The experimental Transition Proof of Concept's first flight in March 2009 was successful and took place at Plattsburgh International Airport in upstate New York using U.S. Federal Aviation Administration (FAA) tail number N302TF.

[10] The extra 110 pounds (50 kg) granted by the exemption provides more weight allowance for the mandatory road safety features such as airbags and bumpers.

[13] Aerodynamic changes revealed included a new, optimized airfoil, Hoerner wingtips, and removal of the canard after it was found to have an adverse aerodynamic interaction with the front wheel suspension struts; furthermore, the multipurpose passenger vehicle classification from the NHTSA removed the requirement for a full width bumper that had inspired the original canard design.

[14] On November 16, 2010, the U.S. National Highway Traffic Safety Administration (NHTSA) published Terrafugia's petition for a temporary, three-year hardship exemption from four FMVSS standards in the Transition.

[28] In January 2013, development continued and the company announced that it might be necessary to construct a third, completely new prototype, due to the large number of modifications required.

The company indicated that the increases were required to allow inclusion of structures to meet FMVSS ground operation safety regulations.

[37][38][39] In April 2015 the company announced that parts were being built for the third version of the aircraft, and that current planning estimated the first customer delivery after roughly two years.

[46] These include a hybrid-electric motor and lithium iron phosphate battery for road mode use, a Dynon electronic flight instrument system, a Ballistic Recovery Systems ballistic parachute, an inflight power boost feature, a remodeled interior, increased cargo space, improved seat belt design, airbags, plus three rearview cameras.

[48] In February 2021, it was reported that Terrafugia had laid off most of their employees and would close down operations in the United States later in the year, with the intention of moving to China.