When electric vehicle company Canoo was facing a cash crunch this summer, Walmart offered a lifeline in the form of a direct investment as well as a contract to purchase several thousand of the company’s cars.
The ties between Walmart and Canoo appear to go deeper, however, in light of financial ties between one of Walmart’s largest shareholders, Alice Walton—daughter of the late Walmart founder Sam Walton—and Canoo’s chief executive, Tony Aquila.
While it is unclear whether Walton has invested in Canoo directly, new court documents filed in Illinois federal court this week formally link Alice Walton and the Walton Family Office to AFV Partners, Aquila’s personal private equity firm that owns a minority stake in the electric vehicle company. (Fortune has previously reported on the connection)
In one of several depositions filed this week, a former principal at AFV Partners, Ryan Aprill, who is one of two plaintiffs in the case, asserts that he and Aquila had a phone call on Aug. 4, 2019, in which they discussed Alice Walton’s backing of AFV Partners.
“I needed to ensure that we had a minimum funding level to support that salary,” Aprill said in the deposition testimony, in reference to his minimum base salary they were allegedly discussing at the time. “[Tony Aquila] assured me we did from the Walton Family Office, Alice Walton in particular.”
Walton, who inherited tens of billions worth of Walmart shares after the passing of Sam Walton, collectively with her two brothers holds approximately 48% of voting shares at Walmart, according to Walmart disclosures. Aquila’s private equity firm owns an approximate 19% stake in Canoo, according to recent public filings.
Fortune had previously reported that Alice Walton was the original backer of Aquila’s AFV Partners and that her capital had been used for two early deals at the private equity firm. It is unclear whether Walton has specifically invested in Canoo through the PE firm, although multiple sources have told Fortune that they believed Alice Walton to be an investor (None of those sources had firsthand knowledge of that investment). Alice Walton’s name was not mentioned in the Walmart-Canoo agreement materials.
When reached by Fortune, Aprill declined to comment on the matter or the lawsuit. Spokespersons for Alice Walton’s family office and Walmart also declined to comment. AFV Partners and Canoo didn’t respond to a request for comment.
Aquila took over as executive chairman, and later CEO, of Canoo after he made an investment in the EV company through his PE firm in 2020, right around the time Canoo was going public via a SPAC merger. Earlier this year, as part of Canoo’s deal with Walmart, the companies signed a warrant agreement for Walmart to purchase more than 20% of the EV company’s shares. Canoo’s stock immediately rose on the news, though shares are now trading at around $1.30 each.
Before the Walmart deal was announced, Canoo had publicly stated at the end of 2021 that it was planning to move its headquarters to Bentonville, Walton’s home base and the location of Walmart’s headquarters. The states of Arkansas and Oklahoma have offered some $400 million in tax incentives in relation to Canoo building two new facilities in those states, including a manufacturing operation in Bentonville. Arkansas governor Asa Hutchinson also had named Aquila as one of more than a dozen members of the state’s Council on Future Mobility.
Canoo recently announced a contract with fleet leasing provider Zeeba, which has agreed to purchase 3,000 Canoo vehicles, and potentially more later. But the company has yet to put its vehicles on the road. Canoo, which had projected it would start producing the final version of its vehicle before the end of this year, has been working with a third-party manufacturer in Michigan, Roush, to produce the “Gamma” version of its vehicles, as Fortune reported last month. (A Roush spokeswoman says that the company cannot confirm or deny whether they are supporting a specific customer.)
One Canoo employee, who spoke with Fortune on condition of anonymity, says that there has been no internal communications around Canoo’s production schedule. “Anything that I do hear is all water cooler conversations,” the employee said, noting that, given the lack of communication, they were skeptical production would indeed start before the end of this year.
A Canoo spokeswoman says that the company does not comment “on hearsay [sic] or water cooler talk. Our manufacturing strategy is a confidential matter and those who need to know, know. As we stated in our press release, We have a large committed, growing order book, are finalizing our multi-year allocations for 2023 customer deliveries and will share our manufacturing plan with the broader market shortly.”
Eventually, Canoo plans to build out its own facilities in Oklahoma and Arkansas to manufacture the final vehicle. As of now, those facilities are far from completion, and Canoo is in dire need of ongoing capital, according to its own SEC filings. The EV company also continues to lose its senior management. At least six of the company’s executives or senior employees have left Canoo in recent months, as Fortune has previously reported.
The aforementioned lawsuit is part of ongoing case filed in summer 2020 by ex-AFV Partners employee Aprill and another former employee, who are alleging breach of employment contract and unjust enrichment, among other claims. AFV Partners has called the allegations “baseless” in filings and is attempting to compel the case into arbitration.
Update, Oct. 14, 2022: This article was updated with a comment from Canoo regarding its production plans.
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