Fortune reporter goes under the hood on Canoo

A recent report by Jessica Mathews, a Bentonville-based senior writer for Fortune magazine, featured some interesting discoveries about electric vehicle startup Canoo, which has ties to Arkansas.

“Inside the chaos at Canoo, the zero-revenue, cash-burning EV company that just inked a major deal with Walmart,” is the name of Mathews’ new report (subscription required). Fortune.com published it on Aug. 27, nearly three weeks after the company’s second-quarter earnings call. The Q2 financials revealed that Canoo finished the first half of 2022 with just $33.8 million in cash/cash equivalents. It posted a loss of $164.4 million in the second quarter. That’s up from $112.6 million in the second quarter of last year.

Mathews’ article was published a couple of months after she spoke to CEO Tony Aquila at Canoo’s planned manufacturing facility in Bentonville. Canoo signed a 10-year, $17.1 million lease in January to occupy the new 270,000-square-foot building at 4700 S.W. Regional Airport Blvd. It will complement a more significant U.S. manufacturing hub in the MidAmerica Industrial Park in Pryor, Okla. Construction there has not started.

According to Mathews, Canoo is working with a third party based in Detroit to manufacture its initial vehicles for now. Aquila told Mathews that Canoo’s Bentonville facility won’t start making vehicles until at least the second quarter of 2023.

“For an executive whose public company hasn’t reported a dollar of revenue since 2020, Aquila seemed exceedingly confident,” Mathews wrote. “But at the time, in early June, Canoo’s financials and risk disclosures were telling a story that clashed with that confidence — showing that the company was hanging on by a thread.”

From there, Mathews unpacks a lot in the lengthy article. It includes details about the company’s history and its first major contract — a deal to supply 4,500 delivery vehicles to Walmart, the world’s largest retailer.

“Crack open the hood even an inch, however, and it’s clear that, even with the Walmart deal, Canoo is floundering to an extreme degree,” Mathews wrote.

Mathews also explores Aquila’s personality and investment ties between him and Walmart heiress Alice Walton.

“In 2019, after his contentious departure from a previous company he had founded, vehicle data management software company Solera Holdings, Aquila apparently received significant financial support from Alice Walton, a philanthropist and the daughter of the late Walmart founder Sam Walton, and one of America’s wealthiest individuals,” Mathews wrote. “Alice Walton was the original backer of AFV Partners, a private equity firm Aquila set up after leaving Solera, according to a person with direct knowledge of the matter. Walton backed Aquila’s two early deals at the firm, that person says: An investment in a sports betting company called Sportradar, and the acquisition of airline company Aircraft Performance Group. A former Canoo employee, who asked not to be identified, says that Aquila would talk about how he was ‘great friends’ with Walton.

“At the end of 2020, AFV Partners invested $35 million in Canoo ahead of its public debut — an investment that propelled Aquila from a third-party outsider into the driver’s seat of the newly public company as executive chairman, and later CEO,” Mathews continued. “Now AFV owns 19% of Canoo, or 51.2 million shares, according to public filings — worth approximately $190 million at the company’s current stock price. Multiple sources told Fortune that they believed Alice Walton was also an investor in Canoo, though none of those sources had firsthand knowledge of that investment.”

Mathews wrote that Walton’s family office representative declined to comment on whether she is an investor in AFV or Canoo.

FOR THE RECORD 
While on the subject, let’s set the record straight about Canoo. It is not a Bentonville-based company.

It’s been popular to report that (Mathews did so, though she is hardly alone), but it’s inaccurate. Canoo is investing in Northwest Arkansas, yes, but it is not a Bentonville-based company.

The company’s most recent Securities and Exchange Commission filing includes this: “Our principal executive office is located at 19951 Mariner Avenue, Torrance, California 90503, and our telephone number is (424) 271-2144.”

What is accurate is that the company has signed a long-term lease for a Bentonville facility where it’s planning one day to make electric vehicles. It is also correct that the company announced in November 2021 its intention to relocate its headquarters to Bentonville but has not disclosed additional specifics or a timeline to do so.