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EV maker Canoo has ‘substantial doubt’ about going concern as cash runs low -Breaking

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© Reuters. FILEPHOTO: The 2021 LA Auto Show is held in Los Angeles. A Canoo Lifestyle Vehicle will be on display. REUTERS/Mike Blake

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 “substantially” to continue to exist.

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

Canoo’s cash crisis highlights the difficulties EV startups have scaling up high-priced vehicle production in face of traditional carmakers investing billions in new technology.

Canoo claimed it had approximately $105million in cash remaining at March’s end, which is lower than the $120,000,000 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’s Chairman and Chief Executive Officer stated in a statement that “We have been very clear about our approach to raising capital prudently” and that he will maintain this disciplined approach.

Aquila claimed that Canoo had over $600,000,000 in capital available to finance the production of vehicles and that it has “significant experience in raising capital in difficult markets”.

Canoo claimed that 39 Gamma vans had been built as of March 31st and that 17,500 pre-orders had been placed with a value projected at $750 million. On Tuesday’s earnings call, executives stated that the company produces up to 12 vehicles per day and is focusing on fleet customers.

The U.S. aerospace agency awarded the contract to the company to develop vehicles for astronaut transport to NASA’s Launch Pad.

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