Canoo, the Torrance, California-based EV startup announced Wednesday it will shift production of its electric vehicles from Europe to the United States. Manufacturing will start at its facility planned for Arkansas, as well as a second plant in Oklahoma, which should come online in late 2023.
Supply chain concerns
The company had been discussing the possibility of contract manufacturing its vehicles with the Netherlands-based VDL Nedcar. But those talks ceased due to concerns about supply chains, the company states that by bringing all of its manufacturing stateside, they increase their speed to market, better control the product, eliminate tariffs and overseas shipping costs, and create more American manufacturing jobs.
“We will be 100% built in the heartland of America, and we have proudly achieved another major milestone of having sourced 96% of our parts from U.S. and Allied Nations,” said Tony Aquila, an investor who is also Chairman & CEO at Canoo Inc., in a statement. Previously, Aquila estimated VDL Nedcar would produce up to 25,000 units in 2023.
But Canoo is still seeking a relationship with VDL Group. While VDL Nedcar will return Canoo’s prepayment of $30.4 million, VDL Group has agreed to purchase $8.4 million of Canoo stock.
Latest company to leave California
Those vehicles will now be built in Bentonville, Arkansas, where Canoo plans to move its headquarters, with an R&D center to be located Fayetteville, Arkansas. Canoo is also building a “Mega Micro factory” at a cost of $400 million. The facility, the nascent EV maker’s second, will be located on a 400-acre tract in the MidAmerica Industrial Park in Pryor, Oklahoma near Tulsa. The company says is expected to come online in late 2023 and generate 2,000 jobs.
State incentives play a part
Canoo confirmed in August that it received $300 million in financial incentives from the state of Oklahoma, with approximately one-third of the incentives anticipated to come during the first 36 months. Whether Arkansas has given the company financial incentives isn’t clear.
But the moves led the company to increase its production forecast. Aquila said the company now expects to build between 3,000 and 6,000 units in 2022, before growing to as many as 17,000 units in 2023, 50,000 in 2024, and as many as 80,000 by 2025.
“The initiatives announced today are another step in executing our strategy of reducing risk and increasing certainty,” Aquila said.
What’s a Canoo?
The company is expected to launch its “Lifestyle Vehicle,” a lozenge-shaped minivan shown at the 2021 Los Angeles Auto Show, in the third quarter of 2022. It designed in-house at the company’s current design and engineering office in Torrance, California by Richard Kim, best known for designing the BMW i3.
Looking much like a modern-day version of Buckminster Fuller’s Dymaxion, the company is targeting the vehicle to have a 250-mile range and as much as 350 horsepower with front-wheel or all-wheel drive. Look for prices to start at $34,750.
The same platform is expected to yield a pickup truck, and a boxy delivery vehicle dubbed the MPDV, although a start date for production hasn’t yet been announced.
What Wall Street thinks
Canoo is listed on the NASDAQ ticker symbol GOEV, closed Friday at $8.94 a share, up $0.52, or 6.18 percent. That puts it at more than halfway below its 52-week high of $24.90, yet still above its low of $5.75. Analysts’ consensus on the stock is overweight, with three analysts rating it a Buy, and one rating it an Underweight. Analysts’ average stock price target is $13.75, ranging from a high of $21 to a low of $5, according to The Wall Street Journal.
That is pricier than Lordstown Motors (NASDAQ: RIDE) at $4.05, which has seen its share of trouble and like Canoo has yet to build anything aside from prototypes. Canoo’s valuation is far from Rivian’s (NASDAQ: RIVN) $97.70 a share. Analysts rate Lordstown an Underweight, with two rating it a Hold, one at Underweight, and three are at Sell. Rivian, like Canoo, is rated an Overweight, with eight rating it a buy, two Overweight, and five Hold.
But the U.S. Securities and Exchange Commission (SEC) is less impressed. In May, the SEC launched an investigation into the company after Canoo conducted a reverse merger with special purpose acquisition company Hennessy Capital Acquisition Corp. to go public.
Financially, Canoo announced in November a GAAP loss of $80.9 million and $208.7 million for the three- and nine-months ending Sept. 30, 2021, compared to a GAAP loss of $23.4 million and $77.5 million for the three- and nine-months ending Sept. 30, 2020. The company’s workforce currently numbers around 800, and expects capital expenditures of $60 million to $80 million in the fourth quarter.