Fleeting Thoughts on Canoo’s Demise

In the same blog, I ask if Lordstown’s demise means fleets should avoid doing business with any independent OEM. I answered my question with 12 questions that fleets should ask independent OEMs before buying their vehicles. Here are three: 

• Who populates the C-suite, and what does personnel turnover look like? 
• Has the OEM contracted with a production partner yet?
• Does the stated timeline for production align with a reasonable manufacturing ramp-up?

The Lordstown bankruptcy presaged the Canoo bankruptcy in many respects. Both companies:  

• Went public via a SPAC merger in 2020, yet both faced cash flow issues as cost overruns emerged. 
• Touted high-profile vehicle orders they were unable to fulfill.
• Repeatedly pushed back production timelines, though production was always only a few months away. 
• Saw significant C-suite turnover. 
• Burned through gobs of cash while raising money through various means (equity and asset sales, a reverse stock split, private investment) that was small compared to the burn and the need.
• In the end, Lordstown sold about 50 Endurance pickups, while Canoo only sold 22 vehicles at the time of its b/k. 

An Auspicious Start for Canoo

We at Bobit had a neighborly relationship with Canoo, as its first headquarters was a block from ours in Torrance, California. In 2018, we took our first meeting with Canoo at its offices to the sound of rivet guns and circular saws. 

We were delighted to discover Jay Leno filming a spot for Jay’s Garage outside our offices in 2019. I videoed it and promptly posted it on Twitter. 

Canoo showed up at the fleet events, including our Fleet Forward Tour Stop in Dallas. The executive team mixed with the right people. There were plenty of big fleet order announcements.

The Canoo Vehicles Were Solid

The thing is, I liked the product. Canoo’s delivery vehicle and its people-mover cousin were real vehicles with distinct styles. Though on a skateboard platform, they weren’t rattletraps; they were more than highway capable. The top range of 250 miles was and is very good for a commercial vehicle. 

They had a drive-by-wire steering system that produced the tightest turning radius of any vehicle I’d driven. The modular interiors were spartan but tech-forward. The delivery vehicle offered a pullout rack system that would have been perfect for tradespeople in urban environments. The $34k base price seemed impossible. 

Lessons from Canoo’s Demise

Canoo tried to carve a niche as an independent automaker of electric commercial vehicles in Class 1. Mullen Automotive’s Mullen One remains to fill that segment of commercial light duty. On the incumbent automaker front, Kia’s PBV models will be staunch competition. 

However, it’s not likely that pending competition was the switch that turned the lights off. The more prescient cause is aligned with Lordstown’s demise:

Starting and maintaining vehicle production over time takes not millions of dollars, but billions. A $15 million stock sale is a drop in the bucket. Initial timelines are always calculated with best-case scenarios. A volatile EV market, particularly on the commercial side, will delay orders and only intensify the cash crunch. 

The outlook is cloudy moving forward. An unfriendly presidential administration will only exacerbate those challenges, particularly when financial support is yanked from both the manufacturer and the buyer. Venture capital will then dry up, too. 

These were the final two lines of the Lordstown blog, and the meaning still holds true:

Greater product choice is a benefit to any market, but fleet buyers have their work cut out for them when choosing horses in this new world. Expanding competition is pushing new innovations faster than ever before. Yet further consolidation and attrition are inevitable — buyer beware.