The next big thing in transportation could be electric flying taxis — think of a drone crossed with a helicopter — that would ferry people and goods high above congested roadways.

Why it matters: Air taxis are billed as a cheaper, faster, cleaner mode of transportation, and an important link between remote areas and population centers. But there are still technical and regulatory challenges to overcome — not to mention public skepticism.

• While test flights could begin as soon as 2023, don't expect to see them criss-crossing the skies in large numbers until the middle of the next decade.

Reality check: Flying taxis are approaching the "peak of inflated expectations," on Gartner's annual "hype cycle" for connected vehicles and smart mobility.

• That puts them about where self-driving cars were five years ago — and we're still waiting for those to arrive.
• Right now, autonomous vehicles are mired in what Gartner calls the "trough of disillusionment."

Investors thrive on hype, though — which is why on Wall Street, at least, flying taxis are taking off.

• In 2020, air mobility companies raised a total of $1.3 billion in private investment, up 80% from 2019, according to Pitchbook.
• Now several startups, including Silicon Valley-based Joby Aviation and Germany's Lilium, are expected to go public by merging with a special purpose acquisition company (SPAC), the research firm says.
• They and others are likely looking to capitalize on the frothy demand for public shares in electric vehicle companies and related mobility technologies, says Pitchbook mobility analyst Asad Hussain.

The big picture: The potential market for air mobility is huge — as much as $115 billion by 2035, with 280,000 employees — according to a new study by Deloitte and the Aerospace Industries Association.

• That includes drones delivering pizzas, as well as larger air shuttles hauling merchandise between warehouses, ferrying passengers to the airport or even carrying military troops to the battlefield.

Details: Everyone including aviation companies, automakers, tech giants and startups are designing new aircraft to deploy in this new transportation network.

• Electric vertical takeoff and landing aircraft (eVTOLs) would have multiple small rotors enabling them to take off and land like a helicopter, but then rotate forward like a propeller so they can fly like a plane once in the air.
• NASA and the Federal Aviation Administration are working with eVTOL companies on how to safely integrate these aircraft into existing air traffic, sandwiched between low-flying drones and the traditional airspace high above.
• Meanwhile, urban planners in places like Los Angeles and Dallas are designing so-called vertiports, where these eVTOLs can pick up and drop off passengers.
• Lilium plans to locate its first U.S. vertiport in Orlando.

What to watch: Flying cars share some technology with autonomous electric vehicles, but could potentially be deployed faster because they don't have as many obstacles to avoid in the air.

• They'll also be piloted in the early stages, but eventually be able to fly themselves.
• As with self-driving technology, they're likely to start out carrying cargo, and then add passengers later.
• With lower operating and maintenance costs, eVTOLS could be much cheaper than the $9 per mile it costs now to fly on a helicopter — especially once the highly paid pilot is removed.

The bottom line: Operators hope some day that an autonomous air taxi could be no more expensive than a shared ride, but a lot faster — and with a better view.