Electric vehicle startup Canoo is ending its deal with Dutch automotive manufacturing company VDL Nedcar to serve as its contract manufacturer in Europe, according to a Securities and Exchange Commission filing on Wednesday. A separate filing reveals that Canoo will also be exploring a new deal with VDL Groep, another Dutch auto manufacturing company, to produce vehicles in the U.S.
“We appreciate the months of effort VDL Nedcar invested to provide us with a contract manufacturing option, but we have concluded that building in America is better aligned with our mission and current focus to invest in the communities and states that are investing in hi-tech manufacturing alongside us, creating American jobs and innovation,” said Tony Aquila, Canoo’s CEO, in the filing. “The support from Oklahoma and Arkansas will allow us to achieve SOP earlier and with less risk on many fronts.”
As part of the breakup, VDL Nedcar will return Canoo’s prepayment of $30.4 million, and as part of the new partnership, VDL Groep will purchase $8.4 million of Canoo stock.
The news comes about a month after Canoo shared plans to move its headquarters and an advanced manufacturing industrialized facility to Bentonville, Arkansas, where Walmart is also headquartered. During Canoo’s second-quarter earnings call, Aquila had estimated VDL Nedcar would produce up to 25,000 units of the automaker’s lifestyle vehicle in 2023, but it appears those vehicles will now be manufactured in Arkansas.
Canoo is also working on its “mega microfactory” in Oklahoma, which is expected to come online in late 2023 and will build Canoo pickup trucks and multipurpose delivery vehicles. Oklahoma committed $300 million in non-dilutive financial incentives to support Canoo’s facility and the next phase of its manufacturing. Canoo has not replied to requests for information about similar financial incentives offered by Arkansas, but it’s likely those incentives exist. The SEC filing states that Canoo will be able to better utilize the incentives from Oklahoma and Arkansas now that the startup and VDL Nedcar have ceased contract manufacturing discussions.
With the $1 trillion infrastructure bill officially signed into law, which includes the Buy American Act, it’s possible Canoo will be chasing federal government contracts and other government incentives. The act restricts the purpose of non-domestic supplies, stipulates that the end product must be manufactured in the United States and applies to federal government contracts for products used in the U.S.
“In addition, we will be 100% built in the heartland of America, and we have proudly achieved another major milestone of having sourced 96% of our parts from U.S. and Allied Nations,” said Aquila.
By choosing a different manufacturing partner, Canoo hopes to reduce supply chain vulnerabilities, increase speed to market, more securely control the creation of additional innovation and IP, increase advanced manufacturing jobs in local communities and save thousands of dollars per unit by “eliminating warranty risks, tariffs and overseas shipping costs,” according to the filing.
On Wednesday, Canoo also shared upgraded guidance on its refined manufacturing strategy and production roadmap for 2022 to 2025. Next year, Canoo aims to produce 3,000 to 6,000 units, up from 500 to 1,000 units. In 2023, it hopes to produce 14,000 to 17,000, up from 15,000 units. And its 2024 and 2025 targets are 40,000 to 50,000 units and 70,000 to 80,000 units, respectively.
