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The Canoo is aimed at young professionals interested in a subscription model.
Courtesy Canoo
Yet another company with electric cars is publicly traded through a purchase through a special purpose purchase company, or SPAC. This time it’s the Hennessy Capital Acquisition that buys Canoo.
Canoo is a self-described company-to-consumer company for electric cars. It is EV as a service. Drivers essentially rent a futuristic-looking VW type from the company that calls, well, Canoo.
It’s not really a rental. But it’s a subscription. Subscribers can put their goods in the car and keep them as “for a month or for 10 years,” explains Uloo Kranz, CEO of Canoo Barron’s. The subscription fee included maintenance, insurance and access to charging stations.
The deal with Hennessy is valued at $ 1.84 billion and is expected to close in the fourth quarter of 2020. It will bring about $ 600 million to Canoo to fund its development plans.
Canoo, up to this point, has developed an EV powertrain that it thinks will become a low cost player in the industry. The company’s flagship system will arrive in 2022. Canoo is aimed at young professionals interested in a subscription model. Finally, it has plans to develop other cars, such as commercial vans, similar to Workhorse (ticker: WKHS). Canoo’s commercial vehicle will be driven after 2023.
Canoo will outsource mechanics, instead of producing their own cars.
Investors interested in Canoo can now buy the Hennessy Stock Exchange (HCAC). The stock is up about 5% year-on-year, still trading close to the original $ 10 unit price. Hennessy stock is down 1.1% in midday trading Tuesday.
This is not the first SPAC an EV maker has purchased. Niloka (NKLA) became a publicly traded company this way. Hyliion – maker of alternative fuels for heavy trucks – is being acquired by Tortoise Acquisition (SHLL). Lordstown Motor – maker of the Endurance pick-up truck – is being acquired by DiamondPeak (DPHC). And Fisker – maker of the Ocean SUV – is being acquired by the Spartan Energy Acquisition (SPAQ).
There have been many activities on capital markets related to EV production in 2020. NIO (NIO) needs cash from a local government. Another Chinese EV maker, Li Auto (LI), also recently became a publicly traded entity. Li provided cash through a traditional initial public offering.
Lucid is currently another EV maker without a SPAC partner. The Lucid Air is a luxury car with a range of up to 500 miles on a single charge.
There’s no mystery why EV activity picks up. EV files are on fire. EV shares Barron’s tracks averaged about 260% year-on-year, and comparable gains from the S&P 500, the Dow Jones Industrial Average and automotive peers crushed.
The success of Tesla (TSLA), now the most valuable automotive company in the world, has helped the entire sector. The shares have risen more than 350% year-on-year to date.
Write to Al Root at [email protected]
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