Canoo Announces Furloughs and Factory Idle as it Focuses on Finalizing Securing Capital

Rhea-AI Summary

Canoo (Nasdaq: GOEV) announced the furlough of 82 employees and the temporary closure of its Oklahoma factories while working to secure necessary capital for continuing operations. The company stated it is in advanced discussions with various capital sources and expressed hope to bring back the furloughed employees soon. The workforce reduction affects both salaried and hourly workers during the holiday season.

Positive

• Company in advanced discussions with potential capital sources

Negative

• 82 employees furloughed across salary levels
• Oklahoma factories idled due to capital constraints
• Immediate operational disruption due to financial challenges
• Critical need for capital to maintain business continuity

Insights

Financial Restructuring Specialist

The announcement of employee furloughs and factory idling at Canoo represents a critical cash conservation measure, indicating severe liquidity constraints. With a micro-cap status of just $12.8M, this development signals a potentially existential crisis for the EV startup. The timing and nature of these actions - particularly during the holiday season - suggests an urgent need for immediate capital injection. Factory idling significantly impacts the company's ability to meet production targets and generates additional restart costs. While management indicates "advanced discussions with various capital sources," the company's weak bargaining position could lead to highly dilutive financing terms or unfavorable debt structures. The decision to furlough 82 employees while maintaining core operations suggests a strategic attempt to extend the cash runway while preserving essential capabilities. This situation mirrors similar patterns seen in distressed automotive startups, where capital intensity often leads to critical funding gaps during the pre-revenue phase.

Automotive Industry Analyst

This development reflects the broader challenges facing EV startups in the current market environment. Factory idling in Oklahoma represents a significant setback to Canoo's production timeline and could impact existing government contracts and partnerships. The automotive industry requires substantial continuous capital investment and any production interruption can trigger a cascade of supplier relationship strains and potential contract breaches. The timing is particularly concerning given the competitive EV landscape where established players are aggressively scaling up. In simpler terms, imagine a restaurant that's fully built but can't afford to buy ingredients or pay staff - the longer it stays closed, the harder it becomes to reopen successfully. The furloughs suggest Canoo is operating in survival mode, which typically precedes either a major strategic transaction or a potential restructuring event. This situation highlights the vulnerability of pre-revenue EV manufacturers in a market with tightening capital conditions.

JUSTIN, Texas, Dec. 18, 2024 (GLOBE NEWSWIRE) -- Canoo Inc. (Nasdaq: GOEV), a high-tech advanced mobility company today announced the company has furloughed 82 employees, both salaried and hourly, and idling its factories in Oklahoma while it works to finalize securing the capital necessary to move forward with its operations.

The company is in advanced discussions with various capital sources.

Canoo said, “We regret having to furlough our employees, especially during the holidays, but we have no choice at this point. We are hopeful that we will be able to bring them back to work soon.”

About Canoo
Founded in 2017, Canoo Inc. (NASDAQ: GOEV) is an automotive tech company that manufactures electric cargo vehicles, built to deliver, for large commercial, government and fleet customers globally. The company has developed design-forward innovative electric vehicles with steer-by-wire technology on its common modular platform with end-to-end software plus power solutions. Canoo’s platform is purpose-built to maximize the vehicle interior space and is customizable to support a wide range of business and government applications. Headquartered in Justin, Texas, Canoo has teams located in California, Michigan and Oklahoma with world-class vehicle and battery facilities in Oklahoma City. For more information please visit www.canoo.com and investors.canoo.com.

Forward-Looking Statements
The information in this press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward- looking statements may be identified by the use of words such as "estimate," "plan," "project," "forecast," "intend," "will," "expect," "anticipate," "believe," "seek," "target" or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements about our plans, expectations and objectives with respect to the results and timing of the reverse stock split and the effect the reverse stock split will have on the Company’s ability to regain compliance with the Nasdaq Listing standards. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of Canoo's management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Canoo. These forward-looking statements are subject to a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political and legal conditions; Canoo's ability to access future capital, via debt or equity markets, or other sources; the rollout of Canoo's business and the timing of expected business milestones and commercial launch; future market adoption of Canoo's offerings; risks related to Canoo's go-to-market strategy and manufacturing strategy; the effects of competition on Canoo's future business, and those factors discussed under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Canoo's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission (the "SEC") on April 1, 2024, as well as its past and future Quarterly Reports on Form 10-Q and other filings with the SEC, copies of which may be obtained by visiting Canoo's Investors Relations website at investors.canoo.com or the SEC's website at www.sec.gov. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Canoo does not presently know or that Canoo currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Canoo's expectations, plans or forecasts of future events and views as of the date of this press release. Canoo anticipates that subsequent events and developments will cause Canoo's assessments to change.

However, while Canoo may elect to update these forward-looking statements at some point in the future, Canoo specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Canoo's assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.

Media Contact
press@canoo.com

Investor Relations Contact
IR@canoo.com

FAQ

How many employees did Canoo (GOEV) furlough in December 2024?

Canoo furloughed 82 employees, including both salaried and hourly workers.

Why did Canoo (GOEV) idle its Oklahoma factories in December 2024?

Canoo idled its Oklahoma factories while working to secure the capital necessary to move forward with its operations.

What is the current status of Canoo's (GOEV) capital raising efforts?

Canoo is in advanced discussions with various capital sources to secure necessary funding.

How will the December 2024 furloughs impact Canoo's (GOEV) operations?

The furloughs and factory idle will significantly disrupt Canoo's operations until the company secures necessary capital and can resume normal activities.

When does Canoo (GOEV) expect to bring back furloughed employees?

While Canoo expressed hope to bring back employees soon, no specific timeline was provided as it depends on securing necessary capital.