Terrafugia was then incorporated May 1, 2006, with much of the initial funding coming from CEO and founder Carl Dietrich's US$30,000 Lemelson-MIT Student Prize.

[10][11] In October 2008, Terrafugia reported seeking reservations for airframe number 57 representing an order book of more than US$8 million.

During that period the company increased the staffing levels at its Woburn, Massachusetts, headquarters, expanding the work force in engineering, accounting, human resources, marketing and also operations.

A new research and development division was also established in Petaluma, California, intended to undertake all future engineering tasks.

Owners will be able to drive amidst normal street traffic from their garage to an airport where the wings can be deployed for take-off and flight within a range of 460 miles (740 km; 400 nmi).

[27] The design of the production version was made public at AirVenture Oshkosh on 26 July 2010 and no longer included a front canard.

[28] The Transition Proof-of-Concept's maiden flight on 5 March 2009 lasted 37 seconds and covered 3,000 feet (910 m) of the runway at the Plattsburgh International Airport.

[30] On June 29, 2011, the National Highway Traffic Safety Administration also granted exemptions allowing the Transition to use a polycarbonate windshield, to use tires suited for highway and aircraft use but not typically certified for multi-purpose vehicle use, to not include an electronic stability control system that could inadvertently cut engine power during flight, and finally, to use regular instead of advanced airbag deployment.

A Phase 1 proposal from AAI Corporation was awarded a US$3m contract in September, 2010[41] and incorporates deployable surfaces technology from subcontractor Terrafugia.