Archer Aviation said on Wednesday the U.S. Federal Aviation Administration (FAA) has granted the company a certificate to begin commercial operations, making it the second electric air taxi maker to achieve the key milestone.

Shares of the Santa Clara, California-based company rose 3% in morning trade on receipt of the nod, known as Part 135 Certification.

The company's flagship electric vertical takeoff and landing (eVTOL) aircraft, "Midnight," is yet to receive a Type Certification from the U.S. aviation regulator. That certification means an aircraft meets the FAA's design and safety standards.

Archer, which is backed by companies such as Stellantis, Boeing and United Airlines said it plans to use conventional aircraft to refine its "systems and procedures."

Peer Joby Aviation received the Part 135 Certification from the FAA in 2022.

Archer is among a bunch of eVTOL makers seeking to revolutionize urban travel in congested cities by offering short-haul air travel.

But, the industry faces regulatory and technological challenges, such as battery density, which have weighed on shares of eVTOL makers.

Archer shares are down 47% this year, while, Joby Aviation has fallen 26.7%.

However, that hasn't stopped large companies from betting on the eVTOL makers. Earlier this year, carmaker Stellantis raised its stake in Archer by roughly 8.3 million shares, making it the company's biggest shareholder, according to LSEG data.

  - Reuters