A couple days ago we noticed that Canoo, via GCC Olayan, has begun taking Pre-Orders from customers in Saudi Arabia for the LDV, Lifestyle vehicle and even the Pick-up Truck!
As a refresher, Canoo recently announced a strategic partnership with GCC Olayan, one of Saudi Arabia's largest importers and distributors of consumer products representing major international principals. We see in the promo video below, Tony is escorting Lubna Olayan, former CEO of Olayan Finance and current Chairperson of the Board of Directors for Saudi Alawwal Bank, which is the newly minted name of the bank after the merger between SABB and Alawwal Bank two years ago.
This marks the first expansion of allowing pre-orders outside of North America and even though no pricing or delivery schedules are provided that we saw, it seems like a very significant event.
Detractors and fans alike might scoff and point to the nearly $3B order book already established without a current means of production nor cash in the bank to finance it, why bother opening even more reservations let alone in a foreign country?
The picture is not yet crystal clear - actually, its not clear at all, more like extremely fuzzy and possibly upside down. However, during the FY22 Q3 ER call there were a couple of statements made by Tony that might give us some clues to their strategy.
"We have put a lot of work into making the MPP 1 a foundation for our business. We are capable of producing 60,000 units of our MPP 1. In future quarters, I will explain why that is important. "
"Our manufacturing plan enables rapid geographic expansion and opportunistic joint ventures that we have track records of doing in the past globally."
So, I think we are not happy to be in a high inflationary, unstable supply chain environment, but we see huge opportunities and globalization. The platform is perfect for it.
The statements about additional MPP's (this is the skateboard or "multi-purpose platform") capacity and globalization weren't mentioned together at the time, but it seems a plausible connection to make given this latest development. Saudi Arabia has really big plans for the future such as NEOM and they want to have a hub of domestic manufacturing for electric vehicles. Perhaps Canoo has their sights set on exporting skateboards to SA and having and/or contracting out local manufacturing there for top hats, we don't know.
However it plays out, it seems to be a continuation of their very cautious yet strategic roll out focusing on what we see as intelligent growth versus sacrificing quality and user experience for growth above all else. The harsh environment of the Gulf Kingdom would represent a real proving ground for any OEM but especially for a newcomer such as Canoo.
We look forward to updates with some further clarity on the timeline of this expansion and of course how it's going to be financed is at the top of our minds.
Authors disclosures: I am long Canoo - I own common shares, warrants and call options.