Summary
- Canoo has filed for Chapter 7 bankruptcy and ceased operations
- The startup failed to secure funding leading to the bankruptcy decision
- Canoo had substantial orders but only delivered small numbers of vehicles
- The bankruptcy filing reveals the startup owes $164 million to creditors
- Canoo underwent several changes in direction, ultimately leading to its downfall
Article
Electric vehicle startup Canoo has recently filed for Chapter 7 bankruptcy and ceased all operations. The startup made the announcement on January 17 in the U.S. Bankruptcy Court for Delaware, stating that a trustee will oversee the liquidation of Canoo’s assets and distribution of proceeds to creditors. Canoo struggled to secure additional funding from a Department of Energy loan program and foreign investors, despite going public four years ago and raising an estimated $600 million. The cash-intensive process of developing and manufacturing new vehicles left the company searching for alternative funding sources.
Canoo primarily focused on electric vans built atop a skateboard chassis, along with two pickup-truck designs intended for military use. Although the company claimed to have substantial orders from customers like Walmart, it only managed to deliver small numbers of demonstration vehicles to organizations such as NASA, the Department of Defense, and the U.S. Postal Service. The bankruptcy filing revealed that Canoo owes approximately $164 million to creditors while holding $126 million in assets.
In December, Canoo furloughed 82 employees and shut down an assembly facility in Oklahoma, subsequently placing the remaining employees on a “mandatory unpaid break.” The company also acquired equipment from a defunct U.K. startup, Arrival, for use at the Oklahoma facility. Canoo was initially founded in 2017 as Evelozcity by former Faraday Future executives. However, under current CEO Tony Aquila, the company shifted its focus from selling van-like EVs on a subscription basis to manufacturing commercial vehicles and securing government contracts.
Despite maintaining the goal of producing commercial vehicles under Aquila’s leadership, Canoo faced numerous challenges and setbacks, including changing production plans with the Netherlands’ VDL and relocating its operations from Arkansas to Texas. The struggles to secure funding and deliver on customer orders ultimately led to the company declaring bankruptcy. Canoo’s bankruptcy filing sheds light on its financial issues, with a significant debt to creditors and assets that do not cover the liabilities. The startup’s failure serves as a cautionary tale for other electric vehicle companies in a highly competitive and capital-intensive industry.
Read the full article here