Saturday, 26 Sep 2020

U.S. EV startup Canoo to go public at $2.4 billion valuation

DETROIT (Reuters) – Canoo Holdings Ltd, a U.S. electric vehicle startup already working with South Korea’s Hyundai Motor, will go public later this year at a value of $2.4 billion and aims to start delivering vehicles by the second quarter of 2022.

It has joined forces with a so-called special purpose acquisition company, or SPAC, and the combined company will be called Canoo Inc following the closing of the deal with Hennessy Capital Acquisition Corp IV (HCACU.O) in the fourth quarter. It will trade on the Nasdaq under the ticker symbol “CNOO,” the companies said.

Tuesday’s announcement comes as investors are looking to ride the global shift to EVs and echo the surging stock price of segment leader Tesla (TSLA.O).

A SPAC is a shell company that raises money through an IPO to buy an operating entity, typically within two years.

“A SPAC has for us a huge advantage because we can generate enough funding to accelerate our development process,” Ulrich Kranz, Canoo’s co-founder and chief executive, told Reuters.

The former BMW (BMWG.DE) executive cited Hennessy’s long track record, which includes taking school bus maker Blue Bird Corp (BLBD.O) public in 2015.

Hennessey CEO Daniel Hennessy said he looked at more than 12 EV startups and preferred Canoo’s faster path to commercialization.

The deal, including additional money from BlackRock Inc (BLK.N) and other institutional investors, will raise $607 million in proceeds. Hennessy raised $300 million in its March 2019 initial public offering.

Canoo has developed a “skateboard” – a low-rise platform that bundles batteries and electric motors with such chassis components as steering, brakes and wheels – on which a variety of vehicle body types can be built.

Canoo projects 2024 revenue of $1.43 billion and its first profit at $188 million, officials said during a conference call.

In February, Canoo, based just outside Los Angeles, announced a deal to develop EVs with Hyundai Motor Co (005380.KS). Hyundai also has invested in UK electric van startup Arrival, another potential SPAC target.

The first of Canoo’s lineup – the pod-like, seven-seat canoo – will be available via subscription to U.S. consumers starting in the second quarter of 2022, followed by a small commercial delivery vehicle in 2023 and a sport sedan in 2025, Kranz said. The canoo will have an electric driving range of more than 250 miles.

Canoo expects to build 10,000 canoo vehicles in 2022, rising to 50,000 in 2024, the same annual rate it expects to reach for the delivery vehicle and sport sedan in 2026, officials said.

Canoo plans eventually to expand to China, Kranz said.

He added that Canoo will not have a dealer network and will offer monthly vehicle subscriptions bundled with maintenance, charging and access to insurance.

Canoo has a letter of intent and is in talks to finalize a deal for Canada’s Magna International (MG.TO) to assemble its vehicles, Kranz said. Magna, which also may build vehicles for another EV startup, Fisker Inc, confirmed the talks.

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