Electric-vehicle startup Canoo to go public, joining the wave of companies chasing Tesla’s success
Electric-vehicle startup Canoo announced Tuesday morning that it will go public at a $2.4 billion valuation later this year. It joins a raft of EV makers making the jump to public markets. Like some other new entrants, Canoo will use an unusual listing method that avoids a traditional IPO.
Canoo’s unique strategy revolves in part around what it calls its “skateboard architecture,” essentially a flat chassis that contains all the functional elements of a vehicle. That allows bodies tailored to a variety of applications—which Canoo refers to as “top hats”—to be built on top of a single type of frame. Canoo says this modular approach will allow the company to serve a variety of market segments at reduced cost.
Canoo is also notable for its planned subscription model, which it describes as month-to-month and “commitment-free,” while including maintenance, warranty, and charging. A similar subscription model is planned by Nikola, but Nikola is focused largely on commercial electric freight trucks and is expected to require more commitment from customers.
Canoo’s first vehicle, by contrast, will be a consumer-focused “lifestyle vehicle” called the Canoo, expected for release in 2022. The vehicle is very unusual, essentially a smoothed box that takes up the entire length of the chassis. Canoo has said this is intended to leverage the future potential of autonomous driving, and some of Canoo’s concept art shows the vehicle converted into something akin to a rolling lounge—with no driver.
The option of renting a consumer vehicle on a monthly basis would be fairly novel for consumers, while leaning into a broader trend toward recurring subscription revenue that has been embraced by entrepreneurs and investors. However, the no-commitment model would also seem to represent special risks if Canoo’s products disappoint or consumers prove flighty.
Canoo says its second vehicle will be an urban commercial delivery vehicle, coming in 2023.
Canoo will go public using an unusual but increasingly popular method. Instead of an initial public offering of new Canoo shares, the car company will be acquired by a so-called Special Purpose Acquisition Company (SPAC), Hennessy Capital Acquisition Corp IV, which has raised funds for the purpose. The merged company will be known as Canoo Inc. and trade on the Nasdaq stock market.
The SPAC public listing method has already been used this year by electric-vehicle startups Nikola and Fisker. Broadly, an SPAC listing is faster than a traditional IPO, and the electric-vehicle market in particular has entered a phase where speed to market appears to be of the essence. Tesla, the pioneer of the category, has experienced wild stock growth over the past 12 months, culminating in the expectation that it will join the S&P 500. Other EV makers appear eager to draft on that success.
Canoo was founded just two years ago, but it’s hardly a team of novices. The company was founded after executives fled the chaos at Chinese-owned EV startup Faraday Future. Its executive team includes veterans from BMW, and Canoo announced earlier this year that it would partner with Hyundai to produce its vehicles.