Walmart has struck a deal with Canoo to buy 4,500 electric vehicles as part of the U.S. retailer's goal to achieve net-zero emissions by 2040, the companies said on Tuesday. The deal, whose financial terms were not disclosed, also gives Walmart an option to purchase up to 10,000 units as it electrifies its delivery fleet.
Canoo shares more than doubled in early trading, with the news sparking interest in the company among retail investors and making it one of the most discussed stocks on trading forum Stocktwits.
Automotive News reported that the deal includes a stipulation that blocks Canoo from selling vehicles to Amazon. That detail was disclosed in a securities filing on Wednesday and states that Canoo "will not enter into any agreement for any services involving the design, manufacture, consult, advice, lease, or sale of EVs to, or issue any equity, equity-linked or debt securities of any type, or enter into any agreement for the purpose of transferring control of the Company to, Amazon.com, Inc., its subsidiaries, or affiliates."
Amazon has a standing order for 100,000 vehicles from Rivian.
AN also reported that Walmart's purchase order is non-binding.
The movement in Canoo's stock is strictly retail buying as shorts are not expecting the deal to reduce cash burn or anticipated funding needs, said Roth Capital analyst Craig Irwin. "This order was already somewhat anticipated, but it is a nice get. It will be exciting to see those vehicles rolling in the DFW (Dallas Fort Worth) area," Irwin added.
Short interest in Canoo stood at nearly 13% of outstanding shares, research firm S3 Partners said, adding the jump has reduced mark-to-market profit for the shorts by $58 million to around $100 million.
The stock has lost nearly 70% of its value this year, as of last close, amid the selloff in tech stocks and concerns around Canoo's access to capital.
The deal comes as companies including FedEx Corp, Amazon.com and United Parcel Service Inc pledge to shift their delivery fleets to EVs.
The Canoo-Walmart agreement features the EV startup's fully electric Lifestyle Delivery Vehicle (LDV), a commercial version of a vehicle concept for passengers that Canoo first debuted in 2019. Canoo expects to start production of the LDVs in the fourth quarter of 2022, according to the statement.
Canoo said the LDV will be American-made and built on Canoo's proprietary multi-purpose platform (MPP) architecture that integrates the motors, battery module and other drive components. It will have steer-by-wire, with a panoramic window to increase visibility, and a design that maximizes interior space.
Last year Canoo selected Walmart's home of Bentonville, Arkansas, as its headquarters. Pryor, Oklahoma, will be its manufacturing site, where Canoo promises to establish "an EV ecosystem in the heartland to create thousands of technology and manufacturing jobs in the surrounding communities."
In June, Walmart said it was expanding transportation pilots with the manufacturers of electric, hydrogen and natural gas-powered vehicles, including Cummins Inc and Daimler Truck's Freightliner.
The retailer has reserved 5,000 electric delivery vans with General Motors' commercial EV business, BrightDrop.
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