Canoo's new CEO has just told investors the bad news.
It seems like every few months an electric vehicle start-up that issued an IPO after merging with a special purpose acquisition company, or SPAC, becomes the subject of a US government investigation. Today, it's Canoo's turn. The Securities and Exchange Commission (SEC) has opened an investigation into the Los Angeles-based EV startup, according to newly appointed CEO Tony Aquila. Aquila revealed this during a conference call with investors earlier this week. For now, the SEC is purely on a "fact-finding" mission to determine whether or not Canoo broke the law during its SPAC merger process.
The investigation will cover its "operations, business model, revenues, revenue strategy, customer agreements, earnings and other related topics, along with the recent departures of certain of the Company's officers," according to the SEC filing.
Canoo has pledged its full cooperation. The first indication of Canoo's troubles occurred back in April when we learned Hyundai was no longer backing it. At the time, Canoo still had over $700 million in cash or cash equivalents on hand, thanks to its IPO. But it also appears to be burning through cash pretty fast with around $62 million supposedly having been spent in the first quarter of this year alone.
Canoo never gave it an official name but it's been described as and very much looks like the Leatherman tool of EVs. Aquila has since declined to provide any additional details surrounding the investigation. Over the past few months alone, the SEC has opened investigations of hydrogen truck startup Nikola and Lordstown Motors, maker of the battery-electric Endurance. Both companies can thank Hindenburg Research, a short-selling firm, for conducting in-depth investigations and releasing the troubling details. The SEC read those reports and took action.
Canoo has not been the subject of Hindenburg Research but something definitely caught the SEC's attention. Where this goes next remains to be seen.