Last week, Canoo released a scary first-quarter earnings report saying that “there is substantial doubt about the Company’s ability to continue as a going concern.” That had me a little concerned — I’m rooting for Canoo and its clever truck designs. This week, I spoke with Canoo CEO Tony Aquila, who promised me the company is not going anywhere.
Aquila expects Canoo to be alive in six months, in one year and, hopefully, far beyond. The CEO says he’s perfectly happy to get last-minute financing to keep Canoo going. In its earnings release, Canoo said that it had $104 million in cash or cash equivalents on hand at the end of the first quarter, after spending $140 million in the same quarter, along with $600 million in “accessible capital.”
Just-in-time capital is part of Aquila’s personal philosophy, he told me. “I love that anxiety because it makes you not wasteful,” he said. “My father used to say, having a full pocket of money should be spelled F-O-O-L. I like pushing that intensity into the teams. They innovate better,” he said. He also pointed out that just-in-time money has less of a diluting effect on shares. “In the end, I think you have less angry shareholders,” he said.
As it stands, Canoo is going full-speed-ahead with final testing on the LV (Lifestyle Vehicle). Aquila insists the minibus-like vehicle will be out later this year, and the company plans to build 23,000 Canoos in 2023. That’s a big jump from zero, but in the auto industry, five-digit production numbers are a drop in the ocean. Aquila says that’s the point: Canoo wants to offer realistic projections, differentiating itself from a landscape full of electric-vehicle startups making outlandishly exaggerated promises.
Like a lot of those shoot-the-moon competitors, Canoo went public via special-purpose acquisition company. Also like a lot of them, Canoo’s stock is currently in the gutter.
The only way out is through. Unless Canoo chooses a different strategy, like selling itself to an established company. A few days back, Bloomberg floated the idea that Apple could be preparing to buy Canoo, swooping in as the company hits rock-bottom.
Aquila found the suggestion amusing. “I mean, I can see how we’d be a target, but that’s one of the reasons I keep buying more and owning more,” Aquila said. “I don’t want to surrender my sword.”
Canoo’s initial rollout, if it happens, will be focused on a few targeted regions of the U.S., so the company can focus on getting the customer experience right. The first vehicle planned to go on sale, the Canoo LV, promises a range of 250 miles, a starting price of $34,750, and a variety of trim levels from bare-bones Delivery models to Premium and Adventure specs aimed at outdoorsy types.
Canoo seems to view itself as the anti-Tesla, the anti-Nikola (SPAC merger notwithstanding). “Look, we don’t roll vehicles down the road,” Aquila said — a jab at rumors that EV startup Nikola’s promotional videos showed a nonfunctional prototype coasting down a hill. “We drive them up.”
I’m old enough to have been in the room with more than one startup carmaker that aspired to be the “anti-Tesla,” and then watch them fall by the wayside. That could easily happen to Canoo — Tesla is still the only American start-up automaker in nearly a century to have found enduring success, if you don’t count Kaiser.
I’m allowing myself to be a little irrational about Canoo, partly out of dumb hope, and partly because Aquila says things that would get any other automaker CEO fired. Canoo’s design includes an in-dash infotainment system that owners can easily upgrade when newer tech arrives. “Who builds a car where you can upgrade your infotainment system? They want to sell you a new car,” Aquila says. “We’re not trying to push steel.”
Aquila says Canoo’s concepts were designed with second and third owners in mind, something I’ve never heard any other automaker say. Most legacy car companies seem to just be grasping the potential of the used-car market.
“I’m really fixated on building a vehicle that meets the needs for working people,” Aquila said. “Sell one chassis to that house, not three, because they don’t need it.”
The next step is bound to be the hardest one for Canoo: Actual volume production, the point where so many car startups stumble. Mass-producing an automobile is one of the most complicated manufacturing tasks in the world.
Aquila says Canoo is trying to do things right, coming off a time when a lot of EV industry news was indistinguishable from hysteria.
Referring to the blunt revelations in Canoo’s most recent quarterly earnings report, Aquila is direct. “We got punched in the face, obviously, for doing the right thing, and that’s the way it works in these markets. But you know, the historical record will write itself,” he said. Aquila explained that Canoo’s choice not to have any big news announcements this quarter was intentional, a way to distinguish the company from the previous bombast of other EV hopefuls. “I’m pretty proud of [...] the discipline,” he said. “That’s why we put the big-news-no-news concept out there, because [the EV industry] was just so full of shit for so long.”