Driving electric vehicle adoption

Canoo Completes Acquisition of Manufacturing Assets From EV Startup Arrival

Electric vehicle (EV) startup Canoo has made a significant stride forward with the completion of the acquisition of a substantial portion of the advanced manufacturing assets previously owned by the bankrupt UK-based commercial EV startup Arrival. This strategic move involves the collection of the purchased assets into more than 20 containers, which will then be shipped by sea to Canoo’s manufacturing facilities located in Oklahoma.

(Image: Canoo)

This acquisition follows a notable earlier transaction announced in January 2024, where Canoo acquired almost all of the new and like-new assets owned by Arrival Automotive USA, Inc. These assets, having originated from Arrival’s facility in North Carolina, have already been transported and received at Canoo’s Oklahoma facility, where the commissioning process is currently underway.

With the acquisition of these significant manufacturing assets, Canoo is now exceptionally positioned to meet its production targets for 2024 and substantially expand its manufacturing capabilities for 2025. This transaction secures the equipment essential for Canoo to advance its production processes at a significantly reduced cost. By integrating these assets, Canoo will be able to shorten the purchase lead times for critical machinery and components by over 40%, reduce capital expenditures by 20%, and lower the unit cost of its electric vehicles.

This strategic move is not just about expanding capacity, it also enhances efficiency and quality. In the near term, Canoo aims to refine its manufacturing processes and elevate product quality while maintaining low-volume production. This measured approach provides the dual benefits of enabling Canoo to harmonize its supply chain and incorporate valuable customer feedback before ramping up to high-volume production. By strategically allocating capital to areas offering the highest return, Canoo sets itself on the most direct path to achieving positive unit margins, ensuring its competitiveness and sustainability in the highly dynamic electric vehicle market.

“Our current strategy will save our shareholders tens of millions of dollars, which today, is not properly reflected in the value of our company. We remain focused on capital discipline and the smartest way to invest and create value,” said Tony Aquila, Investor, Executive Chairman, and CEO of Canoo.

These assets, crucial for both cabin production and general assembly, include state-of-the-art robots, precise dispensing systems, advanced control equipment, and PLC controllers tailored for intricate cabin construction. Additionally, the enhancement of general assembly capacity is supported by cutting-edge safety equipment, manipulators, and dynamic vehicle testing apparatus, alongside an array of spare equipment parts. Not only does this acquisition fortify the company’s production capabilities, but it also ensures a higher level of operational redundancy, safeguarding against potential equipment malfunctions.

Canoo secured these assets at an astounding discount—over 80 percent off their estimated value. These assets are either new or like-new and were meticulously chosen by Canoo’s team through multiple on-site visits and rigorous inspections over several months.

Canoo’s approach is marked by a strong emphasis on discipline, ensuring that each investment aligns with the company’s overarching vision for growth and sustainability. Furthermore, Canoo may leverage its newly approved Foreign Trade Zone status to facilitate these purchases. This designation allows the company to reduce costs associated with customs duties and taxes, providing a financial advantage when acquiring international equipment and components.

Canoo History

Canoo’s origin dates back to 2017, when it was founded under the name Evelozcity by Stefan Krause and Ulrich Kranz, two individuals who formerly collaborated at the rival electric vehicle (EV) company, Faraday Future. Their departure to establish a new venture stemmed from disagreements with Faraday Future’s leadership. The initial phase of Canoo’s development was buoyed by substantial financial backing from notable figures such as Chinese investor Li “David” Pak-Tam/Botan and German entrepreneur David Stern.

Financial Difficulties and Lawsuits

Despite a promising start, Canoo encountered financial turbulence by May 2022, publicly acknowledging that it was on the brink of financial instability with just enough capital to sustain operations for an additional quarter.

Compounding these challenges, Canoo was involved in legal disputes during the same period, notably suing investor Pak Tim Li for allegedly engaging in the improper sale of shares. The company’s legal woes further extended in December 2022 when it took action against several former Canoo executives, for alleged theft of Canoo’s trade secrets and the illicit recruitment of its talent to bolster a new EV company, Harbinger Motors.

Resurgence and Firm Orders

Canoo started to build a more positive narrative around its brand and financial stability in 2022, despite the hurdles faced earlier in the year.

In April 2022, NASA gave Canoo a substantial nod of approval by selecting the company to supply crew transportation vehicles for its Artemis program, a contract valued at $147,855.

This boost was followed by a notable partnership with Walmart in July 2022, when the retail giant entered into a definitive agreement to purchase 4,500 all-electric Lifestyle Delivery Vehicles (LDV) from Canoo, securing the option to extend the order up to 10,000 units in the future.

In mid-October 2022, Canoo announced two major orders. The first was from Zeeba, which ordered 5,450 LDVs and Lifestyle Vehicles (LV), including a binding commitment to procure 3,000 units by 2024. The second, a massive order from Kingbee, consisted of 9,300 LDVs with an option for the company to double this order.

USPS Orders Canoo Vehicles; USPS Convinced to Go Electric by EVinfo.net and Others

Canoo started 2024 on a high note by announcing a key partnership with the United States Postal Service (USPS) in January, which ordered six right-hand-drive LDV vans. The USPS order was a part of a larger order of EVs and EV chargers. The Postal Service has assigned the manufacture of its initial 14,000 EV chargers to three suppliers: Siemens, Rexel/ChargePoint, and Blink. At the event announcing the new Canoo EVs, USPS showcased battery electric commercial off-the-shelf (COTS) vehicles manufactured by Ford. A total of 21,000 COTS USPS EVs are planned, 9,250 of them from Ford.

USPS is now exploring achieving 100% electrification for its fleet. The Postal Service is commended for taking this bold step, as a commitment to reducing greenhouse gases and fighting climate change. This was a reversal of a previous announcement, in February 2022, stating that USPS planned to buy gas-powered trucks. In March 2022, EVinfo.net got involved in the campaign against the USPS gas-powered plan. We are gratified that public pressure, bolstered by EVinfo.net, convinced USPS to make the right decision, towards going all-electric.