Unfortunately, we’ve seen this before and it doesn’t sound promising. EV startup Canoo released its earnings report, and it is burning through cash like crazy with no vehicles to sell. It says it has “substantial doubt about the Company’s ability to continue as a going concern.” That is apparent in the amount of cash it burned through versus what it has left.
How much did Canoo lose in Q1?
According to its earnings report, it ran through $125.4 million for Q1 2022 and has only $104.9 million in cash as of the beginning of Q2. And again, it still isn’t making anything. However, it says it has put money aside to begin production of its Lifestyle Vehicle this year. It expects to make between 3,000 and 6,000 vehicles.
Since 2017, when Canoo first launched as Evelozcity, it has shown a pod-like Lifestyle Vehicle, a delivery van called MPDV, and a pickup version of the van. In that time it has made 39 prototypes, with 17 of those being production-intent builds finished last quarter. It says it has also finished over 2,000 miles of extreme winter testing.
What happens with the 17,500 pre-orders?
With production originally supposed to start in Arkansas later this year, it has 17,500 pre-orders in the books. It says that it has “more than $600 million in accessible capital to support the start of production.” Another claim is that it has constructed 43 battery modules.
Capital expenses totaled $28.4 million on zero dollars of revenue according to Reuters. This also indicates that Canoo needs capital to continue. “We have been clear about our philosophy of raising capital judiciously and will continue with this disciplined approach,” Canoo Chairman and Chief Executive Officer Tony Aquila said in a statement.
We’ve seen this scenario before unfortunately
It appears Canoo is following down the same road as Lordstown, Lucid, Nikola, and apparently Rivian. The EV truckmaker posted dismal earnings for Q1 2022 with a loss of $1.6 billion with earnings of $95 million. At least it is making trucks, which explains the earnings. Most of the aforementioned startups, including Fisker, still aren’t actually making anything except the sale of T-shirts and refrigerator magnets.
Which sheds light on how amazing Tesla’s rise is. It is the first and only successful new automaker since before WWII. It is intoxicating birthing an auto company and watching it develop a vehicle, then see it manufactured.
But turning that dream into reality takes billions upon billions of dollars. Even legacy automakers like GM and Ford spend billions of dollars developing a new model. And they have the resources and over 100 years of doing it under their belts. Starting from scratch is an almost insurmountable effort. And before Tesla, it was a completely insane proposition.