Canoo, a market leader in the EV industry, has announced bankruptcy and immediate cessation of operations. The startup’s attempt to keep afloat failed as it could not secure the necessary funding, forcing it to proceed with asset liquidation through a Chapter 7 bankruptcy process in Delaware.
Struggle for Survival
Funding challenges have been the Achilles’ heel for Canoo. With unsuccessful foreign investment talks and insubstantial response from the U.S. Department of Energy’s Loan Program, the startup’s financial distress became apparent. It filed bankruptcy, citing liabilities between $10 million to $50 million, while its assets fell far short, totaling under $50,000.
The Journey Comes to a Halt
The bankruptcy news strikes after recent layoffs and operational suspension of Canoo’s factory in Oklahoma. Even with a short-lived presence in the market, Canoo failed to achieve a stable clientele, passing through several executive reshuffles and dwindling down to just $700,000 in funds by mid-November.
A String of EV Failures
This bankruptcy follows a trend amongst EV startups choosing to merge with special purpose acquisition companies (SPACs) as a quick route to go public. Following Canoo’s leap to public trading via a SPAC merger, a few of its contemporaries faced similar financial distress, filing for bankruptcy.
An Unfulfilled Potential
Despite its bankruptcy, Canoo did have a breakthrough moment. In 2020, it went public raising around $600 million and even courted Walmart, leading to a tentative deal for 10,000 EVs in 2022. However, Canoo’s attractive modular EV platform and advanced technologies, appealing enough to attract Apple’s attention, couldn’t salvage the company from its financial woes.
Management Shuffles and Strategic Missteps
Canoo’s strategic decisions also contributed to its downfall. With multiple abrupt changes in leadership and strategic refocus under new CEO Tony Aquila, Canoo struggled to lay down a sustainable path. Distinct signs of the impending bankruptcy surfaced over the week, including employee layoffs and refunding customer deposits.
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