Canoo Bankruptcy: EV Startup Ceases Operations

Canoo Files for Bankruptcy, Ceasing Operations

Electric vehicle startup Canoo, established seven years ago, has initiated bankruptcy proceedings and will immediately halt all operations. The company is currently in the process of liquidating its assets through a Chapter 7 filing within the Delaware Bankruptcy Court.

Funding Challenges and Liabilities

According to a recent press release, Canoo’s attempts to secure capital from international investors proved unsuccessful. Furthermore, the company expressed disappointment regarding its inability to obtain funding from the U.S. Department of Energy’s Loan Program Office.

The bankruptcy filing details that Canoo owes financial obligations to a substantial number of creditors, exceeding $164 million in total liabilities. Conversely, the company reports assets valued at approximately $126 million.

Recent Struggles and Operational Shutdown

This filing follows recent workforce reductions, including the furlough of remaining employees and the suspension of operations at its Oklahoma manufacturing plant. Throughout 2024, Canoo faced difficulties in delivering even a limited number of its electric vans to customers, alongside significant leadership turnover.

By mid-November, the company’s cash reserves had dwindled to just $700,000.

A Pattern Among EV Startups

Canoo is not alone in its struggles; it represents the latest in a series of EV startups to encounter financial difficulties after initially going public through a merger with a special purpose acquisition company (SPAC).

• Electric Last Mile Solutions filed for bankruptcy in June 2022.
• Fisker, Lordstown Motors, Proterra, Lion Electric, and Arrival have all sought various forms of bankruptcy protection.
• Notably, Canoo acquired assets from Arrival during its insolvency in 2024, though the extent of their utilization remains unclear.

From SPAC to Public Listing and Partnerships

Canoo initially announced plans to merge with Hennessy Capital Acquisition Corp. in August 2020, becoming a publicly traded company in December of the same year and raising around $600 million.

Following its public offering, the company produced a limited quantity of its uniquely designed electric vans, offering them for trial to select partners, some of whom provided compensation. The U.S. Postal Service, Department of Defense, and NASA were among those utilizing Canoo vehicles.

Walmart Deal and Founding Principles

In 2022, Canoo reached an agreement with Walmart for the potential purchase of up to 10,000 EVs, however, this agreement was largely non-binding and presented minimal financial risk to the retail giant.

The company was founded in late 2017 by a team of executives who departed Faraday Future. Originally known as Evelozcity, they developed a modular electric vehicle platform capable of supporting diverse vehicle configurations, incorporating advanced technologies like steer-by-wire systems.

Potential Acquisition and Leadership Changes

Canoo’s innovative concepts even attracted interest from Apple, which explored a potential investment or acquisition to bolster its own electric vehicle initiatives. Ulrich Kranz, former CTO and CEO of Canoo, later contributed to Apple’s car project before its eventual cancellation in 2024.

Subsequent to becoming a public company, Canoo underwent several strategic shifts under the leadership of Tony Aquila, who had previously invested in the company.

Shift in Focus and Financial Concerns

Aquila redirected Canoo’s focus from direct consumer sales to commercial fleets. During his tenure, the company repeatedly revised its plans regarding in-house vehicle production versus outsourcing. A relocation of headquarters to Bentonville, Arkansas – home to Walmart – was announced but ultimately not realized.

Concerns arose regarding potential conflicts of interest, as Aquila’s financial firm appeared to benefit from his position at Canoo, including substantial payments for corporate jet usage and office space rentals.

Recent Loans and Warning Signs

Aquila’s firm provided crucial loans to Canoo in recent months to maintain operations, beginning in October. These loans were secured by a “first priority lien and security interest” on the equipment at Canoo’s Oklahoma City facility.

Prior to the bankruptcy filing, several indicators suggested impending difficulties. A billboard outside the company’s Texas office was removed, employees on furlough received termination notices, and customers who had placed deposits began receiving refunds.

This report has been updated to include the latest information regarding Canoo’s creditors, assets, and liabilities.