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Why is the US Army testing a Canoo?

Updated: Oct 14, 2023



On July 12, 2022, Canoo announced that Walmart signed a definitive agreement with Canoo to purchase up to 10,000 work vans. This was a major development for Canoo so it’s not surprising that the press release that followed two days later did not receive nearly as much attention. On July 14, Canoo announced that the U.S. Army selected Canoo’s multipurpose platform for analysis and demonstration.


The press release stated: “This contract supports the U.S. military's focus to incorporate scalable and adaptable capabilities in operational and garrison environments”. Tony is known for saying that Canoo is going “where the puck is headed” so let’s see where this puck is headed.


Every year (for the past 60 years or so), the US Congress writes the National Defense Authorization Act (NDAA). The NDAA instructs the Department of Defense, by law, on how they will spend money in the following fiscal year. In case you did not grow up watching “School House Rock”, bills have to pass through both houses of Congress and then the President can sign them into law.


On July 14, the same day that Canoo announced that the US Army would be testing Canoo vehicles, the US House passed their version of the 2023 NDAA bill, HR 7900. The text of the bill is 3854 pages long. Canoo investors need to only read section 314 of the bill which provides insight into one of the possible reasons why the Army is testing the Canoo EV.


Sec. 314 (a) of HR 7900 NDAA for FY 2023

Each branch of the military will select one base for the pilot program:


Sec. 314 (b) of HR 7900 NDAA for FY 2023


The House bill sets a deadline for replacement of vehicles at each test site:



Sec. 314 (d) of HR 7900 NDAA for FY 2023


So Canoo announced that the Army selected their multipurpose platform for testing in operational and garrison environments on the same day the House passed a bill instructing the Department of Defense to initiate a pilot program to replace all nontactical vehicles with electric vehicles (starting with one selected base per Armed Force).


The Senate introduced it’s version of the NDAA, S.4543 on July 18, 2022. The replacement of all non-tactical feet vehicles of the Department of Defense is first discussed in section 386 of the senate bill. This section seems to establish the financial and security data sets that must be collected prior to the (Defense) Secretary entering into “an indefinite delivery indefinite quantity contract to procure and replace the existing non-tactical fleet of the Department of Defense with electric vehicles, advanced-biofueled-vehicles, or hydrogen- powered-vehicles”.





Then later in the senate bill, Section 2867 would amend Title 10 of the United States Code section 2922g to state that after October 1, 2030, all covered nontactical vehicles (with some exceptions as defined) shall be electric, advanced biofuel powered or hydrogen powered. Since the Senate timeline has full conversion of the nontactical fleet starting by October 1, 2030, this leads me to believe section 386 is intended to provide the Defense Department guidelines for data collection during the trial period at the selected bases, not delay the pilot program.


Sec. 2867 (a) of S.4543 NDAA for FY 2023

Subsection (b) goes on to provide an effective date:


Sec. 2867 (b) of S.4543 NDAA for FY 2023

To put it more simply, Congress is going to instruct the DoD to start a pilot program next year as a first step towards replacement of the full fleet of nontactical vehicles.


The House Bill(HR 7900) defines where and how the pilot program should happen

  • Each military branch will choose one installation to conduct the pilot program.

  • Each selected installation will convert its non-tactical vehicles to electric vehicles by Jan 2025.

The Senate Bill(S.4543) defines the parameters of what the pilot program data set should be and when it needs to be completed by in order to facilitate a change over by 2030.

  • A complete cost/benefit analysis of converting the non-tactical fleet over to "zero emissions" covering not only the vehicles themselves but also the installation and maintenance necessary for the infrastructure to support them.

  • An assessment of the supply chain of critical minerals.

  • An assessment of the data security risks associated with having vehicles connected to cloud computing systems(such as to receive OTA updates from the OEMs).


Congress will now work to pass one comprehensive version of the bill through both houses to send to the President to sign into law.



 
Canoo EV on Display outside of the Pentagon

In September, the company took several Canoo vehicles to Washington DC and

reportedly met with several senators and congressmen. This visit included over 200 familiarization rides with national leaders. There could be many reasons for this trip. Canoo did meet with NASA in DC to provide an update on the Artemis crew vehicles. Canoo vehicles were also seen parked in front of national monuments and the USPS HQ. It is not clear whether or not part of the reason for the trip was introduce the vehicles to members of Congress as we move forward to electrify the nontactical fleet of the Defense Department.


Stay tuned as the bill works it’s way through Congress over the next several weeks.




Author’s disclosure: I own Canoo common shares and warrants.



 

This article was written by a new contributor to Canooers.com. If you have a topic concerning Canoo or Advanced Mobility in general please consider reaching out to us!



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