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Canoo: Differentiation Potential In EV Space, But Still A Show-Me Story

Mar. 07, 2021 9:35 PM ETCanoo Inc. (GOEV)LCID, ARVL, F, ELMSQ, FSR, GM, RIDEQ, TSLA, AAPL20 Comments
NestEgg Research profile picture
NestEgg Research


  • Electric vehicle company Canoo went public through a SPAC deal with Hennessy Capital Acquisition Corp. IV but saw its share price decline significantly from recent highs.
  • The company plans to enter multiple EV categories with a unique subscription-service and skateboard technology which may be key differentiators.
  • Recent news have been scarce except headlines that Apple was in talks for its own EV plans. A big partnership like this would drive the stock significantly higher.
  • Management has a proven track record in the car, manufacturing and EV industry at BMW, GM and Deutsche Bank.
  • We are long with a speculative but small position following recent stock price declines.

Article thesis

Canoo (NASDAQ:GOEV) listed on the Nasdaq on December 22nd following its SPAC merger with Hennessy Capital Acquisition Corp IV. (HCAC). Canoo stock has pulled back significantly from its highs of $25 after the closing of the SPAC deal and now trades at ~$11 as of the closing from 5th March.

While the company has not made any revenue yet, we believe that the experienced management team and potential best-in class EV drive-train technology (skateboard) are key differentiating factors for the company.

Canoo has established a strategic partnership with car manufacturer Hyundai for its proprietary skateboard technology. However, there is no further transparency from management on the details around the partnership.

Besides engineering services, Canoo plans to manufacture different B2C EV types (lifestyle and sports) that will be brought to market via a subscription-only offering. Customers can access Canoo‘s cars by paying a monthly subscription that includes all maintenance fees, while offering a maximum flexibility with a minimum subscription duration of only 1 month. Canoo also recently announced details around its multi-purpose delivery vehicle, which will be part of its B2B offerings, by which the company aims to enter electrification of the large last-mile delivery vehicle space.

In our view, success for Canoo depends on closure of potential partnerships for both its engineering segment and the recently announced B2B delivery-vehicle, as well as the level of customer adoption for its subscription model once the first B2C cars hit the market.

This article provides a perspective on Canoo's technology and financial forecast up to 2025, and will discuss some of the risks and opportunities.

Canoo's offerings

Canoo's currently planned EVs include a lifestyle vehicle, a multi-purpose delivery vehicle and a sports vehicle, all set to be launched between Q2 2022 and 2025.

Source: Company presentation

All vehicles

This article was written by

NestEgg Research profile picture
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Analyst’s Disclosure: I am/we are long GOEV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (20)

alphakar profile picture
So I don’t own the car? Ever? Not sure consumers will go for that... not even giving them the option...
ESP equity research profile picture
@alphakar ;
you will always have the option to buy.

surfgeezer profile picture
@alphakar young people think of cars as being more like their phone- constant updates makes leasing a viable option for them.
crazylikebudfox profile picture
Compelling management team. Chalked full of guys that previously bankrupted Faraday, which this company is mostly a repeat of.
crazylikebudfox profile picture
Based on the forecast model, GOEV is assuming $1kk a month to lease vehicle. Seems like alot. And where do you charge it?
crazylikebudfox profile picture
You're telling me GOEV blew-up out of the gate? Gee, who could have guessed.
08 Mar. 2021
Should have listed in 2-3 years...they got too greedy and went for a spac too quickly!!
Frank Thomas in Florida profile picture
Canoo's skateboard design sounds like VW. Canoo will get more mileage out of the platform, but that's about it. What about REE Auto... which seems to have a completely different and superior design but for cheaper price? Ree Auto also seems to have more heayweight partners with Mitsubishi and Hino Motors (Toyota).
NestEgg Research profile picture
@Frank Thomas in Florida REE coming public soon via merger will be interesting to watch. We see REE competing in the engineering segment but not directly in the B2C or B2B segment where Canoo is pushing towards producing and bringing to market their own cars. This makes Canoo the more diversified endeavour (at least on paper). However, this is so early stage and both companies are still pre-revenue, so any comparison needs to be taken with a grain of salt. Despite that, this is definitely not a winner-takes-all market when we look at modular drivetrain designs, so probably enough room for multiple companies. Happy to hear your thoughts!
How is this a publicly listed company? No revenues, no earnings, just a prototype. This is a purely speculative play on EVs. Even Nikola has a better chance at survival than this ticker.
Watblieft profile picture
Thank you for this extensive analysis.

This is an asymmetric investment in my opinion: this can go 10x/20x if they succeed in their mission. Or they can just fade out if they fail to deliver. So far I am confident.
NestEgg Research profile picture
@Watblieft totally agree. Very speculative, which means either this is a home-run investment or full-blown loss. Feels much like venture capital in the public markets.
ESP equity research profile picture
@NestEgg Research ;
Yes very much so. But this does give investors the op to buy into this venture deal. They probably pushed hard on funding and could not get what they wanted so they Spaced...

I own a small GOEV position - it is a speculative play for sure - But I like many features of this EV play...

They have lots of irons in the fire, I just wish they'd start to pull out some soon.
NestEgg Research profile picture
@tmcooper will be interesting to see their first quarterly report as a public company.
sho profile picture
I invested in GOEV, later backed out, it is really hard to assess FV while we are in our infancy. Modular concept is good, but everyone else knows how to take advantages of modular design, reuse, common parts and subsystems etc. Lease only can not be the model of operation, maybe a stop gap during the low production volume years.
Orr77 profile picture
Very thorough analysis, thanks. How proprietary and protected is the skateboard technology? Seems like it would be hard to stop a competitor from replicating the basic concept.
NestEgg Research profile picture
@Orr77 thank you for commenting. You can get a good overview on their patents here: uspto.report/...
The patent of interest which was filed in Nov 2020 should be the one listed here: uspto.report/...

Our desk research found at least some comparable patent applications for modular configurations and drivetrains from companies like Rivian, see overview on their filed patents here: uspto.report/...  

And also REE Automotive has a comparable drivetrain patent grant which can be found here: uspto.report/...

Please note we are no patent attorneys and don‘t have a qualified legal background to assess patent protection in full detail.
I need one of these vehicles. Long GOEV
NestEgg Research profile picture
@regularjoe1324 let us know when you test-drive one
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