Canoo, a Los-Angeles based upstart automaker that went public late last year in a merger with a special purpose acquisition company (SPAC), plans to bring highly-customizable, mass-market electric vehicles to Canadians starting in late 2022 or 2023.
In a pivot away from the company’s initial plan to launch its vehicles as part of an all-inclusive subscription service, Canoo Inc.’s new chairman and chief executive officer Tony Aquila announced the business will instead focus on selling a mass-market pickup truck, passenger van and commercial van meant for, “the backbone of America.”
Canoo is just one in a series of EV startups – including Arrival, Faraday Future, Lordstown Motors and Nikola – that are raising money by going public with a SPAC, which entails less regulatory scrutiny than an initial public offering. Building a car company from scratch is a risky and expensive endeavour; even well-funded startups have burned through cash and fizzled out.
Canoo’s chief accounting officer, Ramesh Murthy, said it will cost $565-million to get their first vehicle to start of production and the company has sufficient cash to see it through the start of production in the fourth quarter of 2022.
The initial batch of vehicles will be produced by VDL Nedcar, a contract manufacturer based in the Netherlands, while Canoo’s own “mega microfactory” – slated to open in 2023 – is being built in Oklahoma.
The first Canoo on the road will be a futuristic-looking five- or seven-seat van, dubbed the Lifestyle Vehicle, which has a targeted starting price of US$34,750-US$49,950 and a driving range of 400 kilometres. The pickup truck and a larger commercial Multi-Purpose Delivery Vehicle (MPDV) will arrive as early as 2023. The company has taken more than 9,000 refundable commitments so far, although preorders for Canada have yet to begin and the company won’t say when Canadians will be able to put down a $100 deposit.
Canoo was founded in 2017 as Evelozcity by three ex-BMW, ex-Faraday Future executives. Richard Kim, Canoo’s vice-president of design, penned BMW’s radical i3 electric car. And, in some ways, the Canoo Lifestyle Vehicle – with its avant-garde style, large glasshouse and boxy shape that maximizes interior space – picks up where the soon-to-be discontinued i3 leaves off.
Another BMW i alumni, Ulrich Kranz, co-founder and former CEO of Canoo, resigned in April and was subsequently hired by Apple, TechCrunch reported. Mr. Aquila, a major investor in Canoo took over as CEO. He comes from the software world, having previously founded Solera Holdings, a company that provides asset management and protection software to the auto industry and other sectors.
Speaking to The Globe and Mail, Mr. Aquila outlined Canoo’s vision of an electric vehicle as a connected, secure digital platform, through which the company will offer on-demand upgrades and third-party services such as maintenance and customization.
In total, how much have you personally invested in Canoo?
I put a total of $70-million in.
Why invest so much money into this upstart EV company?
I wanted to actually see about finding a platform that could be enabled by technology, not by mechanical thinking. So I searched; I looked at investing in all of the startups. I went on a quest and the platform I liked the most was this one. I thought the business model was a little off on financial engineering, but the technology and the engineering teams, they really knew how to bring things together.
Cyberhacking vehicles, ransomware, all that’s going to be the next big rage. We have one microchip manufacturer and half the number of microchips [in the car], but we can control the way that architecture works. All the other startups were just, like, thinking of batteries; they were not thinking about what happens in a highly technical electrified environment – what are the attacks? Canoo’s platform was rock solid.
Why the pivot away from a subscription-based sales model to a more traditional vehicle-ownership model?
Do I think some day a membership model will be successful in this business? Yes. But do I want to figure out the underwriting algorithm for it, carry the costs on my own balance sheet and take the risk? No.
With the current business model, how much of the profit will come from selling cars versus other avenues?
The second, third and fourth owners of a vehicle, 80 per cent of all profit from cradle-to-grave is in that area, not in selling the vehicle to the first owner. Let’s not try to make money on selling the car, let’s make money on getting all the waste out of ownership of a car, and let’s manage the asset so people know when to buy, sell, trade, repair and build a loyalty model, because that’s where the profit is anyways. But, also, we build vehicles that are in the high-growth areas, and the highest profit areas.
Through the Canoo app, customers will be able to manage their Canoo, but also their other vehicles using an OBD II dongle. Drivers could purchase extra features or third-party services. Does that mean pop-up advertising on the app, or in the car?
You’ve got three cars in your driveway, and we’re going to say, based on all the readings, like your braking patterns, you need new tires. That’s the pop-up you want; it’s not deal driven. You’ve also got two other vehicles in your driveway, and you’re going to need to change them to snow tires. So why don’t we go to the tire shop and say, ‘I’ve got three jobs for you, what will you do for my customer?’
What’s special about the physical EV platform Canoo is building?
The critical equation was to have the turning radius of a Toyota Prius, the size of a small pickup and the payload of a large pickup. If you can do that, you can build the first global platform, because it can drive on Roman roads, Incan roads, American and Canadian roads. And we’ve achieved that.
With Canoo’s modular EV architecture, the steering wheel is connected to the wheels only by wire, rather than the usual mechanical linkage. How do you ensure it’s safe?
Fly by wire, this has been well perfected in aviation. My view is a steering column belongs in the Smithsonian Institution, just like traditional mechanical yoke from classic airplanes. All systems we deploy have, just like in aviation, multiple redundant systems.
Will customers buy your vehicle through traditional third-party dealers or from Canoo directly?
We’re developing a centre here in Texas that you can come and visit and it’ll even have some light 3D printing capabilities. For example, a customer can say ‘here’s what I want to hold my rifle because I’m a hunter,’ and we’ll go back and print a mock-up. To get to scale, we’ll use the vehicle upfitting market, as well as real high-quality dealers that realize that the old model is dying. Again, where’s profit margin in this business? It’s in accessorizing a vehicle, so the vehicle delivery should be about accessorizing.
When exactly will the first Canadian customers take delivery of their vehicles?
We will make an announcement for that some time later this summer, after the holiday break. What we want to do is a bit of a road show around Canada. One of the things I will say that I learned in automotive tech is that Canadians always adopted technology before Americans.
This interview has been edited and condensed.
Editor’s note: A previous version of this story erroneously said that it would take $565-million for Canoo to get their first vehicle to market. It is in fact to the start of production. The Globe regrets the error.