Canoo Opens Battery Plant Amid Q1 Losses

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Canoo has a backlog of orders to fulfill

Electric vehicle maker Canoo announced on Wednesday, April 5 that it was set to commence operations in Oklahoma. The MidAmerica Industrial Park operation will focus on battery module assembly. The company unveiled the sign and stacked shipping crates containing machines used for battery module production inside the facility.

“We originally thought we would do it all at one mega site and add the microelements as we geographically expand,” said Canoo CEO Tony Aquila during a press conference. “Turned out that this was just not strong enough to move fast enough, so we had to start zigzagging.”

It was in November that Canoo announced that it was purchasing the Terex factory on the west side of Oklahoma City as well as its intention to make battery modules at the MidAmerica Industrial Park at Pryor. However, it appears the new plan is to start assembling vehicles at the Oklahoma City plant before the end of the year. Canoo will share the company with Terex.

This doesn’t mean that Canoo will abandon the $90 million mega-site plan at the MidAmerica Industrial Park facility. Although Aquila acknowledged that the project was “behind schedule”, he said the Oklahoma City facility will not meet the company’s full production needs.

“Our target in the state of Oklahoma is roughly 700 jobs by the end of the year,” Aquila said. “We will post the new jobs in a few weeks and hope to have Oklahomans hired starting in June.”

Aquila revealed that the goal is to have 100 employees by the end of the year. Training for some of the new jobs is already underway. According to the CEO, the small Oklahoma operation will allow the company to kickstart the production of more vehicles while waiting for the completion of the large plant planned for Pryor.

Canoo has a backlog of orders to fulfill

Canoo has penned down EV production contracts with several government entities and businesses. The company wants to focus on fulfilling fleet orders first before progressing into the production of individual consumer vehicles.

Canoo will use the batteries assembled at the Pryor industrial park to build EVs for a U.S. Defense Department contract. The main battery component will be supplied by Panasonic which also mulled the construction of a large manufacturing plant at the MidAmerica Industrial Park before settling for a site in Kansas.

A team of European engineers is expected at the Pryor facility to assemble the machines and carry out rigorous testing to make sure they work efficiently and that all bugs are addressed before anyone works on them.

Canoo’s plan to get on the road was partly hampered by the COVID-19 pandemic. During an investor call in March, the company revealed that it had $2.8 billion worth of orders but only delivered one vehicle in the first quarter of 2023—a tactical vehicle known as the Screaming Eagle that was built as a test vehicle for the Army.

Canoo has entered into an agreement with Walmart and others for the production of delivery vehicles. Also, there is a tentative agreement between Canoo and the state of Oklahoma for the purchase of 1,000 Canoo EVs. However, the agreement and business incentives hinge on the completion of the mega site by 1 July 2026.

Oklahoma cuts millions of incentive pledge to Canoo

Canoo has missed out on Oklahoma state’s $10 million incentives after failing to commence construction on a factory in Pryor. Also, the automaker could forfeit more millions if it fails to finalize the purchase of an Oklahoma City plant later this year.

During the opening of the battery plant on Wednesday, Aquila mentioned that the company is still committed to the construction of the Pryor manufacturing facility and was on course to purchase the Oklahoma City facility soon.

“We’re committed with the state to kind of take a long view on this and obviously, there are other programs in the state,” Aquila said.

Canoo is yet to receive any incentive from the state because they are tied to the automaker’s ability to meet hiring goals and other performance timelines. Oklahoma created the Quick Action Closing Fund to attract investors to the state and create jobs.

Volkswagen, Panasonic, and Tesla recently passed on the incentives in preference for other states. Less-established Canoo was willing to take the offer. However, it has faced a persistent cash crunch that has forced the automaker to change its strategy.

In January, the Oklahoma Department of Commerce moved to terminate one of Canoo’s Closing Fund deals meant to encourage the company to hasten plans to build a $482.6 million facility in Pryor and create about 1,500 manufacturing jobs. According to commerce officials, the contract has been invalidated because of Canoo’s inability to begin construction by January 1.

“The State of Oklahoma remains committed to the success of Canoo and should the company request Closing Fund for this project again, we will work to present this request to the Governor,” said Brent Kisling, executive director of the agency.

Canooo agrees to pay a $1.5 million settlement with SEC

Regulatory filings show Canoo has agreed to pay a $1.5 million settlement with the U.S. Securities and Exchange Commission. The SEC started investigating Canoo back in May 2021, a few months following the company’s merger with Hennessy Capital Acquisition Corp.

The investigation covered the merger, Hennessy’s IPO, the startup’s business model and operations, revenue and revenue strategy, earnings, customer agreements, and more. It also weighed in on the circumstances surrounding the departure of some company officers including co-founder and CEO Ulrich Kranz.

The company shared the news as part of the fourth-quarter and full-year 2022 earnings report. Canoo is one of the myriads of EV SPACs that was under investigation by the SEC. Others are Nikola, Arrival, Lordstown Motors, and Faraday Future.

Although the company did not share details about the investigation, the $1.5 million payment was gleaned from the company’s balance sheet for the fourth quarter. Canoo is still far from being profitable. The company reported a 2022 Q4 net loss of $80.2 million.

“We continue to optimize manufacturing and cost efficiency and already shifted more than 90% of our supply chain to the US or allied nations,” Aquila said. “As we move through 2023, we are focused on bringing our facilities online, scaling production, and aligning with our strategic distribution partners for our global expansion.”


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