EV startup Canoo has hired hundreds of employees and is aiming for a production date, but critical milestones remain, including bringing in a battery supplier, according to the company’s second-quarter earnings report.
Canoo’s earnings report comes just weeks after the company’s first investor relations day, when it named the Dutch company VDL Nedcar as contract manufacturing partner for his lifestyle vehicle. At the time, Canoo estimated that the Nedcar facility would build up to 1,000 units by 2022 for the U.S. and European markets, with a target of 15,000 units by 2023. During Monday’s earnings call, CEO Tony Aquila said the company now expects 25,000 units by 2023.
Canoo has also provided updates on its plans to build a US-based factory, describing it as a “mega micro-factory” for its pickup and multi-purpose van. In June, the EV startup has announced plans to open its first factory in Oklahoma. build. The state has committed $300 million in non-dilutive financial incentives to support the facility and phase 2 of production.
“This two-pronged strategy is important for a few reasons,” Aquila said during Monday’s earnings call. “As a new OEM, the partnership with Nedcar will allow us to refine our production process. In addition to increasing our manufacturing expertise, which will be deployed at our Oklahoma facility, it will enable us to diversify our manufacturing operations geographically and position us to increase our commitments, products and volumes to adapt to changing market demands and flexibility in distribution.”
Aquila said about a third of Oklahoma’s investment will be available within the first 36 months. These funds will help the company move forward as it moves into the Gamma phase, meaning Canoo is getting ready to launch. Year after year, Canoo expanded its workforce from 230 to 656 employees, 70% of whom are hardware and software engineers. The startup’s operating expenses have risen from $19.8 million to $104.3 million YOY, with most of that increase coming from R&D.
The rise in pre-expense income is a signal that Canoo is pursuing its production targets, but work still needs to be done before construction begins on the Oklahoma plant. Aquila said Canoo is in the final process of selecting a construction manager, architect and engineering firm and will likely have more updates on construction progress next quarter.
The company is still working on making a final decision on a battery partner in the third quarter, a move that will become increasingly important as more legacy OEMs try to control their supply chain with battery joint ventures. Canoo is also grappling with issues in its semiconductor supply chain, as is the rest of the industry, but says its streamlined manufacturing process means its vehicles require fewer chips to function.
On IR Day, Canoo announced it had completed 500,000 miles of beta testing. On June 30, Aquila said the company has retained the engineering and design to begin “gamma” builds.
“We also sourced 87% of the components, compared to 74% in the first quarter of the year, and excluding bulk materials, we source 95% in full,” said Aquila. “Our CTO and his team have completed the engineering design for 67% of the lifestyle vehicle components and moved them to tools.”
Aquila said Canoo would begin a countdown to standard operating procedure for its lifestyle vehicle in the fourth quarter. The lifestyle vehicle is likely closer to production, but Aquila said that of the 9,500 non-binding, refundable pre-orders, pre-orders for Canoo’s other two vehicles, the pickup and multi-purpose van, are the most popular.