Canoo's Latest Problems Might Be Fatal

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The American EV start-up is facing some huge problems.

Canoo, the American electric vehicle startup, is facing some difficult times. Over the past several weeks, the company has lost some core talent that could affect how and when its multi-purpose EV van and truck come to market. Bloomberg has confirmed the company's vehicle program lead, software control manager, and another early employee who served as head of powertrain and battery manufacturing engineering have all departed. Of course, everyone is replaceable but these individuals have unique skill sets and talents that can't easily be filled.

"When you have smart, talented people, this sometimes happens," a Canoo spokesperson said. But there could be another reason why these individuals have left: the ongoing Securities and Exchange Commission (SEC) investigation over its merger in 2020 with a publicly-traded shell company, also known as a SPAC merger.

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EV startups such as Lordstown Motors and Lucid also went public via SPACs.

Last year, Canoo's CEO was poached by Apple to work on its top-secret EV project, while its CFO and CTO departed for other opportunities. Not surprisingly, Canoo's shares dropped late last week following the revelations of the most recent round of departures.

What could be Canoo's biggest loss is the termination of its agreement with Hyundai to jointly develop Canoo's skateboard EV platform. It was an odd marriage to begin with because, quite frankly, Hyundai does not need anything from Canoo; it has its own dedicated EV platform, called E-GMP, which underpins the Ioniq 5, Kia EV6, and a host of other upcoming models.

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The combination of losing key talent, the collapse of its deal with Hyundai, and the continued federal investigation doesn't sound good. Above all, not a single Canoo vehicle has been built. Late last year, Canoo announced plans to build all of its cars right here in the US, specifically at plants in Arkansas and Oklahoma. Its 2022 year plans supposedly call for the production of 3,000 to 6,000 cars and up to 70,000 units in 2024 and 2025.

It's easy to be skeptical with production goals like these given Canoo's current situation. Those vital positions need to be filled fast and market confidence needs to be restored, which could be partially accomplished if the SEC concludes nothing illegal happened.

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Source Credits: Bloomberg

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