Canoo

What did it do?

Canoo was a California-based car company, founded in 2017 as Evelozcity, that developed electric vans and delivery vehicles for commercial fleets. It first planned to offer its vehicles only by subscription, then switched to selling commercial vehicles. In December 2020 it began trading on NASDAQ through a SPAC merger.

Why did it shut down?

Canoo quickly became a company that lost its co-founders and senior executives and kept changing its business model; in April 2021 the SEC opened an investigation over these developments and shareholder lawsuits. Although orders for thousands of vehicles were announced from Walmart, Zeeba and Kingbee, fewer than 12 vehicles had been delivered across all of them as of October 2024. In 2023 it delivered 22 vehicles and earned just $886,000 in net revenue. In December 2024 it halted its Oklahoma factory, put 82 employees on unpaid leave and went looking for emergency funding. When none came, it filed for Chapter 7 on 17 January 2025 and ceased operations immediately.

The story

In July 2022 Walmart signed a definitive agreement to buy 4,500 electric delivery vehicles from Canoo, with an option for up to 10,000. A few months later Zeeba, a fleet leasing company, ordered 5,450 vehicles and Kingbee ordered 9,300. On paper, there was demand for tens of thousands of vehicles. By October 2024, fewer than 12 vehicles had been delivered across all of those orders.

Canoo was founded in 2017 as Evelozcity by Stefan Krause and Ulrich Kranz; its main backing came from the Chinese investor Li Pak-tam and the German entrepreneur David Stern. The company planned to offer its pod-shaped electric van by subscription only. In September 2020 it announced a SPAC merger with Hennessy Capital Acquisition Corp. IV; the deal assumed a valuation of $2.4 billion and closed in December 2020.

The instability started early. Co-founder Krause left in July 2020; in April 2021 Kranz stepped down as CEO and was replaced by the chairman, Tony Aquila. That same month the SEC opened an investigation over the senior departures, abrupt changes to the business model and shareholder lawsuits. The company switched from subscriptions to selling commercial vehicles, announced it would move its headquarters to Arkansas, then turned to Texas, and planned two separate manufacturing sites in Oklahoma. NASA chose Canoo to carry astronauts to the launch pad for the Artemis programme and took delivery of three vehicles before the bankruptcy. In May 2022, however, the company disclosed that it had only enough cash left for one quarter. In 2023 it delivered 22 vehicles and earned $886,000 in net revenue; according to its annual report, payments to CEO Aquila's company for private jet use and shared services came to almost four times that revenue.

In December 2024 the Oklahoma factory was halted and 82 employees were put on unpaid leave. On 17 January 2025 Canoo filed for Chapter 7 liquidation in Delaware and ceased operations immediately. At the time of filing its assets were below $50,000. In March 2025 it was reported that CEO Aquila had offered to buy almost all of the company's assets for $4 million in cash.

Canoo's story shows that a perception of growth built on order announcements cannot keep alive a company that cannot get vehicles out of its factory.

Lessons for founders

• Letters of intent and cancellable order announcements are no substitute for production capacity; report the number of vehicles delivered to your investors.
• Switching the business model from subscription to sales, then to fleets, erodes the trust of both the team and investors; do not move to a new model before gathering evidence for the current one.
• Changing headquarters and factory locations one after another spreads capital thin; focus on proving mass production at a single manufacturing base.

Sources

1. Canoo (Wikipedia)
2. EV startup Canoo files for bankruptcy, to cease operations (Reuters, 2025-01-18)
3. Canoo's CEO is buying the bankrupt EV startup's assets (TechCrunch, 2025-03-05)
4. https://www.wikidata.org/wiki/Q99482082
5. Wikipedia (English)

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