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Can Walmart save EV company Canoo?

August 29, 2022, 1:01 PM UTC

EV company Canoo hadn’t reported a dollar of revenue since 2020 when I went to its new facility in Bentonville, Ark., in early June to test-drive one of its vehicles and sit down with its CEO.

But Tony Aquila, who had started a gradual takeover of the company a couple of years ago, expressed confidence to me at the time, as I wrote about in my latest feature for Fortune. 

After all, a month later, Canoo would announce it had signed an agreement with Walmart to purchase up to 10,000 of its vehicles. As part of the deal, Walmart would get warrants for shares worth more than 20% of the company.

Canoo’s ties to Walmart’s home base of Bentonville have grown thick since Aquila became executive chairman, and later CEO, of the company. At the end of 2021, Canoo announced it was moving its headquarters to Bentonville. Earlier this year, Arkansas Gov. Asa Hutchinson named Aquila as one of more than a dozen members of the state’s newly minted Council on Future Mobility. And Canoo has been offered some $400 million in tax incentives from Arkansas and nearby Oklahoma to build two new facilities in those states, including a manufacturing operation and headquarters in Bentonville.

Even so, Canoo is struggling. Executives have been bleeding from the company since Aquila’s arrival. Canoo’s stock is hovering around $3.50—down from $8 earlier this year, and from $15 shortly after its SPAC merger at the end of 2020. Canoo is burning cash—with nearly $300 million lost in the first six months of this year, and it has yet to start construction on its own manufacturing facilities. Canoo’s regulatory filings are muddled with generous payment arrangements between the company, its CEO, and Aquila’s affiliated business entities. 

Even the Walmart deal, which promises to offer a significant sales pipeline to the company, has strings attached. Walmart can give Canoo 30 days’ written notice to cancel the deal, according to Securities and Exchange Commission disclosures, and Canoo’s vehicles are also subject to “certain acceptance and performance criteria” that the EV company will need to meet. Canoo is also barred under the new deal from working with—or selling shares to—one of Walmart’s largest competitors, Amazon.

Will Canoo’s sleek EV vehicles ever make it onto the road? You can read the full story here.

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See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
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Jackson Fordyce curated the deals section of today’s newsletter.


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