Canoo’s deal with Hyundai looks dead

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The deal between Canoo and Hyundai to build electric vehicles appears to have ended as the California EV startup is moving away from trying to sell its electric vehicle technology to other automakers.

Canoo chairman Tony Aquila shared the news Monday during an icy investor call – Canoo’s first publicly traded company. Canoo’s CEO was also absent from the call and the company announced earlier in the day that its CFO had stepped down to take another job – the second major departure in recent weeks after Canoo lost head of corporate strategy.

“These are major surprises during today’s call, and they are not ideal,” Roth Capital analyst Craig Irwin said at one point during the call.

The deal with Hyundai was announced in February 2020, and it was to result in both the Hyundai and Kia brands building vehicles on Canoo’s electric vehicle platform. It was seen as an important vote of confidence in the startup, which was only two years old at the time, and in its technology. Canoo called it a ‘key partnership’. Hyundai did not immediately respond to a request for comment. Canoo did not respond beyond Aquila’s statements.

Aquila acquired Canoo as part of the startup’s merger with a special acquisition company (SPAC) in 2020, bringing it approximately $ 600 million. Initially speaking obliquely, he said Monday that the startup’s board of directors had decided to “less stress” the line of “engineering services”. This was the planned part of Canoo’s business intended to have the startup deliver technology to larger companies looking to enter the electric vehicle space. Canoo’s desire to sell its technology at some point even caught Apple’s interest, such as The edge Reported previously.

In documents filed with the Securities and Exchange Commission, both before and after the merger, Canoo had said that its planned engineering services “were an important market for contract engineering services among legacy OEMs who lack the expertise to develop an electric powertrain at the pace necessary to take advantage of rising regulatory requirements and the global demand for EVs. ”

The startup also said that such partnerships would serve as “concrete points of external validation for our technology and the talent of our team, as well as additional revenue streams and long-term commercial opportunities.” Canoo said it was “in discussions with a number of other partners and expects to announce many more partnerships in due course.”

But on Monday, Aquila said Canoo will now focus more on making and selling its own vehicles to commercial operators. The company has so far announced a van, a pickup truck and a van, all built on the same underlying technology platform. Canoo will focus even less on the idea of ​​selling its electric van to consumers through a subscription model – the original field when the startup gave coverage in 2018.

Aquila has previously spoken of more focus on selling to fleet operators and small businesses rather than customers, though he didn’t explain just how far he’s willing to take that strategy shift until Monday. Namely, Canoo quietly uploaded a new investor presentation on its investor relations website on Monday that Hyundai no longer mentions.

“We have so much demand for our three [vehicles]let’s do all that work, and then let’s see if there is any [are] partnerships, ”he said. Aquila explained that he believes this will make for a healthier business with less risk.

When Aquila, who invested $ 35 million in Canoo before the SPAC merger, pressed the startup’s previous claims about this part of its business, he pointed to his previous leadership. Aquila said they were “a little bit more aggressive” than he would have been with some of their public statements, and that talk of possible partnerships was “overbearing”.

‘You have to be careful with statements you make. So, you know, again, I think it was a bit premature, ”he said.

While some of those executives are now indeed gone, like co-founder and former CEO Stefan Krause, others remain – though they weren’t on Monday’s call. At one point, Aquila was directly asked if Krause’s replacement, Canoo co-founder Ulrich Kranz, was still CEO. Aquila confirmed that he is The edge First reported late last year, Kranz’s contract was recently renegotiated and he was kicked out of the board of directors.

Aquila said he believes the company’s refocus will help “protect” the intellectual property Canoo has developed, and that the original deal with Hyundai did not take into account the value of that IP. When an analyst asked if Aquila thinks Hyundai has obfuscated any of Canoo’s IP addresses, Aquila said, “I’ll leave it up to you to make that decision.”