Written by Cláudio Afonso | LinkedIn | X
The chief financial officer of the EV startup Canoo, Greg Ethridge, participated at the Sidoti Small Cap conference where he stated the company is “at the stage of production ramp”.
The CFO said that Canoo will, “overtime”, set up “manufacturing in international locations” besides its manufacturing plant in Oklahoma, United States.
“When we thought about, for example, our capacity at Oklahoma, we were not… We can right now manufacture our multipurpose platforms, where I mentioned we have 70 percent of our critical systems, 60 percent of the BOM [bill of materials],” he stated.
Ethridge disclosed that, thanks to design, the company will be able to export the drivable platforms to other markets allowing the final assembly to be done locally.
“We can manufacture today at a much higher rate than we can in the rest of the facility. And that was by design. And the design was that we can actually manufacture those drivable platforms and export them to other markets where we can do final assembly,” the CFO said.
Canoo announced in early April a partnership with Red Sea Global to conduct trials on three models, namely Canoo‘s Lifestyle Vehicle (LV), Lifestyle Delivery Vehicle (LDV) 190, and the Bulldog pickup truck.
Without disclosing a detailed timeline, Ethridge said the company will still maintain control of the IP in the United States.
“And so we’ve been contemplating, and it’s not going to evidence itself in the immediate term, but over time, initially we’ll sell the full vehicles, but we do want to set up manufacturing in international locations. And because much of our IP is in that MPP-1, we want to maintain control of that IP in the U.S. and then ultimately be able to do some of the final assembly in other geographies. Now, depending on the geography, you might have a little… There’s different strategies around that,” he disclosed.
“That’s also one of the reasons that the FTZ, the foreign trade zone, was so important for us, because you do get, at least to the extent you are still sourcing international components that are subject to tariff and duties, you get some really strong financial benefits through those international sales, because you get basically a full credit for those costs, those taxes,” Ethridge said.
“And to the extent it’s U.S., right through the FTZ, you actually get a deferral until the final sale. So in either case, it’s pretty powerful economics, and it’s always been part of our plan to be able to export some of this technology into friendly markets,” he added.
During his opening remarks, Ethridge said corporates are still focusing on the cost of ownership when considering the vehicles for their fleet.
“At the end of the day, total cost of ownership for our customers is what drives their buying decision. It’s not around whether it’s internal combustion or EV [electric vehicles] necessarily. Although due to a lot of benefits, corporates are very focused from the ESG perspective but it really comes down to economics,” the CFO stated.
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“We spent a lot of money getting to where we [Canoo] are. And we are at the stage now of production ramp. These vehicles are vehicles that we manufactured in Oklahoma City and now delivered to some of our government and commercial fleet customers. It’s a very unique form factor,” he added.
On Friday, shares of the electric vehicle startup Canoo initially surged 14 percent, reaching $2.49 per share, before experiencing a dramatic drop of 42 percent within 21 minutes.
Volume surged to 24.35 million shares during this rapid drop, indicating heavy selling pressure as the trading volume was is currently on track to reach four times the average of the past three months.
Late Thursday, the company announced it had entered into a Pre-Paid Advance Agreement (PPA) with YA II PN, Ltd., managed by Yorkville Advisors.
Effective as of Tuesday, the agreement involves Yorkville advancing $15 million to Canoo. According to a form filed with the SEC, the advance will be offset by the issuance of Canoo’s common stock to Yorkville at an initial purchase price of $2.30 per share.
After accounting for the commitment fee and purchase price discount, Canoo is expected to receive approximately $14.1 million in net proceeds.
The stock is set to join the Russell 3000 Index, according to a preliminary list of additions posted by FTSE Russell on Friday. The Index measures the performance of the 3,000 largest publicly traded companies in the U.S. by market capitalization.
The annual Russell US Indexes reconstitution ranks the largest U.S. stocks by market capitalization as of the last day of April.
Written by Cláudio Afonso | LinkedIn | X
