Canoo, an electric vehicle startup responsible for developing the cool MPV-looking lifestyle vehicles, just broke off its deal with VDL Nedcar for the production of its cars in the Netherland.
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With this development, Canoo became an all-American company (well, not precisely) focused solely on producing vehicles in the US. Los Angeles-based startup will build all of its cars at its plants in Arkansas and (possibly) Oklahoma.
"Canoo is now in a position to issue guidance at a time when many others in the industry are reducing targets and projections. The Company has now refined its manufacturing strategy and assembled a team to execute the production roadmap for 2022 - 2025" said Tony Aquila, Investor, Chairman & CEO at Canoo Inc.
Although the company promised to deliver its first production vehicle by the end of 2021, they have pushed back plans for the last quarter of 2022. As previously reported, the first vehicle to hit the streets will be the Lifestyle Vehicle. It is the one Jay Leno drove had a chance to take a ride in one year ago. I highly recommend watching this episode of Jay Leno's Garage about the Canoo and its business model.
In its press release, Aquila added, "In addition, we will be 100% built in the heartland of America, and we have proudly achieved another major milestone of having sourced 96% percent of our parts from U.S. and Allied Nations."
The deal with the VDL Nedcar is off.
Six or seven months ago, Canoo inc revealed that they had more than $700 million in cash and assets. $30.4 million of that money Canoo invested as a prepayment to the VDL Nedcar, which should have served as a Canoo contract manufacturer in Europe. Now, VDL Nedcar will return Canoo's prepayment in full.
Previously, Canoo reported their estimates about the production capacity VDL Nedcar offered. Dutch would only produce up to 25,000 units in 2023, but that is now off the table. Interestingly enough, the company suggested that it is still on track to produce cars in 2022. 2022 should see 3,000-6,000 units of the Lifestyle Vehicles, while Canoo intends to produce as many as 17,000 units the following year.
2024 - 40,000 units
2025 - 70,000 units
Sure, these claims are nothing but words at this point. After all, Canoo mega factory in Oklahoma is still not operational, but with a clear focus on the US, I can see how Canoo may go after government incentives. Especially with claims that Canoo sources 96 percent of parts from the US. That could grant the company some incentives and tax deductions.
Canoo is not all done with the Dutch.
VDL Groep, an industrial company that supervises the VDL Nedcar car manufacturing, will continue its work with Canoo.
“We look forward to continuing our relationship with Tony and the Canoo team, as we explore new opportunities together,” said Willem van der Leegte, President & CEO. “We see electric vehicles as a significant economic driver. We are pleased to invest in Canoo and look forward to a long and mutually beneficial relationship.”
The VDL Groep purchased $8,4 million worth of Canoo stocks in this new turn of events.
Conclusion
By focusing its production efforts in the US, Canoo could benefit immensely from savings of the smaller supply chain, better control the production processes, and eliminate taxes and shipping costs. All in all, breaking a deal with the VLD Nedcar does not seem to be that bad.
Image source: Courtesy of Canoo for media.
Safet Satara is an automotive journalist and car enthusiast who has nurtured his automotive endeavors since he was 19 years old. He specializes in European cars, EV technology, and research about automotive industry issues. Safet has also written automotive pieces for Gearheads.org, Topspeed.com, Autowise.com, and various print magazines, including ProAuto. His specialty - testing cars - more than 500 tested cars under his belt. You can follow Safet via Facebook, Instagram, and Twitter.
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