Electric vehicle startup Canoo is taking drastic measures to cope with its financial struggles, implementing mandatory unpaid leave for its remaining employees until the end of 2024. This decision follows recent furloughs, where nearly 100 workers were temporarily laid off, along with the idling of its Oklahoma-based assembly plant due to funding shortages. Employees were informed they would be locked out of Canoo's systems starting on Friday, though their benefits would remain active through December.
The email informing staff outlined the difficult situation, assuring them their healthcare benefits would continue until the month's end. Still, uncertainty hangs over when operations might resume or how many employees remain after the recent cuts. Canoo and its CEO, Tony Aquila, have not publicly addressed the shutdown and have remained silent on media inquiries, which leaves many wondering about the company's future.
Industry insiders suggest these cuts mark the beginning of more severe measures. With Canoo disclosing it only has $700,000 left, the financial crisis is alarming. This shortage has led to closing its Los Angeles office, exacerbated by recent high-profile executive exits, including its CFO and CTO. This exodus raises doubts about the company's ability to navigate through its challenges and manage operations effectively.
Notably, Canoo is attempting to maintain its stock listing on the Nasdaq through drastic measures, including announcing a 1-for-20 reverse stock split. This move takes effect on December 24 and is meant to push stock prices above the minimum requirement for listing. Analysts remain skeptical, viewing reverse stock splits as indicators of financial instability rather than recovery.
Founded in 2017, Canoo initially aimed to disrupt the electric vehicle market with innovative vans and trucks for adventurous consumers. Yet, as the company struggles to secure significant market presence—largely confining itself to government contracts with modest demand from the commercial and retail sectors—its growth potential remains limited.
The situation is compounded as Canoo could owe Oklahoma state $1 million due to having closed factories, potentially violating the conditions of performance-based job creation incentives received earlier this year. An official from the Oklahoma Department of Commerce expressed the intent to recoup funds if necessary, emphasizing the state's commitment to protecting taxpayer interests.
Canoo's statement on the furloughs underscored the weight on the shoulders of their workforce, particularly during the holiday season. The company noted, "We regret having to furlough our employees, especially during the holidays, but we have no choice at this point. We are hopeful we will be able to bring them back to work soon." This sentiment captures the frustration felt by employees as their positions remain uncertain.
The company's stock has suffered tremendously, with recent drops reflecting investor concerns; shares plunged 29.17% on December 10 alone, compounded by continued losses. The steep decline indicates widespread reservation among investors, reaffirming doubts about Canoo’s endurance amid increasing competition within the electric vehicle sector.
Overall, Canoo's financial troubles, compounded by executive turnover, operational shutdowns, and the looming threat of repaying state incentives, position the company at a crossroads. It is engaging with various capital sources to raise emergency funding, but whether these efforts yield meaningful results remains uncertain.
With Canoo's dreams of reinventing the EV market hanging by a thread, the next steps will be pivotal, not just for the company but also for its workforce, investors, and the state of Oklahoma.
