By Dan Catchpole and Shivansh Tiwary

Nov 20 (Reuters) - Electric aircraft maker BETA Technologies BETA.N said on Thursday it is partnering with Near Earth Autonomy to develop uncrewed aircraft for the military, with flight testing slated to begin in the first half of 2026.

Development and full demonstration of the autonomous system should take up to a year and could be deployed within 18 to 36 months, BETA CEO Kyle Clark told Reuters.

However, the defense procurement process could change that, he said.

BETA, which designs and manufactures electric aircraft and propulsion systems, said Near Earth adds expertise and experience with autonomous systems, which it has developed for the U.S. military and major aerospace manufacturers.

With regulatory hurdles delaying commercial passenger air taxis, companies in the sector are increasingly exploring defense and logistics markets to diversify revenue, pushing developers to strengthen autonomous capabilities to gain an edge.

There is demand for "hundreds of aircraft per year - on the low end," Clark said. Russia's ongoing war in Ukraine demonstrates the importance of aerial logistics, he added.

The Vermont-based company plans to use its work with Near Earth to expand its products for military users and commercial cargo carriers, including its existing partners UPS UPS.N and Bristow.

The company, which raised $1 billion in an IPO on the New York Stock Exchange earlier this month, has been testing in-house autonomy systems for several years.

Recent signals from U.S. defense and transportation agencies point to faster fielding of autonomous aircraft, Shawn Hall, BETA's chief revenue officer said in a statement.

BETA's partnership with Near Earth complements its work with GE Aerospace to develop a turbo generator, plus its own expertise developing electric airplanes.

(Reporting by Shivansh Tiwary in Bengaluru and Dan Catchpole in Seattle; Editing by Vijay Kishore)

((Shivansh.Tiwary@thomsonreuters.com; +91 9708363192; X: @Shivansh_19_;))