Barely two months after EV startup Canoo seemed to be up a creek without a paddle, Walmart threw it a life preserver.
The retail giant ordered 4,500 delivery vans from Canoo, the struggling automaker announced Tuesday, almost precisely two months after it warned investors it had “substantial doubt” it would have the cash to launch production later this year.
With Walmart having the option to expand the order up to 10,000 vans, Canoo stock nearly doubled after months of steady decline.
“We are proud to have been selected by Walmart, one of the most sophisticated buyers in the world, to provide our high-tech, all-electric, American made Lifestyle Delivery Vehicle to add to their impressive logistics capabilities,” said Tony Aquila, investor, chairman and CEO of Canoo, in a statement.
Lifestyle Delivery Van
The deal focuses on Canoo’s small LDV, or “Lifestyle Delivery Van.” It uses the same multi-purpose platform designed to be shared with a variety of other all-electric products the company has been developing.
With a steer-by-wire system, the LDV was specifically designed for last-mile delivery services, with an emphasis on “grocery and food/meal delivery,” the company said in its statement. “Its customized interior is designed for small package delivery, at competitive per stop economics. The modular design and 120 cubic feet cargo volume are adaptable to evolve with customer needs which contributes to a decreasing per unit investment over time.”
An uncertain future
Financial details were not released and it is unclear exactly how Canoo will resolve the issues it faced when it issued a warning in its first-quarter financial statement in May, “As of the date of this announcement, we are reporting that there is substantial doubt about the Company’s ability to continue as a going concern.”
It ended the quarter with just $105 million in cash, not enough to go into production as it had hoped to do before the end of this year.
Even with the Walmart order, “They still have to build them,” cautioned Sam Abuelsamid, principal automotive analyst with Guidehouse Insights. So Canoo will still need to come up with more cash. And even then, Abuelsamid added, “there’s no guarantee” the Walmart deal will be enough to turn the startup into a viable affair “unless they get more orders from other customers.”
But investors seemed buoyed by the news, Canoo stock jumping from an opening price of $2.45 a share on Tuesday to a high of $4.89 before settling back to the low to mid-$4 range in morning trading. That’s still less than a third of the company’s 52-week high of $13.35 a share — though Canoo shares at one point fell to just $1.75.
Walmart takes aim at Amazon
The deal comes, “not so coincidentally,” soon after Canoo moved its headquarters to Bentonville, Arkansas, noted Abuelsamid. That puts it a short distance away from Walmart’s own corporate HQ.
Canoo plans to send prototypes of the LDV to Walmart in the weeks ahead to “refine and finalize” them for production. If all goes well, it plans begin building them by the fourth quarter, with Walmart putting them into commercial use by early next year. Initially, the vans will be used in the Dallas-Fort Worth area, though the initial order of 4,500 LDVs suggests they will quickly roll out into other markets.
The retailer appears to be chasing its rival Amazon as it expands its online business. Amazon has ordered 100,000 EV vans from Rivian and still more from Stellantis.
Walmart previously announced plans to purchase 5,000 electric delivery vans from BrightDrop, the new General Motors subsidiary. Those are larger vehicles better suited for delivering goods from distribution centers to stores, noted Abuelsamid.
Meanwhile, the Arkansas-based retailer has also been working with Gatik, a Silicon Valley startup focused on driverless vehicle technology. Abuelsamid said he would not be surprised if Walmart winds up integrating Gatik’s technology into the Canoo and BrightDrop vans.