Walmart begins deal with electric vehicle company Canoo Tuesday to purchase 4,500 last-mile delivery vehicles. While the deal was not exclusive, it prevented Canoo from selling to Walmart rival Amazon.
Walmart’s deal to buy up to 10,000 electric vans from SPAC Canoo moved by the startup includes a moratorium on sales to Amazon, according to a regulatory filing first reported by Bloomberg. Canoo warned last quarter that it may not have enough money to continue the businessso it’s not surprising that the company made this deal with Walmart, despite the restrictions.
Shares of Canoo jumped more than 50% on news of the deal breaking, but have since fallen 1.65% in after-hours trading on Wednesday. The company’s shares are down nearly 56% so far.
Amazon might not be interested in Canoo anyway. The online retail giant has ordered 100,000 vehicles from Rivian, out of which also owns 20% of the shares. While it’s unclear how many EVs Rivian has delivered to Amazon, the company says it’s on track to meet its 25,000 EV production target This year. However, that is about 15,000 more than the original production target of Rivian – the company lowered its manufacturing instructions in March after disappointing Q4 2021 earnings.
Amazon has also signed up to be First commercial customer for Ram ProMaster electric vanwhich Stellantis plans to launch in 2023.
In terms of pure revenue, Walmart is still a good choice for Canoo. Total revenue hit $141 billion in the company’s first-quarter results, compared with $81 billion in retail-related sales for Amazon. And under the terms of the deal, Walmart could eventually own more than 20% of Canoo’s shares through a warrant granted to the retailer to buy up to 61.2 million shares at an actual price of $2,500. 15 USD/share. The warrants have a term of 10 years and are immediately transferable for 15.3 million shares of common stock, according to the filing.
The remainder of the stock will be divided quarterly and in proportion to any revenue Canoo receives from transactions with Walmart or its affiliates or any products or services provided by Walmart to Walmart. Canoo until net sales equal $300 million, at which point the warrants will be fully granted.
Canoo’s filing also indicates that Walmart’s order is non-binding, but that appears to be the norm for risky dealings with EV SPACs – Amazon’s deal with Rivian is also non-binding and subject to change. .
Walmart also pre-ordered 5,000 e-delivery trucks from BrightDropGeneral Motors’ commercial electric vehicle unit is part of a larger goal of achieving a zero-emissions logistics vehicle fleet by 2040.
