The project - which has been funded by Google founder Larry Page - is able to travel as much as 100 km on a single charge and could hit the consumer market in the coming years, according to parent company Kitty Hawk.
The cutting-edge device is being developed in New Zealand, where the government has hailed the air taxi for its environmental impact.
Dr Megan Woods, the minister for research, science and innovation, explained: "We've got ambitious goals here in New Zealand, we want to get to net zero emissions by 2050 and that includes mobility."
This comes shortly after Audi unveiled a self-driving car that doubles up as a passenger drone.
According to the luxury vehicle maker, the Pop.Up Next will "solve traffic problems in cities" by converting from a car to a drone when needed.
Dr. Bernd Martens, Audi Board Member for Procurement and President of Italdesign, explained: "Creativity is needed where new mobility concepts for cities and people's diverse needs are concerned.
"Italdesign is an incubator for innovative technologies and radical prototyping. Pop.Up Next is an ambitious vision that could permanently change our urban life in the future."
Meanwhile, Jorg Astalosch, the Chief Executive of Italdesign, added: "Various players will define the rules of urban mobility in the future.
"We are proud to collaborate with Airbus, the leading company in the aerospace industry, to investigate solutions for future mobility ..."