This summer, they demonstrated the aircraft's automated folding wing, one of the biggest challenges to the design, and it worked perfectly, opening and closing over 500 times without incident. Says Terrafugia chief operating officer Anna Dietrich, "We're building the rest of the first vehicle now. Our schedule calls for us to start flight testing by the end of 2008, and so far we're on track for that."

The next big challenge? Dietrich told us that the company's "designing the power transfer mechanism from the engine to the prop and the wheels." Explained Dietrich, "The engine we're using is already in use in about 70% of Light-Sport Aircraft, the 100hp Rotax 912." The $148,000 flying car will use premium fuel from any gas station. [Terrafugia, via Technology Review] (Thanks, Terrafugia , for letting us use your video!)