EV Start-Up Canoo Teeters Over the Edge

With its losses mounting and stock price tumbling, Canoo appears to be the latest EV start-up to face the threat of collapse. The company furloughed 30 employees at its factory in Oklahoma, even as two more of its top executives resigned.

Once one of the brighter prospects among a plethora of EV start-ups, Canoo is now struggling to survive.

The company reported a sharp increase in losses for the first half in its latest regulatory filing, while its available cash continues to dwindle.

The EV maker has now laid off without pay 30 workers at its factory in Oklahoma, even as it continues to lose members of its senior management team. The latest to exit: Chief Financial Officer Greg Ethridge and General Counsel Hector Ruiz.

Meanwhile, shareholders continue heading for the door, Canoo’s stock price falling about 90% over the past 52 weeks. That’s leading analysts to question whether it could be the next EV manufacturer to fail after Fisker’s recent bankruptcy.

Up the creek without a paddle

Originally named Evelozcity, Canoo was founded in 2017 by Stefan Krause, the former CFO of Deutsche Bank, and Ulrich Kranz, a former executive at BMW. Both had gotten their feet wet in the EV industry while working at Faraday Future.

As Headlight.News initially reported, Canoo aimed to create a niche for itself with what it described as a vehicle using “minimalist design that maximizes interior space.” It eventually rolled out several body concepts, including a van and a pickup. But early problems, including product development delays and financial issues, led it to abandon the retail vehicle market to focus on commercial products, such as all-electric delivery vans.

In mid-2022, Canoo warned investors that it had “substantial doubt” it would have the cash to launch production later this year.

A lifeline unravels

It appeared to have grabbed a lifeline, however, when, Walmart placed an order for 4,500 LDVs, or “Lifestyle Delivery Vans,” in July 2022 — Canoo saying the mega-retailer had the option to purchase another 10,000.

With $100 million in potential tax breaks and other incentives, Canoo launched production at a factory in Oklahoma a year later.

But things haven’t met expectations, and Canoo has revised its 8-K filing with the SEC to show a net loss of $117.6 million for the first half of 2024, while available cash and equivalents have dropped to $4.51 million, down from $6.39 million a year earlier. And a number of suppliers have gone after that cash, alleging unpaid bills.

Canoo now anticipates full-year revenues will come in between $50 million and $100 million. Analysts had forecast around $152.5 million, according to a consensus gathered by the London Stock Exchange.

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Is the end in sight?

That has investors growing increasingly nervous. Shares fell as low as 39 cents early this week before bouncing back to 43 cents at the end of trading on Tuesday.

Company officials have tried putting a positive spin on the latest job cuts and executive departures, suggesting Canoo is in the midst of “supply chain harmonization to prepare the company for the next phase of growth.”

But there is growing concern that the company doesn’t have much of a future left. “The end is nearing,” warned a report by stock research site Invezz.com.

Canoo would be just the latest in a string of EV start-up failures, such as Lordstown Motors. The most recent is Fisker which recently received court approval for its bankruptcy plan. Still other once-promising ventures, such as Faraday Future, are barely hanging on, with few expecting them to be able to survive.