Rolls-Royce share price: how the company is preparing for the air taxi market

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Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. It’s pretty clear that Rolls-Royce (LSE:RR) will face some tough challenges in the next few years. Although many countries are rolling out vaccines against Covid-19, civil aviation hasn’t recovered all that much. As a result of these headwinds and previous management decisions, the Rolls-Royce share price hasn’t done well over the past 12 months when adjusting for the rights issuance — the stock is down around 59%.While the next few years might be challenging, I reckon there is still an opportunity for Rolls-Royce if management makes the right decisions, particularly in the field of electric air taxis.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Here’s how Rolls-Royce is preparing for the market and how I think it could affect the Rolls-Royce share price.What are air taxisAir taxis are electric vertical take-off and landing (eVTOL) aircraft. While they were previously in the arena of science fiction, rapid improvements in battery technology have made air taxis more practical. A startup such as Archer Aviation is, in fact, hoping to produce air taxis with a range of 60 miles and a top speed of 150 miles per hour by 2023. Other startups and companies are also working on air taxi technology.Given that air taxis could save a lot of time in terms of commutes, many analysts think the market could be pretty big in the future. Airbus, for example, believes the eVTOL aircraft market could one day outpace its current business.Air taxis also fit into the green trend. Because they are electric, air taxis would also represent a more sustainable form of transportation than traditional jets that use fossil fuels.Rolls-Royce and air taxisFor Rolls-Royce, air taxis are a potential growth field, and the company is already doing work in the sector. In collaboration with Airbus, Rolls-Royce has developed a propulsion system for an electric multicopter named CityAirbus with a maximum speed of 75 miles per hour.Going forward, Rolls-Royce believes distributed electric and hybrid electric propulsion technology will be important for electric taxis in the future. The company is working on developing the tech as a result. Rolls-Royce shared its projection on electric propulsion and the potential growth in air taxis: Enabled by distributed electric propulsion, these vehicles will soar over traffic in a way that every commuter dreams about – and they could be in the skies by the early 2020s. The projected market size for these early eVTOL is roughly £1bn per year. As battery technology improves over the years, air taxis and eVTOL will become more sustainable and fly for longer ranges and at higher speeds.Rolls-Royce share price: what I’d doAlthough its fundamentals might not be that great from a near-term cash flow perspective, I reckon Rolls-Royce has a lot of potential in future aviation technologies given its leading R&D capabilities in aircraft engines. If management makes the right moves in the air taxi engine market, Rolls-Royce has a lot of growth potential ahead in my view. Given the current Rolls-Royce share price, I’d buy shares as a result.With that said, the next couple years will likely be challenging for Rolls-Royce and any bad management decisions could send the stock lower. If another company does better in distributed electric and hybrid electric propulsion technology, there might not be as much growth for Rolls-Royce either. 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