AUTONEWS

The list of failed EV startups grows as Canoo files for bankruptcy and shuts down operations

Electric vehicle startup Canoo has filed for Chapter 7 bankruptcy and ceased operations, citing less than $50,000 in assets against liabilities of up to $50 million. Despite initial promise and partnerships with major organizations, the company struggled with strategic shifts, funding issues, and governance challenges.

Electric vehicle startup Canoo announced on Friday that it has filed for Chapter 7 bankruptcy and will cease operations immediately, marking the latest casualty in a string of EV company failures. The filing, made with the U.S. Bankruptcy Court for the District of Delaware, initiates the liquidation of the company's assets under the supervision of a court-appointed trustee.

The seven-year-old company, which developed a distinctive modular electric van platform, disclosed in its bankruptcy filing that it has less than $50,000 in assets, compared to liabilities of between $10 million and $50 million owed to fewer than 49 creditors. Canoo stated in a press release published late Friday that it had been "in discussions with foreign sources of capital" that proved unsuccessful. The company also cited its inability to secure funding from the U.S. Department of Energy’s Loan Program Office, which has been actively lending in the waning days of the Biden administration.

The bankruptcy follows recent warning signs, including the furlough of its remaining workforce and the shutdown of its Oklahoma factory. By mid-November 2024, the company's cash reserves had dwindled to just $700,000, severely limiting its ability to maintain operations or deliver vehicles to customers.

Canoo joins a growing list of failed EV startups that opted for the SPAC route to public markets, following similar bankruptcies by Fisker, Lordstown Motors, Proterra, Lion Electric, and Arrival. Ironically, Arrival's assets were acquired by Canoo in 2024 before its own collapse.

Founded in 2017 by former executives from troubled EV maker Faraday Future, Canoo — initially named Evelozcity — showed early promise with its innovative technology, including a steer-by-wire system and a versatile electric vehicle platform. The company's potential even attracted interest from Apple, which considered investing in or acquiring Canoo to boost its own electric vehicle project.

The company went public in December 2020 through a merger with Hennessy Capital Acquisition Corp., raising approximately $600 million. However, under the leadership of Chairman and CEO Tony Aquila, who took control after the public listing, Canoo underwent significant strategic shifts. The company pivoted away from consumer sales to focus on commercial fleets and struggled with manufacturing strategy decisions.

Despite securing tentative agreements with high-profile partners, including a potential 10,000-vehicle deal with Walmart and contracts with the United States Postal Service, Department of Defense, and NASA, Canoo failed to achieve significant production volumes or generate substantial revenue.

Questions also arose about corporate governance under Aquila's leadership. In 2023, regulatory filings revealed that the company spent twice its revenue on payments to Aquila's firm for corporate jet usage and office space rentals. In recent months, Aquila's firm provided crucial loans to keep Canoo operational, secured by liens on the company's Oklahoma City facility equipment.

The end became apparent as employees received termination notices, consumer deposit refunds began processing, and even the company's billboard at its Justin, Texas, office was removed. Canoo's liquidation in Delaware Bankruptcy Court brings to a close another chapter in the challenging story of EV startup ventures, highlighting the difficulties faced by new entrants in the competitive electric vehicle market.

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