Canoo Oklahoma Factory: EV Startup Production Update
Canoo's Progress Towards Production and Key Milestones
Electric vehicle startup Canoo is actively expanding its team and nearing its anticipated production start date. However, securing a battery supplier remains a crucial step, as detailed in the company’s recent second quarter earnings report.
Contract Manufacturing and Production Targets
The earnings release followed Canoo’s inaugural investor relations day, during which VDL Nedcar, a Dutch company, was designated as the contract manufacturer for its lifestyle vehicle. Initial projections estimated Nedcar would produce up to 1,000 units in 2022 for both U.S. and European markets, with a subsequent goal of 15,000 units in 2023.
During Monday’s earnings call, CEO Tony Aquila revised the 2023 production target upwards to 25,000 units.
U.S. Manufacturing Facility Plans
Canoo is also progressing with plans to establish a U.S.-based manufacturing facility, described as a “mega microfactory,” dedicated to the production of its pickup truck and multipurpose delivery vehicle.
In June, the EV company announced its intention to construct its first factory in Oklahoma. The state government has pledged $300 million in non-dilutive financial incentives to support the facility’s development and the second phase of manufacturing operations.
Strategic Advantages of a Dual-Sourced Approach
“Employing this dual-pronged strategy offers several benefits,” Aquila explained during the earnings call. “Partnering with Nedcar as a new OEM will enable us to refine our manufacturing processes. Simultaneously, we will enhance our production expertise, which will be directly applied to our Oklahoma manufacturing plant.”
“This approach allows for geographical diversification of our manufacturing operations and positions us to adapt to evolving market demands, increasing our commitments, product offerings, and production volumes while building distribution flexibility.”
Workforce Expansion and Financial Investments
Approximately one-third of Oklahoma’s investment will become accessible within the initial 36 months. These funds will facilitate the company’s progress as it enters its Gamma phase, signifying readiness for launch.
Canoo has significantly increased its workforce, growing from 230 to 656 employees year-over-year, with 70% of the staff comprised of hardware and software engineers. Operating expenses have risen from $19.8 million to $104.3 million year-over-year, largely due to increased investment in research and development.
Factory Construction and Component Sourcing
The increase in expenses, occurring before revenue generation, demonstrates Canoo’s commitment to its production objectives. However, work remains before construction can commence on the Oklahoma factory.
The company is currently finalizing the selection of a construction manager, an architect, and an engineering firm, with further updates on construction progress anticipated next quarter.
Battery Supply and Semiconductor Challenges
A final decision regarding a battery partner is expected in the third quarter, a critical step as established automotive manufacturers increasingly seek to secure their battery supply chains through joint ventures. Like much of the automotive industry, Canoo is also navigating semiconductor supply chain disruptions, but believes its streamlined manufacturing process will reduce the number of chips required per vehicle.
Testing and Design Completion
During the investor relations day, Canoo announced the completion of 500,000 miles of beta testing. As of June 30, the company had finalized engineering and design preparations to begin “gamma” builds.
“We have also secured 87% of components, an increase from 74% in the first quarter, and have completed sourcing for 95% of materials, excluding bulk commodities,” stated Aquila. “Our CTO and his team have finished the engineering design for 67% of the lifestyle vehicle components and have transitioned those designs into tooling.”
Launch Timeline and Vehicle Demand
Canoo plans to initiate its countdown to standard operating procedure for the lifestyle vehicle during the fourth quarter. While the lifestyle vehicle is closest to production, preorders for the company’s pickup truck and multipurpose delivery vehicle are currently the most popular among the 9,500 non-binding refundable preorders received.
