A struggling EV startup is making bold moves to survive

Running a car company is hard, and when facing uncertainties like poor sales or financial hardships, the trials and tribulations can be too much for the leaders who run them.

Take Ford CEO Jim Farley, for example. Last quarter, Ford's EV business, known as Ford Model e, lost $1.2 billion, while excessive warranty costs impeded the company's financial growth.

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Or Stellantis's Carlos Tavares, for instance. In addition to leading 14 unique brands under one roof, the brand offers massive discounts on its cars to fight an ongoing inventory crisis and a laundry list of other items weighing it down.

Whether big or small, running an automaker is not an easy business. But for this EV startup, their latest move could be a devastating blow that could severely threaten its prospects.

Canoo struggles to break even on its EVs

In its most recent 8-K filing with the SEC, dated October 30, fledgling EV startup Canoo GOEV revealed that its cash and cash equivalents had been depleted to just $4.51 million. The company also reported a net loss of $117.6 million through the first half of 2024.

Though the brand has been around for a while, specializing in specialized electric passenger vans, commercial vans, and vehicles for NASA's Artemis program, it has been mired in financial trouble. Last year, the firm made only $886,000 in revenue and delivered just 22 vehicles.

In addition to its lack of revenue, Canoo has been borrowing from an unusual source. In the same October 30 regulatory filing, the company revealed that it borrowed $2.7 million from a fund associated with Canoo CEO Tony Aquila. This loan follows one for $1.2 million with 11% interest that was disclosed in an earlier SEC regulatory filing on October 18.

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Canoo's bleak financial picture has also inspired a series of desperate measures to keep the company afloat.

As reported by The Oklahoman, Canoo will be furloughing 30 of its Oklahoma City-based assembly site employees, leaving them without paychecks for 12 weeks and healthcare coverage that will expire at the end of November.

“Canoo has made the difficult decision to temporarily reduce our workforce in Oklahoma City by furloughing 23% of our factory workers for a period of twelve weeks as part of a broader realignment of our North American operations,” Canoo said in a statement.

“This reduction is a continuation of our efforts to consolidate our U.S. workforce which includes redistributing some of our tenured and skilled employees to our Oklahoma City and Texas facilities as part of our comprehensive plan and supply chain harmonization to prepare the company for the next phase of growth.”

Canoo faces an executive exodus

In addition to the furloughs, Canoo's move comes fresh off the company's move from Los Angeles to Texas and the departure of some of its key executives as part of a major reorganization.

Canoo lost its chief technology officer, Sohel Merchant, in August and its senior director of advanced vehicle engineering, Christoph Kuttner, in September.

In its most recent regulatory filing with the SEC, Canoo revealed that its CFO Greg Ethridge and general counsel Hector Ruiz resigned from the company on October 31st.

Though their positions have been refilled, their replacements face a mountain of work to get Canoo safe and sound again.

Currently, it faces multiple lawsuits, including from suppliers that allege missed payments. In one lawsuit filed in August, Air Capital Equipment claimed Canoo owes the compressed air system company more than $570,000, which it took out on credit.

In April, it was revealed that in the same year that Canoo made just $886,000 in revenue, it spent more than $1.7 million in expenses related to the use of a private jet.

Canoo Inc. trades on the NASDAQ as GOEV and is down 7.49% from the opening bell, trading at $0.40 per share at the time of writing.

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