Mere hours after the announcement of pricing for their minibus, Tech Crunch reported that Canoo is being investigated by the SEC. Good thing I didn’t give them a deposit.
Things just keep piling up for the startup. The departures of both company founders, its lawyer and chief powertrain engineer, a dead deal with Hyundai for its EV platform. And now, as part of a far-reaching investigation, the SEC is looking closely at Canoo’s recent merger with Hennessy Capital Acquisition Corp, among other things.
Canoo and Hennessey Capital merged last August in a deal worth $2.4 billion, which meant Canoo immediately had access to $600 million for the development of its EVs.
The SEC’s investigation will look at Canoo’s IPO as well. The departure of its high-level executives will be examined, as well as nearly every level of the company. From its revenue, any customer agreements (including pre-orders), and its controversial business model of being subscription-based. Called a “membership” it bundles registration, maintenance, insurance, and charging in a month-to-month plan that you can pause and resume anytime. But Canoo has been light on the details about the membership.
No word from the SEC or Canoo as to why it’s being investigated. This announcement comes days after its recent first-quarter earnings release. The company reported $641.9 million in cash and a $15.2 million net loss. Canoo was quick to point out that the investigation doesn’t mean they did anything wrong, saying that the company intends “to provide the requested information and cooperate fully with the SEC investigation.”