The Canoo is aimed at young professionals interested in a subscription model.
Courtesy CanooYet another electric-vehicle company is becoming publicly traded via an acquisition by a special purpose acquisition company, or SPAC. This time it’s Hennessy Capital Acquisition buying Canoo.
Canoo is a self described business-to-consumer electric-vehicle company. It’s EV as a service. Drivers, essentially, rent a futuristic looking VW-type van the company calls, well, Canoo.
It isn’t really a rental. But it’s a subscription. Subscribers can put their stuff in the vehicle and keep if for “a month or for 10 years,” explains Canoo CEO Ulrich Kranz to Barron’s. The subscription feel included maintenance, insurance and access to charging stations.
The transaction with Hennessy is valued at $1.84 billion and is slated to close in the fourth quarter of 2020. It will bring about $600 million into Canoo to help fund its development plans.
Canoo, to this point, has developed an EV powertrain it thinks will make it a low-cost player in the industry. The company’s flagship vehicle will arrive in 2022. Canoo is targeting young professionals interested in a subscription model. Eventually, it plans to develop other vehicles such as commercial vans, similar to Workhorse (ticker: WKHS). Canoo’s commercial vehicle is slated for 2023.
Canoo will outsource assembly, rather than manufacture its own vehicles.
Investors interested in Canoo can buy Hennessy stock (HCAC) now. The stock is up about 5% year to date, still trading close to its original $10 unit price. Hennessy stock is down 1.1% in afternoon trading Tuesday.
This isn’t the first SPAC to buy an EV maker. Niloka (NKLA) became a publicly traded company this way. Hyliion—maker of alternative-fuel powertrains for heavy-duty trucks—is being bought by Tortoise Acquisition (SHLL). Lordstown Motor—maker of the Endurance pickup truck—is being bought by DiamondPeak (DPHC). And Fisker—maker of the Ocean SUV—is being bought by Spartan Energy Acquisition (SPAQ).
There has been a lot of capital-markets activity related to EV production in 2020. NIO (NIO) raised needed cash from a local government. Another Chinese EV maker, Li Auto (LI), also became a publicly traded entity recently. Li raised cash through a traditional initial public offering.
Lucid is another EV maker without a SPAC partner at the moment. The Lucid Air is a luxury vehicle boasting up to 500 miles of range on a single charge.
There is no mystery why EV activity is picking up. EV stocks are on fire. EV stocks Barron’s tracks are up about 260% year to date on average, crushing comparable returns of the S&P 500, the Dow Jones Industrial Average and automotive peers.
The success of Tesla (TSLA), now the world’s most valuable car company, has helped the entire industry. Its shares are up more than 350% year to date.
Write to Al Root at allen.root@dowjones.com
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Another EV Company Is Going Public. What Separates It From Tesla and All the Rest. - Barron's
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