Electric vehicles

A rundown of Canoo, the EV startup that Walmart just gave a lifeline

As recently as May, the company warned it was at risk of running out of cash.
article cover


· 3 min read

Canoo has been taking on water, and Walmart may have just passed it a bucket.

Last week, EV startup Canoo Inc. announced that Walmart had agreed to buy at least 4,500 of its electric delivery vans. The news was a win for the EV maker, which over the last two years has experienced executive departures, an SEC probe, and investor skepticism, resulting in a paltry stock performance since it went public via SPAC in 2020.

Walmart has the option to purchase as many as 10,000 of Canoo’s EVs over the next five years, according to the agreement. The price the retail giant will pay for the startup’s Lifestyle Delivery Vehicles was not disclosed, but Walmart expects to begin deploying the branded vans in 2023.

Canoo, which also has contracts with NASA and the US Army, saw its share price more than double the day after the Walmart deal became public, but the beleaguered company still faces some significant hurdles on its path to mass production and that ever-elusive EV startup goal: profit.

Dwindling dollars

Like many other new EV companies, Canoo is currently trying to establish manufacturing operations at scale, and that means it’s burning through cash—fast.

The startup spent ~$120 million on operating activities in the first quarter of 2022—more than double the amount it spent in Q1 last year. As of March 31, it had just $104.9 million of cash on hand, according to Securities and Exchange Commission filings.

In May, Canoo warned investors there was “substantial doubt” that the company would have enough cash to continue with the business in its Q1 2022 SEC filing. But the company plans to push ahead. It has secured $300 million from an existing investor and could sell an additional $300 million in shares.

Stay up to date on emerging tech

Drones, automation, AI, and more. The technologies that will shape the future of business, all in one newsletter.

The deal with Walmart includes an option for the retailer to purchase ~61 million shares of Canoo’s stock at a price of $2.15 per share, amounting to more than a 20% stake in the company.

Beyond its burn rate, supply-chain pressures and technical blunders have also stymied Canoo’s progress on ramping up production.

  • The company had planned to begin production at a plant in Arkansas in the fourth quarter of this year, but the ongoing chip shortage and high material costs could delay that start until early 2023.
  • A new manufacturing facility planned for Oklahoma could also fall behind schedule. Supply-chain issues and high construction costs, among other challenges, may set the project back, with production starting in 2024 rather than late 2023.
  • In early July, lithium-ion battery cells caught fire during testing and burned down a trailer at Canoo’s California office. It was the second battery fire at the site in the past year.

Zoom out: The deal with Canoo is just the latest electric delivery vehicle option for Walmart. The retailer has already ordered 5,000 vans from GM’s BrightDrop and 1,100 E-Transit vans from Ford. But Walmart doesn’t want Canoo to do the same: the agreement prohibits the EV maker from doing any business with Amazon or its subsidiaries.

For its part, Amazon plans to buy up to 100,000 electric vans from Rivian and holds a nearly 18% stake in the company. UPS is betting on UK-based EV maker Arrival. In 2020, the logistics company invested in Arrival and committed to purchasing 10,000 vehicles from the company.

Stay up to date on emerging tech

Drones, automation, AI, and more. The technologies that will shape the future of business, all in one newsletter.