Thursday, July 7, 2022

EV startup Canoo is running out of money and doubting its future

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Shreya Christina
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Canoo, the struggling electric vehicle startup, thinks it’s running out of money. In grim terms, the company reports that it only has enough money to last for another quarter and isn’t sure if it will be able to survive after that.

“As of the date of this announcement, we report that there is substantial doubt about the company’s ability to continue as a going concern,” the company said in its first quarter earnings report.

Canoo was founded in late 2017 when former BMW chief executive Stefan Krause left the then struggling EV startup Faraday Future. Krause and some of the other executives who co-founded Canoo — then called Evelozcity — were charged by Faraday Future for poaching employees and stealing trade secrets, though the lawsuit was arranged at the end of 2018

The automaker has several EVs in the works, including the MPDV, a multi-purpose van, and the Canoo Pickup Truck. The toy truck showed just how far Canoo is willing to push the design of the microbus-style vehicle it first debuted in 2019, which originally planned to sell only on a subscription basis.

The company says it has $104.9 million in cash and cash equivalents as of March 31. Canoo lost $125.4 million in the past three months, compared to a loss of $15.2 million in the first quarter of 2021.

In a statement, Canoo chairman and CEO Tony Aquila said the company has $600 million in “accessible capital” to support production of its line of electric vehicles. That includes total funding of $300 million through a dedicated PIPE from an existing shareholder and a share purchase agreement with funding partner Yorkville Advisors, as well as a $300 million universal shelf, which Canoo has applied for.

The company has fired executives in recent months. Last year, Canoo reported that the Securities and Exchange Commission was investigating the company’s merger with a special acquisition company. And this week, Canoo has filed a lawsuit to recoup the profits made by a major investor with ties to China.

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