Canoo faces dire financial straits

The Californian electric car start-up Canoo is in financial difficulties that threaten its existence. The company has reported a loss of around US$125 million (€118.4 million) for the first quarter of 2022 and warns in its quarterly report “that there is significant doubt about the company’s ability to continue as a going concern”.

+ + Kindly see our update below + +

Although Canoo is in the hot phase of development and testing and says it has produced 39 prototypes (“gamma builds”) in the past six weeks, CEO Tony Aquila does not comment on the vehicle itself, only on financing.

“We have been clear about our philosophy of raising capital judiciously and will continue with this disciplined approach,” Aquila says. “We have more than $600 million in accessible capital to support Start of Production (SOP). As operators and investors, we have significant experience raising capital in challenging markets – and the best way to raise capital is to achieve your goals. We will continue to raise when needed, bridge to milestones and be in a position to take advantage of improving market conditions. We are focused on long term value creation for our customers and shareholders.”

That funding needs are high at this stage is also reflected in the outlook for the second quarter, with Canoo expecting operating costs of $95 million to $115 million and capital expenditure of between $85 million and $105 million. That is a total of 220 million dollars or 208 million euros.

According to plans stated in November 2021, Canoo wants to get its US manufacturing up and running this year. Plans for European production at VDL NedCar have fallen through. The first model is to be a van called Lifestyle Vehicle, which Canoo first presented in 2019. According to earlier announcements, an e-pickup will follow in 2023.

Aquila was brought in to Canoo in 2020 as an investor and executive chairman, he was supposed to accompany the SPAC IPO in this management position. When Canoo co-founder Ulrich Kranz left the company in April 2021, Aquila became the new CEO – and realigned the company. Instead of selling via a subscription model, Aquila wants to sell the vehicles. And the founders’ plan to offer the skateboard platform to other carmakers was also later rejected.

Update 24 May 2022:

Rumours that Apple is working on an autonomous electric car have been circulating for years. According to a recent report from Bloomberg, Canoo could now be in the tech giant’s sights to push the project forward. Since the electric vehicle start-up is, as described above, in financial difficulties that threaten its existence, the company could become a takeover candidate for Apple. The two companies already have ties: in 2021, Apple hired former Canoo CEO Ulrich Kranz to advance its vehicle project. Apple also employs some former Canoo engineers. As an alternative to a takeover, Apple could poach more employees with expertise from Canoo, as “a person close to both Apple and Canoo” told Bloomberg.

canoo.com, update: bloomberg.com