In a surprising turn of events in the electric vehicle (EV) industry, bankrupt commercial EV startup Arrival has sold a significant portion of its assets to Canoo. This strategic acquisition is poised to bolster Canoo’s production capabilities while reducing its capital expenditures. Let’s cut deeper into the details of this deal and its implications for both companies.
Canoo’s Acquisition
Canoo, another struggling startup in the EV space, has acquired advanced manufacturing equipment and other assets from Arrival. This acquisition, viewed as a cost-saving measure, is expected to reduce Canoo’s capital expenditures by 20%. The purchased assets, which are packed into more than 20 container ships, will be transported to Canoo’s facility in Oklahoma. It remains unclear whether Canoo has also acquired any of Arrival’s intellectual property (IP).
Arrival’s Journey
Once valued at an impressive $13 billion and backed by giants like Hyundai and UPS, Arrival had ambitious plans to revolutionize EV production. The company aimed to build compact “microfactories” in city centers, focusing on electric buses, vans, and even purpose-built cars for Uber. However, these plans unraveled as Arrival burned through cash, underwent multiple restructuring efforts, and shifted its focus from the U.K. to the United States to preserve capital. Despite its promising start, Arrival never managed to produce commercial vehicles at scale, leading to a drastic drop in its market valuation to a mere $7.7 million.
Canoo’s Struggles
Canoo, despite going public through a merger with a special purpose acquisition company, has faced its own set of challenges. The company’s innovative “skateboard” architecture, which houses batteries and the electric drivetrain beneath the vehicle’s cabin, garnered attention but failed to translate into successful production. Although Canoo reported having over $1 billion in its sales pipeline, mainly due to a deal with Walmart for 4,500 units, it has struggled to convert these sales into actual deliveries.
Implications
The acquisition of Arrival’s assets by Canoo could be a game-changer for both companies. For Canoo, this could provide the much-needed boost to move beyond prototypes and accelerate its journey towards commercial production. On the other hand, Arrival’s decision to sell off its assets marks a significant setback for a company that once held great promise in the EV space.
The sale of Arrival’s assets to Canoo is a reflection of the challenges faced by startups in the competitive EV industry. While Canoo hopes to leverage this acquisition to enhance its production capabilities, Arrival’s future remains uncertain as it navigates through bankruptcy. As both companies continue to grapple with their respective challenges, the EV industry watches closely to see how this acquisition will shape the future landscape of electric vehicles.
- Seller: Arrival (Bankrupt commercial EV startup)
- Buyer: Canoo (Struggling EV startup)
- Assets: Advanced manufacturing equipment
- Benefit to Canoo: 20% reduction in capital expenditures
- Transport: Assets packed into over 20 container ships, to be sent to Oklahoma facility
- Arrival’s Valuation: Dropped from $13 billion to $7.7 million
- Canoo’s Sales Pipeline: Over $1 billion, largely due to Walmart deal for 4,500 units
