Electric vehicle startup Canoo, which announced plans to produce electric vehicles at a Pryor plant from 2023, reported net losses of $164.4 million in the second quarter and $289.8 million in the first half of 2022.
Although the company, in its recently released 2Q financial statements, said it had amassed more than $1 billion in its sales “pipeline”, it acknowledged that its future prospects hinge on its still-nascent relationship with a single customer, Walmart.
“We expect a substantial portion of our initial revenue to come from a single customer,” he said. “If we are unable to maintain this relationship, or if Walmart purchases significantly fewer vehicles than we currently expect or at all, our business, outlook, financial condition, results of operations and cash flows cash flow could be materially and negatively affected.”
Shares of Canoo, which jumped in value in July after Walmart ordered 4,500 lifestyle electric vehicles from Canoo and opted to buy 10,000 for use as delivery vehicles, have since declined by about 25%. It took another hit when Canoo said in its second-quarter filing that, at least initially, it wouldn’t be building electric vehicles for Walmart itself. Instead, he planned to use an unspecified contractor.
Canoo previously said it would begin vehicle assembly at a small plant in Bentonville, Arkansas, while it works to build its “mega-micro plant” at the Mid-America Industrial Park in Pryor. He said he plans to eventually employ 1,500 to 2,000 people at the Oklahoma plant.
The company benefited from financial incentives provided by Oklahoma. According to statements by Canoo Chairman Tony Aquila, Oklahoma has awarded $15 million from the governor’s “Quick Action Closing Fund” to support Canoo’s job creation and other development efforts in the state. The funding was included in an overall incentive package valued at approximately $300 million.
Arkansas has also provided incentives for the company, as Canoo has stated its goal of creating a “corridor” of electric vehicle development and production stretching from northeast Oklahoma to northwest New York. ‘Arkansas.
In comments posted with Canoo’s filings in the second quarter, Aquila said the company had completed 90% of crash tests and moved through a final phase required to achieve Federal Motor Vehicle Safety Standard certification.
“We are moving towards the start of production in the fourth quarter,” he said. “We have over $1 billion in our sales pipeline, which includes our recently announced commercial order.”
He noted that the US military has asked Canoo to provide electric vehicles for analysis and demonstration purposes. Canoo also plans to deliver several custom electric vehicles to NASA by June 2023.
In other Q2 highlights, Canoo said it launched an “advanced delivery setting” of electric vehicles to be used by Walmart for deliveries in the Dallas-Fort Worth metroplex.
Progress has a cost. Canoo reported net losses of $164.4 million and $289.8 million for the three and six months ended June 30, 2022, compared to net loss and comprehensive loss of $112.6 million and 127 $.8 million recorded for the three and six months ended June 30, 2021 .
Net cash used in operating activities totaled $237.6 million in the first half of 2022, compared to $108.8 million for the six months ended June 30, 2021. Net cash used in investing activities was of $35 million, compared to net cash used in investing activities of $28.7 million in the first two quarters of 2021.
As of June 30, the company said it has access to up to $250 million, including cash and cash equivalents of $33.8 million and approximately $220 million of spare capacity on its power purchase facility. pending shares filed with the Securities and Exchange Commission in May.
Second half 2022 business outlook
Based on current projections, Canoo said it expects second-half operating expenses, excluding stock-based compensation and amortization, of $200 million to $245 million, and capital expenditures. from 100 to 125 million dollars.
Despite the change in plans regarding production, Aquila said deliveries to Walmart are expected to begin in the first quarter of 2023.
The publication Inside electric vehicles noted, however, in a post following the 2Q report that Canoo’s plans to use an outside contractor for initial EV production for Walmart could signal production issues for the startup. He also pointed out that the company’s road to future profitability remains uncertain.
“Canoo says it ended the quarter with more than $1 billion in its sales pipeline, largely attributable to the deal with Walmart. Beware, only 17% of (its) 32,500 reservations are committed sales under contract , with the remainder being non-binding and refundable,” the post read.