take share from horse drawn car-

The point we make is that radical changes to transportation

riages and railroads as existing means of transportation, but vehicle

modality don’t so much ‘cannibalize’ the current/prevailingmiles traveled by passengers - in total - soared as people had a conve-

form of transport as much as totally re-invent and re-scale thenient new way to quickly travel reasonably long distances on theirsize of the market itself, frequently by orders of magnitude.

own schedule, reliably and safely, that was likely not practical or possible by horse or rail before that.

Another example of this lies in aviation. For many years after the
Wright Brothers achieved the ‘first flight’ in 1903, people believed

In the year 1900, there were approximately 20 million horses in

the fixed wing aircraft could never be safe/reliable enough for longthe United States... and approximately 4,000 automobiles. I canhaul transportation. Indeed, it was the dirigible/zeppelin market of its

imagine the financial analysts of that time hosting dinners with insti-

day that was seen as the future of air travel. Could the airplane evertutional investors in cigar-smoke filled oak paneled rooms discussing

achieve a big chunk of the airship market? Between 1910 and WWI,

the potential of this radical new technology (enjoyed by only a selectthefew wealthy ‘motorists’). I can imagine discussions about the TAM

Luftschifffahrts-Aktiengesellschaft had transported 34,000 pas-

(Total Addressable Market) of the automobile. How much of thesengers over 1,500 trips. Were ‘zeppelin miles’ the bounding TAM forhorse market could it eventually replace?

aviation back in the day?

largestGermanairship

operatorcalledDeutsche

The hegemony of the horse-linked TAM was so pervasive that theearly automobile was, of course, referred to as the ‘horseless carriage.’ Today, 113 years after the Model T was introduced, we still referto the power output of a modern car as 'horsepower.'
Morgan Stanley Research27

M

Global Foundation

With respect to eVTOL/UAM… is it time to think outside the zep-

Exhibit 32:

pelin?

Car vs. Rail Passenger Miles Traveled (Millions)

Between 1900 and 1920, total passenger miles traveled by car andrail in the US rose from 16 billion to over 200 billion (CAGR 13%) andtopped 350 billion by 1940 before WW2 (1900-1940 CAGR 8%).
VMT settled into a normal growth pattern after WW2, growing fromalmost 500 billion in 1950 to 1,150 billion by 1970 (a CAGR of 5.7%).
The new transportation model also gained share in this period with
Rail going from almost 100% share in 1900 to <10% share in 1940 and
1% by 1970. Perhaps the best indicator of the growth of travel
brought on by the new transportation mode comes from looking at
per capita travel, which increased from ~200 miles in 1900 to ~900
miles in 1920 to ~2,500 miles per year by 1940, a 12x increase in 40
years.
Source: US Census Bureau

Exhibit 33:
Car vs. Rail Passenger Miles Traveled Share (%)
Exhibit 31:
Car vs. Rail Passenger Miles Traveled per US Capita per Year

Source: US Census Bureau

Source: US Census Bureau

This happened again after WW2 in the long-haul travel space withthe launch of commercial airlines. What commercial airlines did tosteamship travel is similar to what passenger cars did to horse-buggies and railroads half a decade earlier. Total international passengers that arrived in the US by Ocean increased from <800,000 in
1933 to almost 3 million by 1946, but after WW2 ramped from justover 2 million in 1950 to almost 18 million by 1970 – almost 10x in 20
years. Air market share of these passengers grew from 10% in 1933
to 70% by the late 1940s and 95% by the late 1960s. Similarly US per
capita international travel increased 10x between the 1940s and1960s, with global per capita travel increasing a similar percentage.

28

M

Global Foundation

Exhibit 34:

Exhibit 36:

Air vs. Ocean International Passengers Carried (Thousands)

Air vs. Ocean International Passengers Carried per US '000 capita

Source: US Census Bureau

Source: US Census Bureau

Exhibit 35:

Exhibit 37:

Air vs. Ocean International Passengers Share

Air vs. Ocean International Passengers Carried per world '000 capita

Source: US Census Bureau
Source: US Census Bureau

There is no way to tell for certain if eVTOLs can replicate this growth.
The world is now a much more connected place than it used to be andtravel in general – both long and short haul – is a more matureindustry. However, if this were to happen and eVTOLs can replicate
what the passenger automobile and commercial airline did (bygrowing domestic and international miles traveled by 12x and 10x,respectively in a 40 and 20 year period), the TAM would be considerably larger than what we have estimated. Increasing current US VMTby 10x in a 30 year period (between 2020 and 2050) will drive an
incremental revenue opportunity of $30 trillion in the US alone (at~$0.50 per mile), which would be incremental to our bull case TAM.

Morgan Stanley Research29

M

Global Foundation

Scenario Introductions – Assessing
the TAM for Urban Air Mobility
What Do the UAM Sector Adoption Curves Look Like?
Exhibit 38:

Exhibit 39:

Adoption Curve for Military and Defense Usage

Adoption Curve for Transporting Packages and FreightSource: Morgan Stanley Research

Source: Morgan Stanley Research

Exhibit 40:

fewer regulatory hurdles (especially in rural areas) regarding

Adoption Curve for Transporting Humans – A slower, but more loga-

safety and redundancy that human transportation will have torithmic S-curve

overcome. Small and large eVOTL aircrafts can be used for manythings such as last-mile delivery, fertilization of crops, and emergency transport. Companies such as Amazon (covered by Brian
Nowak), JD.com (covered by Grace Chen), and Alphabet (coveredby Brian Nowak) have had autonomous drone programs for years
in order to capitalize on the potential cost savings and incremental revenue opportunities. Technologically speaking, drone
technology has advanced rapidly, but barriers still exist. The primary driver of drone adoption and usage will be the level ofautonomy, speed, and efficiency that shipping drones are able tooperate under.

Source: Morgan Stanley Research

2. Transporting humans: The second, and longer-term use case istransporting humans in electric, autonomous, and urban eVOTL
Urban Air Mobility comes down to performing 2 core functions:aircrafts. We estimate the 2040 addressable market for thetransporting goods and transporting humans. While the gating

human transport (categorized by Airlines and Autos/SM in ourfactors for each use case are relatively similar, we view the adoption

model) market to be $474bn, stealing share away from cars,

curves for each differently, due to the uncertainties surrounding reg-planes, and public transit. The UAM market is precipitated by theulation and overall societal acceptance.

increasing adoption of ride sharing and we see urban air mobility
operating in a multimodal, ride-share fleet model. Urban Air

1. Transporting goods: Transporting goods, in our view, will have

Mobility represents business opportunities within infrastruc-significantly greater near term adoption because of the lower

ture, fleet management, software, hardware, and content, muchdegree of technological barriers (weight, size, etc.) as well as

like the market opportunity for AVs. We see the UAM ecosystem

30

M

Global Foundationbuilding off of existing EV as well as helicopter infrastructure.

l Other factors. Beyond technological and regulatory factors, we

Initially, UAM services will likely start off as a complementary

believe macro-economic factors and the pace of private invest-

method to already existing modes of transportation, with opera-

ment by companies and governments will impact the pace oftions primarily at airports and in dense city systems. But overadoption and the ultimate level of penetration. We see NASA'stime, we see infrastructure evolving to a point with more dense

early involvement as a great positive for UAM ecosystem funding

vertiport buildout across cities, with trips becoming progres-and organization. Dual-purpose and national security concerns

sively longer, driving cost per mile down to more affordable

may also play a role.

levels.
Total addressable market analysis: Scenario framework ranges

We have divided our scenarios for the Global UAM TAM into Bull,

from $2.3tn in our bear case to $19tn in our bull case by 2050.

Base, and Bear cases. Our framework to derive our scenarios is primarily driven by 2 primary vectors: (1) Technology and (2)Given the extremely wide range of outcomes, the unpredictable evo-

Regulation. Our cases assume a number of specific areas of techno-

lution of enabling technology, and the consumer acceptance/regula-logical capability (payload, range, speed, noise, software, connec-

tory issues that are not possible to model, we resort to scenario

tivity, battery, unit cost, etc.). We also assume varying levels ofanalysis to help frame investor thinking on the adoption and TAM of

regulatory inputs (local government, FAA/EASA, infrastructure, andthe flying car model. The autos, transport/logistics, airlines andpublic acceptance).

aerospace, and defense teams considered a number of vectors
when determining the bear and bull case ranges for the TAM

Exhibit 41:

including:

UAM TAM Scenario Framework
Accomodative
Regulationl Battery technology. Improvement in battery energy density is
An Aerial Society

critical to enabling range, payload, and mitigating the emission of

Heavy Batteries Keep the
Flying Car Grounded

noise from the aircraft. Improving power to weight throughRegulation outpaces advancements
in techAdvancements in tech accelerate
regulatory posture

BULL CASE

lighter and more powerful batteries enables a greater magnitudeof freight and/or numbers of human passengers for any distanceof flight. Increased payload and range unlocks larger portions ofUnderdevelopedTechaddressable market to be exploited. A super heavy flying car withThe Drone Didn't Sprout
Its eVTOL Wings

room for 1 passenger and a range of 1 mile would offer only nov-

Tech/regulation evolve too
slowly for disruption

elty/limited commercial application. An unmanned passenger air-Developed
Tech

Baby Steps into the Sky
Major tech advances, but
regulatory delays disruption

BEAR CASE

BASE CASE

craft with a 50 mile range and room for only 3 passengers would
require large numbers of aircraft in operation at any one time,

Obstructive
Regulation

which would compound ATC complexity and erode the economic
payback periods.

Source: Morgan Stanley Researchl Regulation/Societal acceptance. Flying cars will be subject to a

We separated our bottom-up Urban Air Mobility model into 4 sec-

host of regulations and permitting/licensing considerations,tions, which drive our estimates for the US Total Addressable Market

including FAA/EASA approval, crashworthiness, software andin our Bull, Bear, and Base cases.

hardware certification, infrastructure development, and environmental standards around emissions, noise, and privacy. We

The sections are as follows:

acknowledge that the realization of even our base and bull cases
will require a substantial development of regulatory and oper-

1. Autos and Shared Mobility: Transporting humans shorter dis-

ating standards from today’s level. We see the development andtances in heavily populated urban environments, such as a com-early commercialization of terrestrial autonomous networks

mute to work

(shared autonomous cars) as an incubator and accelerator for the

2. Airlines: Transporting humans longer distances along more tra-framework of regulation and consumer acceptance of flying car

ditional short-haul airline routes, allowing for potentially larger,tech.

noisier aircraft.

Morgan Stanley Research31

M
3. Freight Transportation: Transporting goods, small and large, inboth urban and rural environments
4. Aerospace and Defense: Using eVOTL aircraft on the battlefield

Global Foundation

Bear Case: Baby Steps into the Sky
Underdeveloped / Unsuccessful Technology & Obstructive
Policy:for the transportation of troops and supplies.
l Mass rejection and fear/ minimal adoption of transportation of

goods and people by eVOTL / drone
We then extrapolated this US only bottom-up model globally tol Technology stagnates – it is not cost effective for consumer or

estimate the TAM in China, Europe, and ROW. We did this by taking

businesses; is less efficient than current transportation models;

the relative percentage of GDP our US UAM TAM forecast represents

encounters critical technological barriers to adoption (weight,

in the US and adjusted across regions for factors such as shared,

noise, range, payload, safety, etc.)

autonomous, and electric vehicle miles penetration to arrive at therespective GDP percentages for each region. While we recognize
comparing terrestrial ground transportation penetration to UAM
may not be entirely apples to apples, we believe they are solid
proxies, given the overlap of AV/EV and UAM technologies.

Bull Case: An Aerial Society
Advanced / Developed Technology and Accommodative Policy:
l Mass adoption / acceptance of transportation of goods andpeople by eVOTL / dronel Technology accelerates – it is cost effective for both consumers

and businesses; it is more efficient than current transportation
modelsl Policy is flexible and infrastructure is readily available / amend-

able – regulations permit “easy” eVOTL / drone usage and adapt
to changing consumer / business demandsl Global Total Addressable Market: $18.9tn by 2050 (~11 to

12% of 2050E Global GDP)l Policy is restrictive in nature and infrastructure is unable to sup-port adoption – regulations hinder eVOTL / drone usage andimpede widespread adoption.
l Global Total Addressable Market: $2.3tn by 2050 (~1 to 2% of

2050E Global GDP)

Base Case: The Drone Didn't Sprout Its
eVOTL Wings
Advanced Technology & Obstructive Policy:
l Technology outpaces regulation / infrastructure / budget capabili-ties;
l VTOL / drone adoption is affected by red tape and falls on legisla-

tive priority list, hindering usage though technology is readily
availablel Some societal concerns surrounding autonomous aerial control

contributes to restrictive policyl Global Total Addressable Market: $9tn by 2050 (~5 to 6% of

2050E Global GDP)

32

M

Global Foundation

Morgan Stanley eVTOL/UAM Total
Addressable Market Model
We believe that the opportunity in Urban Air Mobility is going to

etration. We believe that these factors are a good proxy for UAM pen-be substantial. To size the Total Addressable Market in the US, we

etration across regions since the technologies are highly comple-

focused on three broad end markets + the supply chain: (1) trans-

mentary.

porting humans, (2) transporting goods and (3) military & defense.
More specifically, we look at markets directly relevant to personalurban/suburban transportation, final mile shipping/logistics, shorthaul airlines, and defense.

Global Total Addressable Market Summary
Exhibit 42:
Global Total Addressable Market ($bn)

Our TAM analysis is limited to the end market services only
(excluding hardware/content). This report does not include thecomponents, sensors, compute, and software – the so called "armsdealers" of the autonomous aircraft ecosystem – which one can estimate via bottom-up forecasts for the three primary end markets.

$10,000$9,000$8,000$7,000$6,000$5,000$4,000$3,000We believe that our US TAM model provides a relevant illustration of the economics behind UAM ecosystem. To arrive at a
Global TAM, we extrapolated our US TAM model using relative percentages of GDP, while adjusting for factors across China, Europe,$2,000$1,000$0

2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050

US

China

EuropeROW

Source: Morgan Stanley Research Estimatesand ROW such as shared, autonomous, and electric vehicle mile penExhibit 43:
Global Total Addressable Market ($bn)

Source: Morgan Stanley Research Estimates

Morgan Stanley Research

33

M

Global Foundation

US Bottom-Up Model Summary
Our bottom-up US Model, in our view, provides a reasonable representation of the different revenue opportunities and businessmodels that will make up the UAM ecosystem.
Exhibit 44:
US UAM TAM Model Revenue Breakdown by Core Sectors ($bns)

Source: Morgan Stanley Research Estimates

Exhibit 45:
US Urban Air Mobility Total Addressable Market (Base Case - $bns)

Autos & Shared Mobility (US)$2,500The business model of autonomous aircraft has the potential to$2,000be far more economically superior to much of the terrestrial$1,500ride-sharing model.
$1,000l Compared to today’s ride-sharing car, an autonomous electric air-

$500

$0
2018 2020

craft can be faster, can do more shifts (higher utilization), and can
2022

2024

2026

2028

Transport/Logistics

2030

2032

2034

Autos/Shared Mobility

Source: Morgan Stanley Research Estimates

2036

2038

2040

2042

Military/Government

2044

Airlines

2046

2048

2050

charge higher revenue/mile. The combination implies strong revenue generation.
l In our scenario analysis, we estimate that flying cars can conduct

4x the numbers of trips per day as a ride-sharing car with 4x thenumber of miles per trip (100mph for flying car vs. 25mph for rideshare car).
l We estimate the annual revenue for a highly utilized ride sharing

car to be around $75k/year. We estimate a flying car can generate
as much as 12x this revenue (>$900k/year).
l Assuming a 15% margin for flying cars vs. a 10% margin for terres-trial cars implies the flying car generates 18x the profit per unit.
l We note the economic outcomes of flying cars depend on a range

of factors, including vehicle cost, useful life, residual value,interest rate, electricity cost, range (miles/KwH), maintenancecost, hangar/infrastructure costs, parking, SG&A, insurance,
licensing, and other fees.
34

M

Global Foundation

Exhibit 46:
US Autos and Shared Mobility UAM TAM Model Summary

Source: Morgan Stanley Research Estimates

Exhibit 47:
US eVOTL Total Miles Traveled – Autos and Shared Mobility (bns ofmiles)
Base Case

Bull Case

Bear Case

4,000

medical and emergency supplies in parts of Africa and remoteareas in North America, commercial (not pilot tests) medical
and rural delivery services began in 2019. UPS and Matternet
started commercial drone deliveries for the Wake Forest
Medical System in NC in 2019, which has since expanded to

3,500

more routes. Separately, Fedex has partnered with Wing to

3,000

launch commercial drone operations at a limited scale in the

2,500

city of Christianburg, VA. We believe medical and rural
2,000

delivery that fully leverage the speed, cost and operating effi1,500

ciency of eVTOLs, which existing delivery solutions struggle

1,000

to replicate, represents an attractive initial use case. Density

500

is the lifeblood of any parcel delivery network and some extra02018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050

urban areas simply do not have the population density to

Source: Morgan Stanley Research Estimatesallow for affordable package delivery, especially in today’ssame-day delivery world. Our 2018 Alphawise analysis
showed that roughly 80% of the US population lives in 28%

Freight Transportationof zip codes, mostly in urban areas along the coasts. We esti-

Freight Transportation, especially for small parcels in rural

other 72% of the zip codes are rural/extra urban residents forareas, are the first and most obvious application for eVTOLs.

whom eVOTL delivery would make practical sense. Our 2019

However, as the capability of the aircraft increases - especially withdeep-dive into AMZN Logistics backed up this number, byrange and payload - and as supply chains evolve to meet the growing

showing that roughly 20% of deliveries were to rural areas.

need for eCommerce (by getting faster and tighter), the next few gen-As such, we estimate that rural deliveries represent roughly

erations of eVTOLs can play a much larger role in Freight

20% of the parcel TAM. While drone deliveries to rural areas

Transportation by 2040-50 than we had envisioned in our 2018

have already launched, we model a slow ramp to 5% of thereport.

rural delivery TAM by 2030, growing to 27% by 2040 andmate that the other 20% of the population that lives in the

85% by 2050, in our base case. We estimate the rural parcel
The three main use cases for eVTOLs in Freight Transportation are:

TAM grows at roughly the rate of GDP growth.
2. Urban parcel delivery. While commercial drones can be

1. Rural and high-service parcel delivery. This is likely to be

used for rural delivery, larger cargo eVTOLs can be used forthe first commercial use case for eVTOLs. In fact, this has

urban parcel delivery. There are clearly some challenges withalready begun. In addition to commercial drone deliveries ofusing flying aircraft for delivery to dense urban areas, largely

Morgan Stanley Research35

M
as the ground and air density of urban areas makes it chal-the middle mile urban Parcel TAM by 2040 and 65% by 2050,

lenging to deliver a small package directly to the customer

a much later and slower ramp than rural delivery. This adds

and also because the density makes current parcel unit eco-

$70 bn to our Freight eVTOL TAM by 2040 and $903 bn by

nomics very attractive, reducing the need to find an alterna-

2050 and is a new addition to our Freight TAM analysis rela-tive. However, until urban architecture is updated to havetive to our 2018 estimate.

eVTOL delivery landing pads on the roofs of buildings, we

3. Pallet-ized freight delivery. While Parcels typically weighbelieve eVTOLs can become a very attractive solution for the

between 1 and 50 lbs (average 3-5 lbs), pallet-ized freight (asmiddle mile urban delivery before penetrating the last mile.

seen in LTL truck delivery) is 150 lbs+. While early launch

As eCommerce supply chains become shorter, faster andmulti-passenger eVTOLs should have payload capacity oftighter and default service standards increase to one-day or

500 lbs+ (4-5 passengers), we estimate that this increases toeven same day delivery, eCommerce companies are looking

a few thousand lbs by 2035-40 (first generation Cargo

to significantly speed up delivery, while also lowering its cost,

eVTOLs are set to have ~1000 lbs payload at launch in a few

since customer willingness to pay for delivery has not

years). This should allow eVTOLs to rival large commercial

increased. While Air is the fastest way to connect DCs, it isvans and medium duty trucks as well as tap into a small por-expensive and cannot reach final mile delivery stations/tion of the loads carried by LTL (especially pickup andstores out of which final-mile delivery occurs. Truck is thedelivery) and TL carriers. As such, we triangulate to the heavy

best solution today, but the carbon footprint is high and it isfreight TAM by estimating the % of the $800 bn Trucking

not as fast as Air. eVTOLs could be the solution. An eVTOL

TAM in the US that is LTL pickup and delivery and short-haulthat can carry several hundred pounds of payload by Air for

TL as well the % that is delivered by medium-duty truck anda 100-200 mile radius from a DC to a delivery station/store

short-haul Class 8 truck. We only expect heavy freightin the outskirts of an urban area represents the best of Air andeVTOLs to launch after 2035 but ramp up to just under

Truck. As such, we estimate that eVTOLs can access 12% of~$100 bn of TAM by 2050.

Exhibit 48:
US Freight Transportation UAM TAM Model Summary

Source: Alphawise, Morgan Stanley Research Estimates

36

Global Foundation

M
Exhibit 49:

Global Foundation

Exhibit 51:

US Freight Transportation Total Addressable Market ($bn)
Base Case

Bull Case

US Airlines Total Addressable Market ($bn)
Base Case

Bear Case$2,000$45$1,800$40

Bull Case

Bear Case$1,600$1,400$35$1,200$30$1,000

$25

$800
$600

$20

$400

$15

$200
$0
2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Source: Alphawise, Morgan Stanley Research Estimates

$10
$5
$0
2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050

Exhibit 50:
US Freight Transportation Total Addressable Market (Urban / Rural /Source: Morgan Stanley Research Estimates

Freight – Base Case – $bns)
Drone Market Rural

Drone Market Urban

Freight Market$1,000

Military & Defense

$900
$800
$700

$600
$500
$400
$300
$200
$100
$0
2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Source: Alphawise, Morgan Stanley Research Estimates

Airlines
In addition to passenger car mobility, eVTOLs likely have the

Although Military and Defense is a very small sliver of ouroverall Total Addressable Market Model, we see the increased
involvement of militaries in the space as paramount to bothtechnological and regulatory advance. The total addressable
market for Military and Defense is much smaller than the other sectors because we model the market as a function of military spend (i.e.,
how much will the military spend on advance eVOTL vehicles in agiven year?). On a relative basis, this is a much smaller revenue pool(~$1bn today) versus the potential for operating a fleet of autonomous aircraft at a cost of $2 per mile.
Exhibit 52:

most overlap with short-haul passenger aircraft. This is a rela-

US Military and Defense Total Addressable Market ($bns)

tively small TAM as in 2019 only 1% of the total 877,574mm ASMs

$7

(available passenger seat miles or airline capacity) flown by US$6

Airlines was <200 mile length of haul (LoH) and another 10% was$5

200-500 miles. Nevertheless, we believe this represents an attrac-$4

tive use case for eVTOLs and can add to the TAM. We estimate a$3

RASM of 75c/mile given the short haul nature of the flight (vs. 10-15c$2

RASM for the average US passenger airline today). We believe$1

eVTOLS can replace workhorse "shuttle" flights between popular$0city pairs like NYC-Boston, NYC-DC, LA-SF, etc., over time. We have a

2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Bull Case

Bear Case

Base Caseslow ramp in our base case, with only 5% of <200 mile flights operated by eVTOL by 2030, growing to 15% by 2040 and 35% by 2050

Source: Morgan Stanley Research Estimateswith a much smaller penetration still of 200-500 mile LoH flights.
This adds ~$3bn to our TAM by 2035 and ~$14bn by 2050. We notethat if eVTOL capability accelerates quickly and these aircraft canachieve 500-1000 miles of range, they could be significant threats topassenger aircraft. Our bull case has the airline revenue opportunity
topping $40 bn by 2050.
Morgan Stanley Research

37

M

Global Foundation

UAM Global Total Addressable Market Extrapolations
While we do not perform a bottom-up analysis for China, Europe, andExhibit 54:

ROW, we believe our model extrapolation reasonably accounts for

Europe Total Addressable Market ($bn)

differences across regions such as autonomous, electric, and shared$3,500mile penetration. Although using terrestrial penetration forecasts$3,000for those vectors is not completely apples to apples, they will likely$2,500be relatively good proxies to adjust our bottom-up Total$2,000Addressable Market estimates across regions. We acknowledge theregulatory, societal, and national security vectors get significantly
more difficult to address as you extrapolate globally, especially for$1,500$1,000$500$0a topic like UAM.

2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Bull Case

Exhibit 53:

Source: Morgan Stanley Research Estimates

China Total Addressable Market ($bn)

Exhibit 55:

Base Case$5,000ROW Total Addressable Market ($bn)$4,500$7,000Bear Case$4,000$3,500$6,000$3,000$5,000$2,500$4,000$2,000$3,000$1,500$1,000$2,000$500$1,000$0
2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Bull Case

Source: Morgan Stanley Research Estimates

Base Case

Bear Case$02018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
Bull Case

Source: Morgan Stanley Research Estimates

38

Base Case

Bear CaseM

Global Foundation

Case Assumptions
Exhibit 56:
TAM Analysis Case Assumptions

Source: Morgan Stanley Research

Morgan Stanley Research

39

M

Global Foundation

A Brief History of New York Airways
New York Airways operated vertical lift flights in the New York City area from 1949 to 1979. The company flew the Boeing Vertol V-44, Boeing
Vertol 107, and the Sikorsky S61.
In its 30 years of operations, New York Airways served the airports around the New York City area including New York International Airport(now known as JFK), New York LaGuardia (LGA), Newark Airport (EWR), Teterboro, White Plains, and Stamford. New York Airways first used
the heliport at West Side Highway at 30th Street and then the Wall Street Heliport. The company also provided scheduled flights using theheliport at the top of the Pan Am Building (now the MetLife Building) in Midtown Manhattan.

Exhibit 57:

Exhibit 58:

Boeing Vertol V-44

Boeing Vertol 107

Source: Wikimedia

Source: Wikimedia

Exhibit 59:
Sikorsky S61

Source: Wikimedia

40

M

Global Foundation

Exhibit 60:
New York Airways

Source: National Air and Space Museum Archives

Exhibit 61:
New York Airways

Source: National Air and Space Museum Archives

Morgan Stanley Research

41

M

Global Foundation

Exhibit 62:
New York Airways

Source: National Air and Space Museum Archives

NTSB Report From 1977 PanAm Building Accident
According to the National Transportation Safety Board (NTSB),“About 17:35 e.d.t., on May 16, 1977, the right landing gear of a New York Airways, Inc., Sikorsky S-61L; N619PA, failed while the aircraft was parked,
with rotors turning, on the rooftop heliport of the Pan Am Building in New York, New York. The aircraft rolled over on its right side and wassubstantially damaged. At the time of the accident four passengers had boarded the aircraft and other passengers were in the process of boarding.
The passengers and the three crew members onboard received either minor or no injuries; however, four passengers who were still outside theaircraft and were waiting to board were killed and one was seriously injured. One pedestrian on the corner of Madison Avenue and 43rd Street
was killed and another was seriously injured when they were struck by a separated portion of one of the main rotor blades of the aircraft.
The National Transportation Safety Board determined that the probable cause of the accident was the fatigue failure of the upper right forward
fitting of the right main landing gear tube assembly. Fatigue originated from a small surface pit of undetermined source. All fatalities were causedby the operating rotor blades as a result of the collapse of the landing gear.”42

M

Global Foundation

Disclosure Section
The information and opinions in Morgan Stanley Research were prepared or are disseminated by Morgan Stanley & Co. LLC and/or Morgan Stanley C.T.V.M. S.A. and/or Morgan Stanley México,
Casa de Bolsa, S.A. de C.V. and/or Morgan Stanley Canada Limited and/or Morgan Stanley & Co. International plc and/or Morgan Stanley Europe S.E. and/or RMB Morgan Stanley Proprietary
Limited and/or Morgan Stanley MUFG Securities Co., Ltd. and/or Morgan Stanley Capital Group Japan Co., Ltd. and/or Morgan Stanley Asia Limited and/or Morgan Stanley Asia (Singapore)
Pte. (Registration number 199206298Z) and/or Morgan Stanley Asia (Singapore) Securities Pte Ltd (Registration number 200008434H), regulated by the Monetary Authority of Singapore(which accepts legal responsibility for its contents and should be contacted with respect to any matters arising from, or in connection with, Morgan Stanley Research) and/or Morgan Stanley
Taiwan Limited and/or Morgan Stanley & Co International plc, Seoul Branch, and/or Morgan Stanley Australia Limited (A.B.N. 67 003 734 576, holder of Australian financial services license
No. 233742, which accepts responsibility for its contents), and/or Morgan Stanley Wealth Management Australia Pty Ltd (A.B.N. 19 009 145 555, holder of Australian financial services license
No. 240813, which accepts responsibility for its contents), and/or Morgan Stanley India Company Private Limited, regulated by the Securities and Exchange Board of India (“SEBI”) and holderof licenses as a Research Analyst (SEBI Registration No. INH000001105), Stock Broker (BSE Registration No. INB011054237 and NSE Registration No. INB/INF231054231), Merchant Banker(SEBI Registration No. INM000011203), and depository participant with National Securities Depository Limited (SEBI Registration No. IN-DP-NSDL-372-2014) which accepts the responsibility
for its contents and should be contacted with respect to any matters arising from, or in connection with, Morgan Stanley Research, and/or PT. Morgan Stanley Sekuritas Indonesia and theiraffiliates (collectively, "Morgan Stanley").
For important disclosures, stock price charts and equity rating histories regarding companies that are the subject of this report, please see the Morgan Stanley Research Disclosure Website
at www.morganstanley.com/researchdisclosures, or contact your investment representative or Morgan Stanley Research at 1585 Broadway, (Attention: Research Management), New York, NY,
10036 USA.
For valuation methodology and risks associated with any recommendation, rating or price target referenced in this research report, please contact the Client Support Team as follows: US/Canada+1 800 303-2495; Hong Kong +852 2848-5999; Latin America +1 718 754-5444 (U.S.); London +44 (0)20-7425-8169; Singapore +65 6834-6860; Sydney +61 (0)2-9770-1505; Tokyo +81(0)3-6836-9000. Alternatively you may contact your investment representative or Morgan Stanley Research at 1585 Broadway, (Attention: Research Management), New York, NY 10036 USA.

Analyst Certification
The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed and that they have not received and will notreceive direct or indirect compensation in exchange for expressing specific recommendations or views in this report: Adam Jonas, CFA; Billy Kovanis; Kristine T Liwag; Ravi Shanker.
.

Global Research Conflict Management Policy
Morgan Stanley Research has been published in accordance with our conflict management policy, which is available at www.morganstanley.com/institutional/research/conflictpolicies. A
Portuguese version of the policy can be found at www.morganstanley.com.br

Important Regulatory Disclosures on Subject Companies
The analyst or strategist (or a household member) identified below owns the following securities (or related derivatives): Billy Kovanis - Boeing Co.(common or preferred stock); Kristine T Liwag- Ford Motor Company(common or preferred stock); Evan Silverberg, CFA, CPA - Boeing Co.(common or preferred stock).
As of March 31, 2021, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in Morgan Stanley Research: Asbury Automotive
Group Inc, Avis Budget Group Inc, Boeing Co., Carvana Co, CSX Corporation, Fisker Inc, Group 1 Automotive, Inc, Heartland Express Inc., Hub Group Inc, Knight-Swift Transportation Holdings
Inc, Lockheed Martin Corp, Raytheon Technologies Corp, Schneider National Inc., Spirit AeroSystems Holdings Inc, Tenneco Inc., TFI International Inc, Visteon Corporation.
Within the last 12 months, Morgan Stanley managed or co-managed a public offering (or 144A offering) of securities of Avis Budget Group Inc, Boeing Co., CSX Corporation, FedEx Corporation,
Ford Motor Company, General Motors Company, Heartland Express Inc., L3Harris Technologies Inc, Lithia Motors Inc., Lockheed Martin Corp, Quantumscape Corp, Raytheon Technologies Corp,
Spirit AeroSystems Holdings Inc, TFI International Inc, TransDigm Group Inc., Virgin Galactic Holdings Inc, Werner Enterprises, XPO Logistics, Inc..
Within the last 12 months, Morgan Stanley has received compensation for investment banking services from Avis Budget Group Inc, Boeing Co., C.H. Robinson Worldwide Inc., CSX Corporation,
FedEx Corporation, Ford Motor Company, Garrett Motion Inc, General Motors Company, Heartland Express Inc., Kansas City Southern, L3Harris Technologies Inc, Lithia Motors Inc., Lockheed
Martin Corp, Norfolk Southern Corp., Old Dominion Freight Line Inc, Quantumscape Corp, Raytheon Technologies Corp, Romeo Power, Inc., Spirit AeroSystems Holdings Inc, Tesla Inc, TFIInternational Inc, TransDigm Group Inc., Union Pacific Corp., United Parcel Service, Werner Enterprises, XPO Logistics, Inc..
In the next 3 months, Morgan Stanley expects to receive or intends to seek compensation for investment banking services from Aptiv Plc, ArcBest Corp, Avis Budget Group Inc, Boeing Co.,
BorgWarner Inc., C.H. Robinson Worldwide Inc., Canadian National Railway Co., Canadian Pacific Railway Ltd., Carvana Co, CSX Corporation, Echo Global Logistics Inc, FedEx Corporation, Ferrari
NV, Fisker Inc, Ford Motor Company, Garrett Motion Inc, General Dynamics Corp., General Motors Company, Goodyear Tire & Rubber Company, Harley-Davidson Inc, Heartland Express Inc.,
Hub Group Inc, J.B. Hunt Transport Services Inc., Kansas City Southern, L3Harris Technologies Inc, Landstar System Inc, Lear Corporation, Lithia Motors Inc., Lockheed Martin Corp, Magna
International Inc., Norfolk Southern Corp., Northrop Grumman Corp., Old Dominion Freight Line Inc, Quantumscape Corp, Raytheon Technologies Corp, Romeo Power, Inc., Saia, Inc., Schneider
National Inc., Spirit AeroSystems Holdings Inc, Tenneco Inc., Tesla Inc, Textron Inc., TFI International Inc, TransDigm Group Inc., Union Pacific Corp., United Parcel Service, US Xpress Enterprises
Inc, Visteon Corporation, Werner Enterprises, XPO Logistics, Inc..
Within the last 12 months, Morgan Stanley has received compensation for products and services other than investment banking services from American Axle & Manufacturing Holdings Inc,
Aptiv Plc, Avis Budget Group Inc, Boeing Co., BorgWarner Inc., C.H. Robinson Worldwide Inc., Canadian Pacific Railway Ltd., CSX Corporation, Ferrari NV, Ford Motor Company, General Motors
Company, Goodyear Tire & Rubber Company, Harley-Davidson Inc, J.B. Hunt Transport Services Inc., Kansas City Southern, L3Harris Technologies Inc, Lear Corporation, Lockheed Martin Corp,
Norfolk Southern Corp., Northrop Grumman Corp., Old Dominion Freight Line Inc, Raytheon Technologies Corp, Spirit AeroSystems Holdings Inc, Tenneco Inc., Tesla Inc, Textron Inc., TransDigm
Group Inc., Union Pacific Corp., United Parcel Service, Visteon Corporation, XPO Logistics, Inc..

Morgan Stanley Research

43

M

Global Foundation

Within the last 12 months, Morgan Stanley has provided or is providing investment banking services to, or has an investment banking client relationship with, the following company: Aptiv Plc,
ArcBest Corp, Avis Budget Group Inc, Boeing Co., BorgWarner Inc., C.H. Robinson Worldwide Inc., Canadian National Railway Co., Canadian Pacific Railway Ltd., Carvana Co, CSX Corporation,
Echo Global Logistics Inc, FedEx Corporation, Ferrari NV, Fisker Inc, Ford Motor Company, Garrett Motion Inc, General Dynamics Corp., General Motors Company, Goodyear Tire & Rubber
Company, Harley-Davidson Inc, Heartland Express Inc., Hub Group Inc, J.B. Hunt Transport Services Inc., Kansas City Southern, L3Harris Technologies Inc, Landstar System Inc, Lear Corporation,
Lithia Motors Inc., Lockheed Martin Corp, Magna International Inc., Norfolk Southern Corp., Northrop Grumman Corp., Old Dominion Freight Line Inc, Quantumscape Corp, Raytheon
Technologies Corp, Romeo Power, Inc., Saia, Inc., Schneider National Inc., Spirit AeroSystems Holdings Inc, Tenneco Inc., Tesla Inc, Textron Inc., TFI International Inc, TransDigm Group Inc., Union
Pacific Corp., United Parcel Service, US Xpress Enterprises Inc, Virgin Galactic Holdings Inc, Visteon Corporation, Werner Enterprises, XPO Logistics, Inc..
Within the last 12 months, Morgan Stanley has either provided or is providing non-investment banking, securities-related services to and/or in the past has entered into an agreement to provide
services or has a client relationship with the following company: American Axle & Manufacturing Holdings Inc, Aptiv Plc, Avis Budget Group Inc, Boeing Co., BorgWarner Inc., C.H. Robinson
Worldwide Inc., Canadian National Railway Co., Canadian Pacific Railway Ltd., CSX Corporation, Echo Global Logistics Inc, FedEx Corporation, Ferrari NV, Ford Motor Company, General Motors
Company, Goodyear Tire & Rubber Company, Harley-Davidson Inc, J.B. Hunt Transport Services Inc., Kansas City Southern, L3Harris Technologies Inc, Lear Corporation, Lockheed Martin Corp,
Norfolk Southern Corp., Northrop Grumman Corp., Old Dominion Freight Line Inc, Raytheon Technologies Corp, Sonic Automotive Inc, Spirit AeroSystems Holdings Inc, Tenneco Inc., Tesla Inc,
Textron Inc., TransDigm Group Inc., Union Pacific Corp., United Parcel Service, Visteon Corporation, XPO Logistics, Inc..
An employee, director or consultant of Morgan Stanley is a director of General Motors Company, Norfolk Southern Corp.. This person is not a research analyst or a member of a research analyst's
household.
Morgan Stanley & Co. LLC makes a market in the securities of American Axle & Manufacturing Holdings Inc, Aptiv Plc, ArcBest Corp, Asbury Automotive Group Inc, AutoNation Inc., Avis Budget
Group Inc, Boeing Co., BorgWarner Inc., C.H. Robinson Worldwide Inc., Canadian National Railway Co., Canadian Pacific Railway Ltd., Carmax Inc, CSX Corporation, Echo Global Logistics Inc,
Expeditors International of Washington I, FedEx Corporation, Ford Motor Company, General Dynamics Corp., General Motors Company, Goodyear Tire & Rubber Company, Group 1 Automotive,
Inc, Harley-Davidson Inc, Heartland Express Inc., Hub Group Inc, J.B. Hunt Transport Services Inc., Kansas City Southern, Knight-Swift Transportation Holdings Inc, Lear Corporation, Lithia Motors
Inc., Lockheed Martin Corp, Magna International Inc., Norfolk Southern Corp., Northrop Grumman Corp., Old Dominion Freight Line Inc, Penske Automotive Group, Inc, Polaris Inc., Raytheon
Technologies Corp, Saia, Inc., Schneider National Inc., Sonic Automotive Inc, Spirit AeroSystems Holdings Inc, Tenneco Inc., Tesla Inc, Textron Inc., Union Pacific Corp., United Parcel Service, Visteon
Corporation, Werner Enterprises, XPO Logistics, Inc..
The equity research analysts or strategists principally responsible for the preparation of Morgan Stanley Research have received compensation based upon various factors, including qualityof research, investor client feedback, stock picking, competitive factors, firm revenues and overall investment banking revenues. Equity Research analysts' or strategists' compensation is not
linked to investment banking or capital markets transactions performed by Morgan Stanley or the profitability or revenues of particular trading desks.
Morgan Stanley and its affiliates do business that relates to companies/instruments covered in Morgan Stanley Research, including market making, providing liquidity, fund management,commercial banking, extension of credit, investment services and investment banking. Morgan Stanley sells to and buys from customers the securities/instruments of companies covered in
Morgan Stanley Research on a principal basis. Morgan Stanley may have a position in the debt of the Company or instruments discussed in this report. Morgan Stanley trades or may tradeas principal in the debt securities (or in related derivatives) that are the subject of the debt research report.
Certain disclosures listed above are also for compliance with applicable regulations in non-US jurisdictions.

STOCK RATINGS
Morgan Stanley uses a relative rating system using terms such as Overweight, Equal-weight, Not-Rated or Underweight (see definitions below). Morgan Stanley does not assign ratings of Buy,
Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold and sell. Investors should carefully read the definitions of all
ratings used in Morgan Stanley Research. In addition, since Morgan Stanley Research contains more complete information concerning the analyst's views, investors should carefully read Morgan
Stanley Research, in its entirety, and not infer the contents from the rating alone. In any case, ratings (or research) should not be used or relied upon as investment advice. An investor's decision
to buy or sell a stock should depend on individual circumstances (such as the investor's existing holdings) and other considerations.

44

M

Global Foundation

Global Stock Ratings Distribution(as of April 30, 2021)
The Stock Ratings described below apply to Morgan Stanley's Fundamental Equity Research and do not apply to Debt Research produced by the Firm.
For disclosure purposes only (in accordance with FINRA requirements), we include the category headings of Buy, Hold, and Sell alongside our ratings of Overweight, Equal-weight, Not-Ratedand Underweight. Morgan Stanley does not assign ratings of Buy, Hold or Sell to the stocks we cover. Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy,
hold, and sell but represent recommended relative weightings (see definitions below). To satisfy regulatory requirements, we correspond Overweight, our most positive stock rating, with abuy recommendation; we correspond Equal-weight and Not-Rated to hold and Underweight to sell recommendations, respectively.

Coverage Universe
Stock Rating
Category

Other Material Investment Services Clients

Investment Banking Clients (IBC)(MISC)

Count% of Total

Count% of Total IBC% of Rating Category

Count% of Total Other MISC

Overweight/Buy

1517

44%

413

47%

27%

670

44%

Equal-weight/Hold

1418

41%

373

42%

26%

649

42%

Not-Rated/Hold

4

0%

2

0%

50%

4

0%

Underweight/Sell

529

15%

95

11%

18%

210

14%

Total

3,468

883

1533

Data include common stock and ADRs currently assigned ratings. Investment Banking Clients are companies from whom Morgan Stanley received investment banking compensation in thelast 12 months. Due to rounding off of decimals, the percentages provided in the "% of total" column may not add up to exactly 100 percent.

Analyst Stock Ratings
Overweight (O or Over) - The stock's total return is expected to exceed the total return of the relevant country MSCI Index or the average total return of the analyst's industry (or industry
team's) coverage universe, on a risk-adjusted basis over the next 12-18 months.
Equal-weight (E or Equal) - The stock's total return is expected to be in line with the total return of the relevant country MSCI Index or the average total return of the analyst's industry (orindustry team's) coverage universe, on a risk-adjusted basis over the next 12-18 months.
Not-Rated (NR) - Currently the analyst does not have adequate conviction about the stock's total return relative to the relevant country MSCI Index or the average total return of the analyst's
industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.
Underweight (U or Under) - The stock's total return is expected to be below the total return of the relevant country MSCI Index or the average total return of the analyst's industry (or industry
team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.
Unless otherwise specified, the time frame for price targets included in Morgan Stanley Research is 12 to 18 months.

Analyst Industry Views
Attractive (A): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be attractive vs. the relevant broad market benchmark, as indicatedbelow.
In-Line (I): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be in line with the relevant broad market benchmark, as indicated below.
Cautious (C): The analyst views the performance of his or her industry coverage universe over the next 12-18 months with caution vs. the relevant broad market benchmark, as indicated below.
Benchmarks for each region are as follows: North America - S&P 500; Latin America - relevant MSCI country index or MSCI Latin America Index; Europe - MSCI Europe; Japan - TOPIX; Asia relevant MSCI country index or MSCI sub-regional index or MSCI AC Asia Pacific ex Japan Index.

Important Disclosures for Morgan Stanley Smith Barney LLC & E*TRADE Securities LLC Customers
Important disclosures regarding the relationship between the companies that are the subject of Morgan Stanley Research and Morgan Stanley Smith Barney LLC or Morgan Stanley or anyof their affiliates, are available on the Morgan Stanley Wealth Management disclosure website at www.morganstanley.com/online/researchdisclosures. For Morgan Stanley specific disclosures,
you may refer to www.morganstanley.com/researchdisclosures.
Each Morgan Stanley research report is reviewed and approved on behalf of Morgan Stanley Smith Barney LLC and E*TRADE Securities LLC. This review and approval is conducted by thesame person who reviews the research report on behalf of Morgan Stanley. This could create a conflict of interest.

Morgan Stanley Research

45

M

Global Foundation

Other Important Disclosures
Morgan Stanley & Co. International PLC and its affiliates have a significant financial interest in the debt securities of Aptiv Plc, Avis Budget Group Inc, Boeing Co., BorgWarner Inc., C.H. Robinson
Worldwide Inc., Canadian National Railway Co., CSX Corporation, FedEx Corporation, Ford Motor Company, General Dynamics Corp., General Motors Company, Goodyear Tire & Rubber
Company, Kansas City Southern, L3Harris Technologies Inc, Lear Corporation, Lockheed Martin Corp, Norfolk Southern Corp., Northrop Grumman Corp., Raytheon Technologies Corp, Tesla
Inc, TransDigm Group Inc., Union Pacific Corp., United Parcel Service, XPO Logistics, Inc..
Morgan Stanley Research policy is to update research reports as and when the Research Analyst and Research Management deem appropriate, based on developments with the issuer, thesector, or the market that may have a material impact on the research views or opinions stated therein. In addition, certain Research publications are intended to be updated on a regular periodic
basis (weekly/monthly/quarterly/annual) and will ordinarily be updated with that frequency, unless the Research Analyst and Research Management determine that a different publication
schedule is appropriate based on current conditions.
Morgan Stanley is not acting as a municipal advisor and the opinions or views contained herein are not intended to be, and do not constitute, advice within the meaning of Section 975 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act.
Morgan Stanley produces an equity research product called a "Tactical Idea." Views contained in a "Tactical Idea" on a particular stock may be contrary to the recommendations or views expressedin research on the same stock. This may be the result of differing time horizons, methodologies, market events, or other factors. For all research available on a particular stock, please contact
your sales representative or go to Matrix at http://www.morganstanley.com/matrix.
Morgan Stanley Research is provided to our clients through our proprietary research portal on Matrix and also distributed electronically by Morgan Stanley to clients. Certain, but not all, Morgan
Stanley Research products are also made available to clients through third-party vendors or redistributed to clients through alternate electronic means as a convenience. For access to all
available Morgan Stanley Research, please contact your sales representative or go to Matrix at http://www.morganstanley.com/matrix.
Any access and/or use of Morgan Stanley Research is subject to Morgan Stanley's Terms of Use (http://www.morganstanley.com/terms.html). By accessing and/or using Morgan Stanley
Research, you are indicating that you have read and agree to be bound by our Terms of Use (http://www.morganstanley.com/terms.html). In addition you consent to Morgan Stanley processing
your personal data and using cookies in accordance with our Privacy Policy and our Global Cookies Policy (http://www.morganstanley.com/privacy_pledge.html), including for the purposes ofsetting your preferences and to collect readership data so that we can deliver better and more personalized service and products to you. To find out more information about how Morgan Stanley
processes personal data, how we use cookies and how to reject cookies see our Privacy Policy and our Global Cookies Policy (http://www.morganstanley.com/privacy_pledge.html).
If you do not agree to our Terms of Use and/or if you do not wish to provide your consent to Morgan Stanley processing your personal data or using cookies please do not access our research.
Morgan Stanley Research does not provide individually tailored investment advice. Morgan Stanley Research has been prepared without regard to the circumstances and objectives of those
who receive it. Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser.
The appropriateness of an investment or strategy will depend on an investor's circumstances and objectives. The securities, instruments, or strategies discussed in Morgan Stanley Research
may not be suitable for all investors, and certain investors may not be eligible to purchase or participate in some or all of them. Morgan Stanley Research is not an offer to buy or sell or thesolicitation of an offer to buy or sell any security/instrument or to participate in any particular trading strategy. The value of and income from your investments may vary because of changes
in interest rates, foreign exchange rates, default rates, prepayment rates, securities/instruments prices, market indexes, operational or financial conditions of companies or other factors. Theremay be time limitations on the exercise of options or other rights in securities/instruments transactions. Past performance is not necessarily a guide to future performance. Estimates of future
performance are based on assumptions that may not be realized. If provided, and unless otherwise stated, the closing price on the cover page is that of the primary exchange for the subject
company's securities/instruments.
The fixed income research analysts, strategists or economists principally responsible for the preparation of Morgan Stanley Research have received compensation based upon various factors,
including quality, accuracy and value of research, firm profitability or revenues (which include fixed income trading and capital markets profitability or revenues), client feedback and competitive
factors. Fixed Income Research analysts', strategists' or economists' compensation is not linked to investment banking or capital markets transactions performed by Morgan Stanley or the
profitability or revenues of particular trading desks.
The "Important Regulatory Disclosures on Subject Companies" section in Morgan Stanley Research lists all companies mentioned where Morgan Stanley owns 1% or more of a class of common
equity securities of the companies. For all other companies mentioned in Morgan Stanley Research, Morgan Stanley may have an investment of less than 1% in securities/instruments orderivatives of securities/instruments of companies and may trade them in ways different from those discussed in Morgan Stanley Research. Employees of Morgan Stanley not involved in the
preparation of Morgan Stanley Research may have investments in securities/instruments or derivatives of securities/instruments of companies mentioned and may trade them in ways different
from those discussed in Morgan Stanley Research. Derivatives may be issued by Morgan Stanley or associated persons.
With the exception of information regarding Morgan Stanley, Morgan Stanley Research is based on public information. Morgan Stanley makes every effort to use reliable, comprehensive
information, but we make no representation that it is accurate or complete. We have no obligation to tell you when opinions or information in Morgan Stanley Research change apart fromwhen we intend to discontinue equity research coverage of a subject company. Facts and views presented in Morgan Stanley Research have not been reviewed by, and may not reflect information
known to, professionals in other Morgan Stanley business areas, including investment banking personnel.
Morgan Stanley Research personnel may participate in company events such as site visits and are generally prohibited from accepting payment by the company of associated expenses unlesspre-approved by authorized members of Research management.
Morgan Stanley may make investment decisions that are inconsistent with the recommendations or views in this report.
To our readers based in Taiwan or trading in Taiwan securities/instruments: Information on securities/instruments that trade in Taiwan is distributed by Morgan Stanley Taiwan Limited ("MSTL").
Such information is for your reference only. The reader should independently evaluate the investment risks and is solely responsible for their investment decisions. Morgan Stanley Research
may not be distributed to the public media or quoted or used by the public media without the express written consent of Morgan Stanley. Any non-customer reader within the scope of Article
7-1 of the Taiwan Stock Exchange Recommendation Regulations accessing and/or receiving Morgan Stanley Research is not permitted to provide Morgan Stanley Research to any third party

46

M

Global Foundation(including but not limited to related parties, affiliated companies and any other third parties) or engage in any activities regarding Morgan Stanley Research which may create or give theappearance of creating a conflict of interest. Information on securities/instruments that do not trade in Taiwan is for informational purposes only and is not to be construed as a recommendation
or a solicitation to trade in such securities/instruments. MSTL may not execute transactions for clients in these securities/instruments.
Certain information in Morgan Stanley Research was sourced by employees of the Shanghai Representative Office of Morgan Stanley Asia Limited for the use of Morgan Stanley Asia Limited.
Morgan Stanley is not incorporated under PRC law and the research in relation to this report is conducted outside the PRC. Morgan Stanley Research does not constitute an offer to sell or
the solicitation of an offer to buy any securities in the PRC. PRC investors shall have the relevant qualifications to invest in such securities and shall be responsible for obtaining all relevant
approvals, licenses, verifications and/or registrations from the relevant governmental authorities themselves. Neither this report nor any part of it is intended as, or shall constitute, provisionof any consultancy or advisory service of securities investment as defined under PRC law. Such information is provided for your reference only.
Morgan Stanley Research is disseminated in Brazil by Morgan Stanley C.T.V.M. S.A. located at Av. Brigadeiro Faria Lima, 3600, 6th floor, São Paulo - SP, Brazil; and is regulated by the Comissão
de Valores Mobiliários; in Mexico by Morgan Stanley México, Casa de Bolsa, S.A. de C.V which is regulated by Comision Nacional Bancaria y de Valores. Paseo de los Tamarindos 90, Torre 1,
Col. Bosques de las Lomas Floor 29, 05120 Mexico City; in Japan by Morgan Stanley MUFG Securities Co., Ltd. and, for Commodities related research reports only, Morgan Stanley Capital Group
Japan Co., Ltd; in Hong Kong by Morgan Stanley Asia Limited (which accepts responsibility for its contents) and by Morgan Stanley Asia International Limited, Hong Kong Branch; in Singapore
by Morgan Stanley Asia (Singapore) Pte. (Registration number 199206298Z) and/or Morgan Stanley Asia (Singapore) Securities Pte Ltd (Registration number 200008434H), regulated by the
Monetary Authority of Singapore (which accepts legal responsibility for its contents and should be contacted with respect to any matters arising from, or in connection with, Morgan Stanley
Research) and by Morgan Stanley Asia International Limited, Singapore Branch (Registration number T11FC0207F); in Australia to "wholesale clients" within the meaning of the AustralianCorporations Act by Morgan Stanley Australia Limited A.B.N. 67 003 734 576, holder of Australian financial services license No. 233742, which accepts responsibility for its contents; in Australia
to "wholesale clients" and "retail clients" within the meaning of the Australian Corporations Act by Morgan Stanley Wealth Management Australia Pty Ltd (A.B.N. 19 009 145 555, holder ofAustralian financial services license No. 240813, which accepts responsibility for its contents; in Korea by Morgan Stanley & Co International plc, Seoul Branch; in India by Morgan Stanley India
Company Private Limited; in Indonesia by PT. Morgan Stanley Sekuritas Indonesia; in Canada by Morgan Stanley Canada Limited, which has approved of and takes responsibility for its contents
in Canada; in Germany and the European Economic Area where required by Morgan Stanley Europe S.E., authorised and regulated by Bundesanstalt fuer Finanzdienstleistungsaufsicht (BaFin)
under the reference number 149169; in the US by Morgan Stanley & Co. LLC, which accepts responsibility for its contents. Morgan Stanley & Co. International plc, authorized by the Prudential
Regulatory Authority and regulated by the Financial Conduct Authority and the Prudential Regulatory Authority, disseminates in the UK research that it has prepared, and approves solely forthe purposes of section 21 of the Financial Services and Markets Act 2000, research which has been prepared by any of its affiliates. RMB Morgan Stanley Proprietary Limited is a memberof the JSE Limited and A2X (Pty) Ltd. RMB Morgan Stanley Proprietary Limited is a joint venture owned equally by Morgan Stanley International Holdings Inc. and RMB Investment Advisory(Proprietary) Limited, which is wholly owned by FirstRand Limited. The information in Morgan Stanley Research is being disseminated by Morgan Stanley Saudi Arabia, regulated by the CapitalMarket Authority in the Kingdom of Saudi Arabia , and is directed at Sophisticated investors only.
The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (DIFC Branch), regulated by the Dubai Financial Services Authority (the DFSA),
and is directed at Professional Clients only, as defined by the DFSA. The financial products or financial services to which this research relates will only be made available to a customer who
we are satisfied meets the regulatory criteria to be a Professional Client.
The information in Morgan Stanley Research is being communicated by Morgan Stanley & Co. International plc (QFC Branch), regulated by the Qatar Financial Centre Regulatory Authority(the QFCRA), and is directed at business customers and market counterparties only and is not intended for Retail Customers as defined by the QFCRA.
As required by the Capital Markets Board of Turkey, investment information, comments and recommendations stated here, are not within the scope of investment advisory activity. Investment
advisory service is provided exclusively to persons based on their risk and income preferences by the authorized firms. Comments and recommendations stated here are general in nature. These
opinions may not fit to your financial status, risk and return preferences. For this reason, to make an investment decision by relying solely to this information stated here may not bring aboutoutcomes that fit your expectations.
The trademarks and service marks contained in Morgan Stanley Research are the property of their respective owners. Third-party data providers make no warranties or representations relating
to the accuracy, completeness, or timeliness of the data they provide and shall not have liability for any damages relating to such data. The Global Industry Classification Standard (GICS) was
developed by and is the exclusive property of MSCI and S&P.
Morgan Stanley Research, or any portion thereof may not be reprinted, sold or redistributed without the written consent of Morgan Stanley.
Indicators and trackers referenced in Morgan Stanley Research may not be used as, or treated as, a benchmark under Regulation EU 2016/1011, or any other similar framework.

Morgan Stanley Research

47

M

Global Foundation

INDUSTRY COVERAGE: Autos & Shared Mobility
Company (Ticker)

Rating (As Of)

Price* (05/06/2021)

Adient PLC (ADNT.N)

U (03/17/2021)$48.29American Axle & Manufacturing Holdings Inc (AXL.N)

U (03/24/2021)$9.76

Aptiv Plc (APTV.N)

O (03/30/2020)$141.46

Asbury Automotive Group Inc (ABG.N)

O (12/07/2020)$209.17

AutoNation Inc. (AN.N)

U (07/10/2018)$106.89

BorgWarner Inc. (BWA.N)

U (11/09/2020)$52.23

Carmax Inc (KMX.N)

O (07/10/2018)$130.29

Carvana Co (CVNA.N)

O (02/26/2021)$263.45

Ferrari NV (RACE.N)

O (05/09/2019)$200.11

Fisker Inc (FSR.N)

O (02/11/2021)$11.30Ford Motor Company (F.N)

U (01/29/2021)$11.74General Motors Company (GM.N)

O (04/09/2018)$58.72

Group 1 Automotive, Inc (GPI.N)

O (05/06/2019)$174.90

Lear Corporation (LEA.N)

O (11/09/2020)$192.21

Lithia Motors Inc. (LAD.N)

U (02/09/2021)$380.32

Lordstown Motors (RIDE.O)

U (02/11/2021)$8.06

Magna International Inc. (MGA.N)

E (04/13/2021)$96.06

Penske Automotive Group, Inc (PAG.N)

O (07/10/2018)$92.37

Quantumscape Corp (QS.N)

O (02/11/2021)$30.98

Romeo Power, Inc. (RMO.N)

U (02/11/2021)$7.56

Sonic Automotive Inc (SAH.N)

E (11/14/2019)$52.37Adam Jonas, CFA

Garrett Motion Inc (GTX.O)$5.80

Tenneco Inc. (TEN.N)

U (03/30/2020)$11.35Tesla Inc (TSLA.O)

O (11/18/2020)$663.54

Visteon Corporation (VC.O)

U (03/22/2018)$126.53

Avis Budget Group Inc (CAR.O)

E (03/15/2021)$83.91

Harley-Davidson Inc (HOG.N)

U (04/22/2021)$48.96

Polaris Inc. (PII.N)

O (01/19/2021)$143.57

E (04/16/2021)$19.54

Rating (As Of)

Price* (05/06/2021)

ArcBest Corp (ARCB.O)

O (12/10/2020)$86.58C.H. Robinson Worldwide Inc. (CHRW.O)

U (06/09/2013)$98.02

Canadian National Railway Co. (CNR.TO)++

C$134.02

Billy Kovanis

Victoria A Greer
Goodyear Tire & Rubber Company (GT.O)
Stock Ratings are subject to change. Please see latest
research for each company.
* Historical prices are not split adjusted.

INDUSTRY COVERAGE: Freight Transportation
Company (Ticker)
Ravi Shanker

Canadian Pacific Railway Ltd. (CP.TO)++

C$471.75

CSX Corporation (CSX.O)

U (12/10/2020)$102.56

Echo Global Logistics Inc (ECHO.O)

E (03/05/2019)$35.07

Expeditors International of Washington I (EXPD.O)

E (02/25/2015)$115.64

FedEx Corporation (FDX.N)

E (06/20/2013)$310.96Heartland Express Inc. (HTLD.O)

U (05/06/2011)$19.11

Hub Group Inc (HUBG.O)

E (02/13/2018)$69.72

J.B. Hunt Transport Services Inc. (JBHT.O)

E (05/06/2011)$174.90++$296.31

O (12/13/2017)$48.83Kansas City Southern (KSU.N)
Knight-Swift Transportation Holdings Inc (KNX.N)
48

M

Global Foundation

Landstar System Inc (LSTR.O)

U (02/23/2016)$175.72

Norfolk Southern Corp. (NSC.N)

U (06/03/2016)$286.97

Old Dominion Freight Line Inc (ODFL.O)

O (03/23/2020)$264.96

Saia, Inc. (SAIA.O)

U (02/23/2016)$236.64

Schneider National Inc. (SNDR.N)

O (05/01/2017)$25.93TFI International Inc (TFII.N)

O (06/10/2020)$87.80

Union Pacific Corp. (UNP.N)

E (03/23/2020)$227.21

United Parcel Service (UPS.N)

U (02/23/2016)$214.78

US Xpress Enterprises Inc (USX.N)

O (07/09/2018)$10.73Werner Enterprises (WERN.O)

O (02/23/2016)$47.85

XPO Logistics, Inc. (XPO.N)

E (02/19/2019)$144.35

Rating (As Of)

Price* (05/06/2021)

Boeing Co. (BA.N)

O (01/29/2021)$229.81Raytheon Technologies Corp (RTX.N)

O (09/07/2020)$84.68Spirit AeroSystems Holdings Inc (SPR.N)

O (03/01/2021)$44.23

TransDigm Group Inc. (TDG.N)

O (09/07/2020)$599.04

Rating (As Of)

Price* (05/06/2021)

General Dynamics Corp. (GD.N)

U (09/07/2020)$192.68

L3Harris Technologies Inc (LHX.N)

O (09/07/2020)$216.99

Lockheed Martin Corp (LMT.N)

O (09/07/2020)$387.34

MDA Ltd (MDA.TO)

E (04/27/2021)

C$15.72

Northrop Grumman Corp. (NOC.N)

O (09/07/2020)$370.05

Textron Inc. (TXT.N)

E (09/07/2020)$67.31Rating (As Of)

Price* (05/06/2021)

E (02/01/2021)$19.18Stock Ratings are subject to change. Please see latest
research for each company.
* Historical prices are not split adjusted.

INDUSTRY COVERAGE: Aerospace
Company (Ticker)
Kristine T Liwag

Stock Ratings are subject to change. Please see latest
research for each company.
* Historical prices are not split adjusted.

INDUSTRY COVERAGE: Defense
Company (Ticker)
Kristine T Liwag

Stock Ratings are subject to change. Please see latest
research for each company.
* Historical prices are not split adjusted.

INDUSTRY COVERAGE: Aerospace & Defense
Company (Ticker)
Adam Jonas, CFA
Virgin Galactic Holdings Inc (SPCE.N)
Stock Ratings are subject to change. Please see latest
research for each company.
* Historical prices are not split adjusted.

Morgan Stanley Research49© Morgan Stanley 2021

The Americas

EuropeJapan

Asia/Pacific1585 Broadway

20 Bank Street, Canary Wharf

1-9-7 Otemachi, Chiyoda-ku

1 Austin Road West

New York, NY 10036-8293

London E14 4AD

Tokyo 100-8104

KowloonUnited States

United Kingdom

Japan

Hong Kong

Tel: +1 (1) 212 761 4000

Tel: +44 (0) 20 7 425 8000

Tel: +81 (0) 3 6836 5000

Tel: +852 2848 5200