A struggling electric van manufacturing startup got some well-timed good news that retail giant Walmart will purchase 4,500 of its vehicles to support its eCommerce business.
Canoo will supply its Lifestyle Delivery Vehicle model to Walmart for deliveries beginning 2023, according to the release. Walmart will use those vehicles for last mile deliveries from online sales.
Although the brunt of the agreement focuses on fleets in operation next year, the two companies plan to kick off advanced deliveries that will help refine and finalize the vehicle configuration. Those early projects begin in the Dallas-Fort Worth metroplex in coming weeks, according to the release.
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“We are proud to have been selected by Walmart, one of the most sophisticated buyers in the world, to provide our high-tech, all-electric, American made Lifestyle Delivery Vehicle to add to their impressive logistics capabilities,” Tony Aquila, a Chairman, CEO and investor in Canoo, said in a statement. “Our LDV has the turning radius of a small passenger vehicle on a parking friendly, compact footprint, yet the payload and cargo space of a commercial delivery vehicle. This is the winning algorithm to seriously compete in the last mile delivery race, globally.
“Walmart’s massive store footprint provides a strategic advantage in today’s growing ‘Need it now’ mindset and an unmatched opportunity for growing EV demand, especially at today’s gas prices,” Aquila added.
The transaction couldn’t come at a better time for Canoo. Two months ago, the publicly traded EV maker informed the U.S. Securities and Exchange Commission that it had lost about $125 million in the first quarter and was down to its $104 million cash balance.
“Our management has performed an analysis of our ability to continue as a going concern and has identified substantial doubt” about that ability, according to the Canoo 10Q filed with the U.S. Securities and Exchange Commission this week. “Our business plans require a significant amount of capital,” the SEC filing reads.
Aquila, however, was optimistic even during that dark period and noted that Canoo had access to $600 million in capital.
“We have been clear about our philosophy of raising capital,” Aquila said in a press release accompanying the earlier SEC filing. “As operators and investors, we have significant experience raising capital in challenging markets – and the best way to raise capital is to achieve your goals. We will continue to raise when needed, bridge to milestones and be in a position to take advantage of improving market conditions.”
Earlier this year, Canoo selected an industrial park site in northeastern Oklahoma as the location for its production plant. The facility is expected to open next year, even though news report had raised doubts about the future.
Aquila pointed that Canoo has doubled its Gamma builds to 39 vehicles and counted more than 17,500 preorders with a projected value of $750 million and growing.
The Walmart EV supply deal is the latest and biggest in terms of public impact. The retailer’s associates till drive those Canoos to deliver online orders such as groceries and general merchandise.
The electric vans also could be utilized for Walmart GoLocal, the company’s delivery-as-a-service business.
“We’re thrilled to continue diversifying our last mile delivery fleet with Canoo’s unique and sustainably focused all-electric technology which will provide our associates with safe, ergonomic delivery vehicles,” said David Guggina, senior vice president of innovation and automation, Walmart U.S. “Today, the closest Walmart to customers is right in their pockets – it’s the Walmart app. By continuing to expand our last mile delivery fleet in a sustainable way, we’re able to provide customers and Walmart+ members with even more access to same-day deliveries while keeping costs low.”
Earlier this year, Walmart and FedEx announced they were ordering 7,500 Brightdrop electric cans. Brightdrop is being produced under the GM Factory Zero model.
The transportation sector is the largest emitter of carbon dioxide in the U.S., accounting for more than 30 percent of overall air pollution emissions. According to a report from the Union of Concerned Scientists, an electric vehicle could improve emissions comparable to a car getting 70 miles per gallon of gasoline (most today average 25 to 30).
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(Rod Walton, senior editor for EnergyTech, is a 14-year veteran of covering the energy industry both as a newspaper and trade journalist. He can be reached at [email protected]).
