California Electric Vehicle Startup Canoo Goes Public at a $2.4 Billion Valuation
【Summary】Los Angeles-based electric vehicle startup Canoo Holdings Ltd is going public, becoming the latest electric vehicle startup turning to Wall Street to raise new capital. The company announced on Tuesday that it entered into an agreement with special purpose acquisition company (SPAC) Hennessy Capital Acquisition Corp IV.
Los Angeles-based electric vehicle startup Canoo Holdings Ltd is going public, becoming the latest electric vehicle startup turning to Wall Street to raise new capital. The company announced on Tuesday that it entered into an agreement with special purpose acquisition company (SPAC) Hennessy Capital Acquisition Corp IV.
The combined company will be called Canoo Inc following the closing of the deal with Hennessy Capital in the fourth quarter of this year. Canoo will trade on the Nasdaq under the ticker symbol "CNOO," the companies said.
The deal gives Canoo a valuation of $2.4 billion. However the transaction is subject to customary closing conditions.
Canoo was co-founded in 2017 by two veteran BMW executives Stefan Krause and Ulrich Kranz. The two execs left financially troubled electric vehicle startup Faraday Future and set out to build unique electric vehicles in a new venture called Evelozcity. Evelocity changed its name to Canoo in early 2019.
However, Krause officially left Canoo in June after initially stepping down as Chief Executive Officer in Aug 2019, citing "personal reasons." Kranz now serves as Canoo's CEO.
Canoo is the latest EV startup looking to raise capital by taking advantage of the current trend of investors pouring money into various EV startups, which has pushed electric automaker Tesla's stock to record highs this summer, making it the world's most valuable automaker.
The reverse merger (SPAC) deal entered into by Canoo and Hennessy Capital Acquisition is the same type that EV startups Lordstown Motors hydrogen-electric truck maker Nikola Motor Company used to launch their own IPOs in the two months. It's typically used by startups to attract new funding on the stock market.
A blank check, or shell company is generally referred to as a "special purpose acquisition company" (SPAC), which is formed in order to raise funds via an IPO to finance a merger or acquisition.
The funds raised are held escrow until a combination transaction closes. However, if no acquisition is made within 24 months, the SPAC is dissolved and funds are returned to investors.
"A SPAC has for us a huge advantage because we can generate enough funding to accelerate our development process," Kranz told Reuters.
Kranz cited Hennessy's long track record for the SPAC deal, including its success in helping school bus manufacturer Blue Bird Corp go public in 2015.
Canoo's EVs Will be Available Via a Monthly Subscription
Canoo is looking to reinvent the traditional car ownership model. The company's first electric vehicle simply called "Canoo" is not for sale, rather it's available as a monthly subscription. The vehicle subscription model will include maintenance, EV charging and insurance.
Canoo created the vehicle for a future mobility landscape that's becoming increasingly more "electric, shared and autonomous." the company said last year.
"Today marks an important milestone of Canoo's effort to reinvent the development, production and go-to-market model of the electric vehicle industry." said Kranz.
"We believe our subscription model will transform the consumer ownership experience."
The company designed and built its first vehicle the Canoo EV in just 19 months. Canoo plans to add a small commercial delivery vehicle in 2023 and a sport sedan by 2025 to its lineup.
"In my 30 years' experience, I have never seen so many quality achievements in such a short time," Kranz said last year.
The Canoo EV has the interior space of a large SUV with room for seven passengers, with only the footprint of a compact car. All seating is designed to feel more like furniture than traditional car seats. The canoo EV is the result of the company completely re-engineering vehicle design, which eliminates wasted space and provides exceptional utility to the user, the company said.
The Canoo EV's battery pack is mounted directly on the vehicle's skateboard architecture, providing torsional rigidity to the vehicle. The overall design allows for future models to use the same battery pack.
The company's engineers even designed a more compact custom suspension setup for the Canoo EV, allowing for a more roomy passenger compartment. Canoo's vehicle has a composite transverse "leaf spring" suspension that creates a completely flat skateboard platform.
All of the EV's electric drive components are self-contained within the platform, which means it can drive on its own, even before the vehicle's body is mounted. The steer-by-wire system also eliminates the need for a mechanical connection to the wheels ,which further frees up interior space for passengers. Canoo describes its EV as an "urban loft on wheels."
"Our technology allows for rapid and cost-effective vehicle development through the world's flattest skateboard architecture," said Kranz.
The Canoo EV has an approximate range of 250 miles and can reach an 80% charge in less than 30 minutes.
The Canoo EV flat "skateboard" architecture.
Canoo is also working with South Korean automaker Hyundai Motor to develop its EVs and plans to start delivering its vehicles by the second quarter of 2022. At launch, Canoo is targeting customers in major urban markets.
Canoo's delivery vehicle competes in a size segment that competitors are currently not addressing. The EV capitalizes on the need for a small last-mile delivery solutions for urban areas, the company said. The platform maximizes cubic cargo volume for the fast growing last-mile delivery market.
Hennessey CEO Daniel Hennessy said he looked at more than 12 EV startups and preferred Canoo's faster path to commercialization.
The deal, including additional money from BlackRock Inc and other institutional investors, will raise $607 million in proceeds.
Canoo projects 2024 revenue of $1.43 billion and its first profit at $188 million, officials said during a conference call on Tuesday.
The EV startup expects to build 10,000 Canoo vehicles in 2022, and increasing to 50,000 units in 2024, the same annual rate it expects to reach for the delivery vehicle and sport sedan in 2026, officials said.
Canoo plans eventually to expand to China, which is the world's biggest market for electric vehicles.
Canoo does not have a factory. Rather the company signed a letter of intent and is in talks to finalize a production deal with Canada's Magna International to assemble its vehicles, Kranz said. Reuter's reports that Magna may also build vehicles for rival EV startup, Fisker Inc, which is also based in Southern California.
resource from: Reuters
Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.
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