Tina Bellon

(Reuters] – Canoo Inc, a company that makes electric vehicles, has warned investors it could not meet its financial obligations. The firm said it was seeking to raise additional money but expressed doubts about whether it will be able “substantial doubt” regarding its future.

As the Texas-based firm reported first-quarter earnings and a loss of $125.4 million, this warning came. After a day of a 5% decline, shares dropped 13% after-hours trading.

Canoo’s cash crisis highlights the difficulties EV startups have scaling up high-priced vehicle production against competition such as Tesla (NASDAQ) Inc or traditional automakers who spend billions on technology and plants.

Canoo claimed it had approximately $105million in cash remaining at March’s end, which is lower than the $120million it spent in operating expenses over the first three month of this year. The quarter’s capital expenses were $28.4 millions on zero revenue. This highlights the need to find additional financing.

Tony Aquila (Canoo Chairman) stated that they have made clear their philosophy about raising capital in judiciously. He also said that they will keep this disciplined approach.”

Aquila stated that Canoo has more than $600million in available capital and had “significant experience raising capital on challenging markets.”

Canoo stated that it has built 39 Gamma vans by March 31, and received 17,500 orders with an estimated value of $750million. A Tuesday earnings conference saw executives stating that Canoo was producing 12 vehicles per week and was focusing its efforts on fleet customers.

In April, the U.S. government awarded the contract to build the vehicles for astronauts who will be transported to the launchpad to support NASA’s Artemis mission to Mars.