Ready To Launch: Canoo Registers with NHTSA and Shares SOP Date
I am pleased to report that as of late last week, Canoo has finally registered with the National Highway Traffic Safety Administration(NHTSA) as a domestic manufacturer.
As a brief recap, if you are in need of one, Canoo had to pause their plans for their own Manufacturing facilities and will use a Contract Manufacture as a stop gap until they can secure additional funding to start back up on their Bentonville & Pryor facilities. Just last week, Zeeba signed a binding agreement with Canoo to purchase 3000 vehicles through the end of 2024. In the Press Release announcing the deal, Tony promised to share the latest manufacturing plan soon.
"We have a large committed, growing order book, are finalizing our multi-year allocations for 2023 customer deliveries and will share our manufacturing plan with the broader market shortly" - Tony Aquila, October 11th 2022
This update from Canoo can't come fast enough, because although Canoo's submission with the NHTSA sheds some light on the path to production, it has left us with even more questions.
This act by itself, registering as a manufacturer, it isn't really a big deal. Lordstown first showed up with a filing on 21/1/2020 and Fisker submitted with the NHTSA as a foreign Manufacturer on 9/13/2021. However, Canoo's filing does make us hopeful that Start of Production(SOP) really is just around the corner.
Although this step is relatively minor and other OEMs have completed it years ahead of starting their own production, it is a necessary milestone, even if its done just months before they start.
On the topic of starting production, you probably noticed right away where it says "Production Start Date: 12/31/2022". But, as exciting as it is to see, there are a couple a things to consider before we take this date to heart. The first being that this submission had a cover letter that shows the following day as SOP: 1/1/2023. Although it is only one day off from the actual registration form, it would end up falling into a different fiscal year for Canoo and so that seems at least noteworthy.
Another thing to consider is that the date(s) shown here aren't concrete and seem more like educated guesses by the OEM. Recall that we mentioned Lordstown filed in 2020, they had SOP listed as 9/6/2021 and we all know that never happened. On the flip side of that example is Fisker's filing from September of last year. It had 11/17/22 for their SOP and just last month they re-affirmed that date by announcing in a Press Release "Fisker is on target for a start of production on November 17, 2022." On target sounds promising but still not written in stone.
I don't believe there has been a contract signed yet with a CM, which again leads me to the conclusion of it being just an estimate. That being said, it ought to be a pretty accurate one as its only two months away! One other oddity with the two dates given for SOP, is that it's either on New Years Eve, a Saturday or New Years Day, a Sunday. It's not impossible for Canoo to pay additional wages and demand production begin over a holiday weekend but it doesn't seem probable. I view the date given as more of a window than a keyhole so I wouldn't be surprised to see SOP happen sooner or maybe slightly later.
What we do know for sure, per NHTSA reporting requirements, is that "Manufacturers are required to submit details on their activities and/or products at least 60 days prior to start, which includes production of new vehicles." Based on this we should be able to definitively state that SOP shouldn't be any earlier than Tuesday, December 13th which would be 60 days from the filing date of 10/14/22
If it happens in FY22 then Tony gets a technical attaboy for hitting the guidance on starting production Q4 2022, or maybe there are tax implications that make a FY23 SOP better despite losing the attaboy. In either case I don't think it matters much if we're talking a difference of weeks.
Alright, now that we have the SOP portion aired out, lets move onto the other more confusing breadcrumbs.
Going back to the cover letter, it says Canoo will be building 3 different vehicles:
Light Duty Battery Electric Vehicles(BEV)
Multipurpose Passenger Vehicles (MPV)
It seems likely the Light Duty BEV is the Cargo Van, the MPV would unsurprisingly be the Lifestyle passenger van variant and the Truck would be the Pick-Up Truck which actually might surprise you being on there, it certainly it surprised me.
Part of now defunct ELMS's business model, targeted college campuses because their EV vans were not homologated, not road-legal, so they could only drive on private roads, meaning a college campus or industrial park was a perfect fit. Perhaps Canoo will be supplying a limited run of trucks to partner colleges/universities
Not helping the confusion is that the NHTSA lumps utility/cargo vans under the definition of a "truck" and then piling on even more questions is that Canoo has two different manufacturing types and four different vehicles listed despite the cover letter only mentioning three. Even though the NHTSA does define Cargo Vans under the Truck type, we can be sure Canoo is including the Pick-Up as it's mentioned specifically under the description along side the Cargo Van.
Alright, so what's an incomplete vehicle? Many OEMs will sell just a chassis with a cab and then an upfitter company will finish it off for specific use cases like refrigerated box trucks or a crane/bucket lift; so it's possible that someone like Gatik might be interested in up fitting a box truck or a utility company like AT&T might want one to install a crane with a man bucket. I'm not sure the initial Multi-Purpose Platform(MPP), or skateboard, is big or heavy duty enough to meet those uses cases, these are just some ideas that come to mind at first. This morning Canoo announced a binding order of 9,300 Vans by self proclaimed leading national work-ready van rental provider, Kingbee. Kingbee is an upfitter themselves, but from what I've seen so far they only focus on upfitting the van interiors, not building out body frame work.
It's also possible it is only referring to the MPP by itself, which technically I suppose could be considered just a chassis. - this idea might give credence to the rumors of Canoo selling their platform to other OEMs such as Mini.
Another reasonable reason might be as simple as having to include their skateboard as it's own vehicle on this list due to the advertised intent to swap top hats so easily with different trim models. This way when a Canoo is sold to someone used, the buyer would be able to trace the life of both the bottom chassis and tophat of the vehicle to know if either were ever totaled or in bad accidents.
One final note to touch on with the registration is that it has a production end date of 9/1/2023 - suggesting perhaps that Canoo anticipates having the Bentonville and other smaller locations up and running by then. Recall that this past ER, Tony stated their production run rate to ramp up toward the end of the year.
"We are very focused on a 20,000 vehicle run rate by the end of 2023, while our facilities are coming online with the production likely weighted towards the end of the year. We are focused to be able to double that production by 2024 to keep pace with the growing demand." - Q2 2022 ER
It's time to stop doubting and start celebrating the victories! SOP is a tremendous milestone to achieve, but when we look back at this time period in a decade, it'll just be a small stepping stone in a long line of successes and wins as Canoo delivers on its promise of EVs for all.
Authors disclosures: I am long Canoo - I own common shares, warrants and call options.
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