Canoo warns it may not have enough funds to bring EVs to market

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Canoo’s first-quarter earnings show the company is burning cash, not generating short-term revenue, and warns it may not have enough cash to stay in business.

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Canoo shares, which fell 5% on Tuesday, fell another 17.5% in over-the-counter trading after the release of the earnings report. It has since recovered and is now down more than 11%.

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Kanu had a turbulent and short history. The design of the company’s vehicles, the first of which debuted in the spring of 2019, has been praised and made it a popular electric vehicle startup. Just last month, NASA even selected Canoo to build ground vehicles for the Artemis space exploration program.

But Canoo has also been plagued by a long string of issues and controversies, including internal drama, the departure of co-founders, legal issues, Securities and Exchange Commission investigation and production delays.

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This latest earnings report paints an increasingly bleak picture of Canoo’s future.

The EV startup, which earlier this week filed a lawsuit against one of its major investors seeking to recover $61 million in profits from allegedly suspicious stock transactions, closed the quarter with $104.9 million in cash and cash equivalents. This means the company, which currently has no revenue, has burned about $120 million since the fourth quarter.

Canoo’s net loss reached $125.4 million compared to $15.2 million in the same quarter last year, with net cash used in operations of $120.3 million compared to $53.9 million in the first quarter of 2021.

“Our business plans require significant capital investment,” the statement said. normative documents from Kanu. “If we are unable to obtain sufficient funding or do not have access to capital, we may not be able to deliver on our business plans and we may need to cease or significantly reduce our operations and our prospects, financial condition and results of operations may be materially impaired. adversely affected.”

In August 2020, Canoo announced that it had reached an agreement to merger with a specialized acquisition company Hennessy Capital Acquisition Corp., which has a market value of $2.4 billion. At the time, Canoo said it was able to raise $300 million in private equity investment, or PIPE, including investments from funds and accounts managed by BlackRock.

It appears that the investment in PIPE has not materialized yet. Canoo said during an investor call on Tuesday that it expects a $300 million private equity investment (PIPE) associated with its merger to come this week, and the company has filed for a $300 million universal shelf. . According to Canoo CEO Tony Aquila, the $600 million is needed to get production going.

Despite the money ahead, Kanu still issued a “going concern” warning.

The going concern qualification means that the company may not have enough funds or cannot generate sufficient income to meet its obligations on time. Among other looming production dates, including over 17,500 pre-orders, Canoo said by June 2023, he will deliver several custom models to NASA, which should be based on his life car model. Canoo’s financial troubles cast doubt on the electric vehicle maker’s ability to deliver on that commitment.

NASA did not immediately respond to requests for more information.

When an investor asked about NASA’s vehicle production guidelines, Aquila evaded answering, saying the information was confidential but that Canoo was too focused on building a plant in Bentonville, Arkansas that was expected to produce “20,000 vehicles” for “Kanu,” said Akila.

Kanu first announced Bentonville factory last Novemberstating at the time that it would also move the production start of the Lifetime Car from early 2023 to the fourth quarter of 2022. This forecast was not updated during the earnings call on Tuesday.

Perhaps the only bright spot in Canoo’s earnings was $30.4 million in a settlement deal with Dutch carmaker VDL Nedcar. Canoo has pre-paid VDL Nedcar money as part of a car manufacturing contract to build its “EV for life”. partnership ended in December while Kanu was looking into a new deal with the VDL Groep.


Credit: techcrunch.com /

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