Shares of Joby Aviation (JOBY 8.80%) are flying higher on Tuesday. The company's stock had spiked 9.9% at 12:25 p.m. ET. The jump came as the S&P 500 and the Nasdaq Composite gained 0.5% and 0.8%, respectively.

The company, which develops electric vertical take-off and landing (eVTOL) aircraft, announced today that it is officially in talks with Abdul Latif Jameel, a prominent Saudi Arabian investor group, to deliver as many as 200 of its air taxis.

A major deal could be coming

As announced through a joint statement this morning, Joby and Abdul Latif Jameel have signed a nonbinding agreement "to explore opportunities to establish a distribution agreement in Saudi Arabia for Joby's electric aircraft." While the deal is preliminary and in an exploratory phase, it looks promising, as the Saudi investor group is already an investor in Joby and has a long-standing relationship with Toyota, an important supporter of Joby.

Image source: Getty Images.

The deal could be worth a substantial $1 billion, but Joby CEO JoeBen Bevirt believes it is just the first step, saying in an interview with Bloomberg that this was a "valuable first step" and "we think that, over time, the market in Saudi is substantially larger than that. But this is the first chunk."

Joby is executing

This deal, if made official, would be a massive step toward establishing Joby not just in Saudi Arabia but globally. It would validate the company's technology and, assuming the aircraft operate reliably and safely, help pave the regulatory path in more cautious markets like the U.S. and Europe. I think Joby is a solid pick for those with a higher risk tolerance.