Canoo is an American manufacturer of electric vehicles (EVs) founded in 2017 and headquartered in Torrance, California. Its stated mission is to bring EVs to everyone.
Canoo’s USP is its platform– a “skateboard” chassis that contains all essential components like the battery, motor, steering, and suspension. This enables the company to integrate different bodies with the platform, creating new models quickly and inexpensively. The company is offering to sell its platform to other manufacturers, who can put their own bodies on it and sell them.
Canoo projects its vehicles as affordable and utilitarian, yet fun. Its focus is on sleekness, functionality, and durability.
Canoo has not actually manufactured or sold any consumer-ready vehicles yet. It has built 39 prototypes. All its models are expected to hit the market only in late 2022 or 2023.
There are problems for Canoo on the horizon, like for other EV manufacturers – semiconductor shortages, supply chain disruptions caused by lockdowns in China, and high raw material costs because of the war in Ukraine. All this increases manufacturing costs and disrupts production.
Canoo has pivoted several times. It de-emphasized its engineering consultancy business. The plan to sell its platform to Hyundai and Kia collapsed. It decided to focus on selling commercial vehicles instead of leasing out consumer vehicles. Finally, Canoo has decided to build its own factories instead of relying on third-party manufacturers.
After all these pivots, it does not appear that Canoo is sufficiently differentiating itself in the competitive EV market. Canoo has plenty of competition. Rivian, for instance, is funded by Amazon. Other rivals include Volta Trucks, Xos Trucks, Fisker, Workhorse, and Faraday Future.
The financial picture
Canoo’s stock has, to put it mildly, been disappointing of late. It was down almost 75% for the year going into July 2022. While announcing its 2022 Q1 results, the company admitted that funding issues raised significant doubts about its ability to keep operating.
Canoo suffered losses of $125.4 million in Q1 and was down to its last $105 million in cash. Two CEOs, the co-founder Stefan Krause and Ulrich Kranz, have quit. Earnings have been negative for the past four quarters.
The company got a much-needed boost when Walmart agreed to buy between 4500 and 10000 Lifestyle Delivery Vehicles. Walmart has also placed a similar order with General Motors’ BrightDrop. A day later, Canoo got another boost when the US Army decided to evaluate and analyze Canoo vans for purchase.
There are rumours that Apple, which is working on its own vehicles, may take over Canoo.
Delivery vehicles are a hot segment for EV manufacturers. Last-mile deliveries in the city require less range and lower emissions. So, EVs make a lot of sense.
But as we have seen, Canoo faces a lot of competition and is in poor financial shape. However, the Walmart deal has given it a fresh lease of life. And, if a deal with the US Army materializes, that would push the company to the front of the pack. Yet, Canoo is, for now, a speculative investment. Industry analyst WardsAuto does not rate Canoo’s chances very highly.
Canoo stock is priced at $4.28. Analysts think the stock could reach between $7 and $17 in a year. A majority of analysts recommend buying the stock. If you already have Canoo stock, analysts recommend holding. If you have the funds, you can consider buying Canoo stock. However, there are many other stocks for which you will get a much stronger buy recommendation.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only