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Canoo, a struggling EV startup, is trying to survive on government generosity

Canoo, a struggling EV startup, is trying to survive on government generosity

When Canoo first unveiled its awesome, futuristic-looking electric van in 2021, a lot of friends reached out to me to ask when they could buy it.

The answer is probably never. Not unless they work for the federal government.

The struggling EV startup has been on the verge of running out of money since last year. Its cash outlay remains high, and analysts say it is at risk of bankruptcy. In fact, Canoo's stock is trading at less than a dollar, threatening to be delisted from the stock exchange. But despite the financial crisis, the federal government is more than happy to continue trading with the company.

Today, Canoo announced that it has successfully delivered three crew transport vehicles to NASA for use in the agency's Artemis mission to the Moon. The vehicles were delivered to NASA's Kennedy Space Center in Florida, where they will be used to carry astronauts to the launch pad for the Artemis lunar mission starting next year.

Canoo has also supplied EVs to the US military for "analysis and demonstration". Basically, the Army is testing the company's light tactical vehicles (LTVs) to see if it wants to order more of them for military purposes. The LTV is built on the same platform as Canoo's Duplo toy-looking EV prototype truck that was first showcased in 2021.

And this week, Canu said it has "expanded" its partnership with the Defense Department's Innovation Unit to develop high-capacity battery packs for use in military vehicles, as well as energy-dense batteries for the US Navy .

It's an important pivot for the six-year-old company, which originally launched in a near-zero-interest rate environment along with more than a dozen other EV startups, all of whom dreamed of becoming the next Tesla. Canu plans to build electric vans and trucks for customers interested in outdoor adventure -- basically a similar pitch to Rivian, which has also struggled but is now seeing its deliveries increase.

Canoo was founded in late 2017 when former BMW executive Stefan Kraus left the then-EV startup Faraday Future. Krause and a few other executives who co-founded Canoo – which they originally called VelocityCity – were sued by Faraday Future for poaching employees and allegedly stealing trade secrets, although the lawsuit was settled in 2018. was resolved. Eventually it was settled.

The automaker has several EVs in the works including the MPDV, a multi-purpose delivery van and the Canoo pickup truck. The Toysh truck showed how keen Canoo is to push the design of the microbus-style vehicle, first launched in 2019, which it originally planned to sell only on a subscription basis.

It's unclear whether NASA or the Defense Department is concerned about Canoo's dismal financial outlook or how a potential Chapter 11 filing could affect ongoing projects for the government. Neither agency responded to requests for comment.

If Canu's financial outlook continues to deteriorate, his dream of becoming the next Tesla may never come true. But if NASA, the US military and other agencies see value in Canoo's EVs, the company could actually be like Elon Musk's other company with a glut of lucrative government contracts: SpaceX.

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