US EV start-up Canoo to go public at $2.4bn valuation

Canoo Holdings Ltd, a US electric vehicle start-up already working with South Korea's Hyundai Motor Co, will go public later this year at a value of $2.4bn (roughly R41.63bn) 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 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.

A SPAC is a shell company that raises money through an Initial public offering (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 CEO, told Reuters.

The former BMW executive cited Hennessy's long track record, which includes taking school bus maker Blue Bird Corp public in 2015.

Hennessey CEO Daniel Hennessy said he looked at more than 12 EV start-ups and preferred Canoo's faster path to commercialisation.

The deal, including additional money from BlackRock Inc and other institutional investors, will raise $607m (roughly R10.53bn) in proceeds. Hennessy raised $300m (roughly R5.20bn) 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 $1.43bn (roughly R24.81bn) and its first profit at $188m (roughly R3.26bn), officials said during a conference call.

Based just outside Los Angeles, Canoo in February announced a deal to develop EVs with Hyundai, which has also invested in UK electric van start-up Arrival, another potential SPAC target.

The first of Canoo's line-up — the pod-like, seven-seat canoo — will be available via subscription to US 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 402km.

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.

The company plans eventually to expand to China, said Kranz.

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 finalise a deal for Canada's Magna International to assemble its vehicles, said Kranz. Magna, which also may build vehicles for another EV start-up, Fisker Inc, confirmed the talks.