Canoo production starts could slip, but CEO remains confident in funding
DETROIT : Start of production by electric vehicle maker Canoo Inc at its Arkansas and Oklahoma assembly plants could slip due to supply-chain pressures, but its chief executive remains bullish on the company’s ability to raise money.
The global chip shortage and higher material costs could, in a worst-case scenario, delay start of vehicle production at Canoo’s Arkansas plant by a few weeks into early next year from the fourth quarter this year, CEO Tony Aquila said Wednesday.
In addition, start of production at Canoo’s planned plant in Oklahoma could slip from late 2023 into 2024, he said.
However, Aquila said he was not worried about the Oklahoma plant and Canoo has strong intellectual property, allowing it to raise additional funds to continue its vehicle launches.
He also said he still expected Canoo to build 14,000 to 17,000 vehicles in 2023, and is targeting closer to 20,000. He added Canoo will sell whatever it builds.
In late 2020, Canoo went public through a reserve merger with a special-purpose acquisition company (SPAC) with the aim of competing with Tesla and Rivian, as well as traditional automakers that have committed billions of dollars to building EVs.
Last week, Canoo warned investors it might not be able to meet its financial obligations and there was “substantial doubt” about its ability to continue as a going concern. Canoo had about $105 million in cash at the end of March and has access to another $600 million in funding.
Aquila, Canoo’s largest shareholder, said funds were available for companies that hit their strategic goals.
“You want to be milestone-driven and just-in-time capital, but have enough facilities that you can access through your most important next two milestones,” he said.
The $600 million in accessible funds gets Canoo through the launch in Arkansas, Aquila said. And the Oklahoma plant’s location on Cherokee Nation land makes it an “opportunity zone” meant to encourage investment in low-income communities, allowing wealthy individuals to invest in a tax-free and tax-deferred manner, he said.
Aquila did not say how much Canoo would seek to raise through an “opportunity zone” fund. He also said Canoo has not accessed the $400 million in Oklahoma state incentives it was awarded.