EV maker Canoo has ‘substantial doubt’ about going concern as cash runs low

By Tina Bellon

(Reuters) – Electrical car firm Canoo Inc on Tuesday warned buyers it won’t be capable of meet its monetary obligations, saying it was making an attempt to boost extra money however added it had “substantial doubt” about its going concern.

The warning got here because the Texas-based firm reported first-quarter earnings, together with a $125.4 million web loss. Shares dropped 13% in after-hours buying and selling, following a 5% drop through the day.

Canoo’s money crunch highlights the problem EV startups face scaling up expensive car manufacturing within the face of competitors starting from Tesla Inc to conventional automakers spending billions on new know-how and vegetation.

Canoo mentioned it had round $105 million in money left as of the tip of March, lower than the $120 million it burned in working bills through the first three months of the yr. Capital bills through the first quarter got here in at $28.4 million on zero {dollars} of income, underscoring its want for added funding.

“We now have been clear about our philosophy of elevating capital judiciously and can proceed with this disciplined strategy,” Canoo Chairman and Chief Government Officer Tony Aquila mentioned in an announcement.

Aquila mentioned Canoo had greater than $600 million in accessible capital to fund the beginning of car manufacturing and “important expertise elevating capital in difficult markets.”

Canoo mentioned it had constructed 39 of its Gamma vans as of March 31 and had obtained 17,500 pre-orders with a projected worth of $750 million. Executives throughout a Tuesday earnings name mentioned the corporate was at the moment producing as much as 12 automobiles per week, including that it was centered on fleet clients.

The corporate in April gained a contract with the U.S. area company to construct automobiles that may transport astronauts to the launch pad for NASA’s upcoming Artemis mission to the moon.

(Reporting by Tina Bellon in Austin, Texas; Modifying by Chris Reese)