Canoo is insolvent and ceases operations
In its own announcement, the electric car manufacturer states that it has filed for bankruptcy under Chapter 7 of the US Bankruptcy Code in Delaware. The decisive factor was that Canoo was unable to convert a conditional loan commitment from the US Department of Energy into a final loan. According to the company, subsequent talks with foreign investors were unsuccessful, so “the Board has made the difficult decision to file for insolvency.”
Tony Aquila, named in the Canoo press release not only as Chairman and CEO but also as one of the company’s largest investors, commented on the closure of the business as follows: “We would like to thank the company’s employees for their dedication and hard work. We know that you believed in our company as we did. We are truly disappointed that things turned out as they did. We would also like to thank NASA, the Department of Defense, The United States Postal Service (“USPS”), the State of Oklahoma and Walmart for their belief in our products and our company. This means a lot to everyone in the company.”
To preserve bankruptcy assets, Canoo will cease operations with immediate effect. Moreover, a court-appointed trustee will manage the liquidation of the company’s assets. There is no hope of a fresh start. Chapter 7 of the US Bankruptcy Code deals with completely liquidating the debtor’s assets. In contrast, Chapter 11 regulates reorganisation or restructuring through insolvency. That is currently the case with battery cell manufacturer Northvolt.
At the centre of Canoo’s business was the Lifestyle Vehicle (LV) and its cargo variant, the Lifestyle Delivery Vehicle (LDV). The manufacturer built the duo in a plant acquired in the US state of Oklahoma at the end of 2022. At the beginning of 2024, the signs were still pointing towards expansion. Canoo took over significant parts of the production equipment of the insolvent British electric vehicle developer Arrival. The equipment was to be collected in more than 20 containers and shipped by sea to Canoo’s production facilities in Oklahoma.
The company stems from Evelozcity, a startup founded in 2017 by German car managers Ulrich Kranz, Stefan Krause and Karl-Thomas Neumann. In 2019, the company was renamed Canoo – and shortly afterwards underwent a reorientation, which is closely linked to the name Tony Aquila.
Aquila joined Canoo in 2020 as an investor and Executive Chairman to initially accompany the company’s SPAC IPO in this management position. When Canoo co-founder Ulrich Kranz left Canoo in April 2021, Aquila became the new CEO – and reorganised the company. Aquila wanted to sell the vehicles instead of the initially planned distribution via a subscription model. He later also rejected the founders’ plan to offer the skateboard platform to other car manufacturers.
Canoo thought big right from the start. The company wanted to quickly expand beyond the US. However, plans for European production at VDL NedCar fell through. In the US, however, Canoo did land some major customers. In January 2024, for example, it received an order from the US Postal Service (USPS). Prior to this, it had already signed contracts with vehicle rental company Kingbee, fleet leasing provider Zeeba and Walmart, some of which were for four-digit purchase volumes. Nothing is known about the status of the order processing.
What is clear, however, is that Canoo has often had to contend with liquidity bottlenecks. In May 2022, the company reported to the SEC in a mandatory disclosure that it was experiencing financial difficulties that threatened its existence. In its quarterly report, Canoo warned “that there is significant doubt about the company’s ability to continue as a going concern.” At the same time, rumours emerged that Canoo could be a takeover candidate.
Since then, the financially ailing startup’s negotiating position has been weak. For example, Canoo had to swallow a few pills to win a large Walmart order. Walmart secured the option to take over up to a quarter of Canoo in the future, and Canoo was also not allowed to sell vehicles to Amazon for the duration of the deal.
The most severe blow followed in 2023, when the US Securities and Exchange Commission (SEC) imposed a fine of 1.5 million US dollars (1.37 million euros) on Canoo for allegedly misleading investors in connection with its IPO. That also had personal consequences for the then-CEO Ulrich Kranz. Following its own investigation, the SEC is certain that Canoo allegedly deceived investors with unrealistic revenue forecasts totalling hundreds of millions of dollars before going public in 2020 as part of a merger with investment firm Hennessy Capital Acquisition.
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