Greg Ethridge, CFO of Canoo, was recently a guest on Benzinga's All-Access.
Canoo Inc. is an automotive tech company that manufactures electric cargo vehicles for large commercial and government fleet customers globally. The company has developed design-forward electric vehicles with steer-by-wire technology on its common modular platform with end-to-end software plus power solutions. Ethridge told Benzinga that his company stands out for providing clients with full, long-term solutions rather than just the EV product.
Canoo's production facility in Oklahoma will be the first automotive foreign-trade zone in the state.
Canoo Inc. is an automotive tech company that manufactures electric cargo vehicles for large commercial and government fleet customers globally. The company has developed design-forward electric vehicles with steer-by-wire technology on its common modular platform with end-to-end software plus power solutions. Ethridge told Benzinga that his company stands out for providing clients with full, long-term solutions rather than just the EV product.
Canoo's production facility in Oklahoma will be the first automotive foreign-trade zone in the state.
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NewsTranscript
00:00Good morning, Greg, and welcome to the show.
00:06Good morning.
00:07Thanks for having me.
00:08Good to be here.
00:09Absolutely.
00:10You know, there's so many things happening in the EV space, and there's always, it doesn't
00:13matter what it is, whether it's the EV space, the AI space, the data center space, there
00:17are different angles and ways to play it, and I'm glad you're on the show to kind of
00:21talk to us about what is it that your company does, so give us a brief overview before we
00:24get under the hood.
00:25Sure.
00:26So Canoo, as you mentioned with the ticker, is an electric vehicle mobility platform.
00:32We consider ourselves a technology equipment manufacturer.
00:36So what does that mean?
00:37That means that we're not just providing the vehicle and handing it to a customer, selling
00:41it to a customer, and then walking away and waiting for our warranty to expire.
00:44We're actually integrating with that customer, providing solutions to that customer, and
00:49it's important to note, our customer is commercial and government fleets, so we're not focused
00:55on consumer.
00:57We're focused on selling 10, 20, 100, 1,000, 10,000 units to one customer, and then being
01:03able to provide a full, long-term solution to that customer.
01:07So that's how we think about the business model, and the reason that Tony Aquila, our
01:11CEO, really repositioned and refounded this business around commercial, government, and
01:16fleet opportunities was to be able to tackle this huge problem, which is actually, we believe,
01:22of the opportunity that's out there around sustainability and mobility itself, right?
01:26Because these are route-based applications, no range anxiety, and it's really the best
01:32part of the solution, in our view, around BEV mobility.
01:36Yeah.
01:37Now, with you being in the commercial EV space, how are you different from the others in the
01:42sector, right?
01:43Because if you're looking both at the direct commercial EV makers and the manufacturers,
01:46as well as the general sector, why do you believe that you're kind of poised and positioned
01:51here to win and take some market share here?
01:54Well, I think it starts for us, it really starts with our technology, right?
01:59Because our, look, at the end of the day, we were founded in 2017, and it was on a blank
02:04sheet of paper, and we weren't trying to fit our technology into a legacy vehicle, right?
02:12So we had the benefit of really starting with that blank sheet of paper, and being able
02:17to build a solution from the ground up.
02:19And so that's where we kind of conceived our multi-purpose platform.
02:23And that's where the same platform, think drivable chassis, that can be used across
02:28any variant of vehicle that we manufacture.
02:32So it gives us massive amount of scale.
02:35It's almost like driving on your laptop, so in terms of data collection, being able to
02:40track how your driver performs, all of that information is all in that platform that can
02:44then be transmitted back to the customer.
02:47So when we think about, really, it starts with that, right?
02:50The other thing that was really, really critical for us is when we think about the platform
02:54as democratizing that platform such that we can sell the components, we can sell the drive
02:59unit, we can sell the battery technology, we can sell our battery modules, right?
03:04So not only can we sell a completed unit, but we can sell that technology and some of
03:08those components to third parties as well.
03:10And it's not something we've spent a tremendous amount of time to date in our earlier, it's
03:14kind of in our infancy, if you will, because we're focused on delivering the full vehicle.
03:18But it does give you additional revenue streams and really enhancing and growing that TAM
03:23opportunity.
03:24Look, the battery has been, it's been proven that we've been testing with Department of
03:27Defense through the Defense Innovation Unit around ways to move power in the battlefield.
03:34Similarly, we've delivered to the U.S. Army, a light tactical vehicle that they purchased
03:40and have been testing around different ways to kind of quietly do things in the desert.
03:44Right. So those are those are just opportunities that are out there, right?
03:49That creative, I think about as a revenue opportunity.
03:52We're focused predominantly on government and fleet, large fleets today.
03:56But there's a military angle to this as well around the power density and moving that
04:02forward in different applications.
04:04So I think on the commercial side, really, it does come back to the technology, the
04:09flexibility, the payload that our small platform provides, but also the usable space on such
04:16a tight platform. And that's driven, again, by using steer-by-wire technology, using some
04:21of the other technology that's been developed in-house and is our IP.
04:25And that's very different than others that are out there providing solutions.
04:29And finally, I'll leave it.
04:31We are providing a long-term solution, integrating with our customers, improving their
04:36workflow, right, ultimately improving their data flow, reducing their claims, right?
04:41Because we have a smaller vehicle, it's easier to drive, it's safer, but also they can manage
04:46their workforce by knowing if a driver is acting dangerous, right, or doing something that
04:50they shouldn't be doing. And so those are all benefits ultimately to our customers.
04:54I love the aspect that it's like a thing behind the thing as well, right?
04:57So you mentioned how we can sell the whole unit or we have battery, we have different ways to go
05:01ahead and create the revenue outside of just the unit as a whole.
05:04So that's an interesting aspect alongside the fact that it's not just a standard old white man
05:08that children are always scared of, right?
05:10You've got a new, unique look with your offerings.
05:12And that's one thing that I enjoy as well.
05:14Now, you're working with large global commercial government and fleet customers.
05:19What's the traction been like, right?
05:21What are these customers saying to you?
05:22What are they sharing with you?
05:23What's the insight there?
05:25Well, I think it's an interesting contrast, right?
05:27Because the last two years, people have been really beating up on EVs in general.
05:32And most of that's coming from the consumer side, right?
05:35There's been issues with consumer.
05:36There's been issues with recalls.
05:37There's been issues with lots of things.
05:39But our customers are really steadfast.
05:41Like they're very committed to their sustainability goals.
05:44Obviously, there's different rules and regulations and requirements in different parts of the world.
05:48But if you take California or the US or the UK, like at the end of the day, all of the smart corporates
05:55and by regulation, but they also do it for other reasons, need to continue to move
06:02towards more sustainable mobility, right?
06:06BEV is a big piece of that.
06:08They're going to move at different paces, right?
06:09And depending on what those regulatory, but at the end of the day, right,
06:12what we know is that it can't just be based on regulation.
06:16It needs to be based also on economics.
06:18And as you get in and start talking with fleet operators,
06:21whether it be here or in other parts of the world, they get the benefit.
06:25They kind of get the joke that BEV is substantially lower cost to operate
06:30than petrol and internal combustion, right?
06:33And for that reason, it gives them the benefit of not only being able to give this,
06:37you know, kind of check the box from a sustainability perspective,
06:40but also, you know, enhance profitability, right?
06:43At the end of the day, everyone knows large corporates are focused on profitability.
06:46So we're feeding into that, you know, feeding them some of that solution
06:50that ultimately drops to the bottom line.
06:52So I think that long-winded answer, but they are as committed as ever.
06:57And commercial and government fleets are not going back.
07:00We're kind of past the tipping point.
07:02And we just think it becomes a question of how long does it take
07:05to really trade out the lion's share of those vehicles?
07:08And, you know, as you may know, in the UK,
07:10they've got more aggressive kind of timelines, you know,
07:13versus, you know, California has more aggressive timelines
07:15than the rest of the US, but it's happening.
07:17It's just gonna happen at a different pace.
07:19Yeah, well, speaking of commitment,
07:21let's hop on a flight and go abroad
07:22because I believe you have interests and news for Canoo.
07:26You mentioned the expansion in the UK.
07:27Tell us a little bit more about that
07:29and what can help with the bottom line of the company.
07:31Yeah, look, I mean, I think that the international opportunity,
07:34the UK opportunity we found really, really intriguing,
07:37obviously from an environmental and a government perspective,
07:40they're very constructive around EV
07:42and around, as we said, these sustainability goals.
07:46I think that interestingly,
07:48when we delivered to the US Postal Service,
07:50the vehicles that they purchased from us earlier this year,
07:53and they've been running mail in and around Atlanta
07:55for the last, you know, six months or so,
07:58we had to develop using our steer-by-wire technology,
08:00a right-hand drive solution.
08:02When we did that, we were already looking
08:04at other international opportunities
08:05because we had received our foreign trade zone status
08:08out of our Oklahoma City facility.
08:10Yeah. And the UK seemed
08:11to be a really natural fit
08:12because they have tight roads, right, Roman roads,
08:15you know, it's just a different environment.
08:17Do more with less on a small footprint over there.
08:21And we introduced the vehicles
08:23at some commercial fleet shows earlier this year.
08:26I think we met with, like, say,
08:27eight of the maybe top 15 kind of fleet operators,
08:32and the feedback was just really tremendous
08:34because they were really excited about, you know,
08:35partnering with an American company
08:38with the ability for us to be able to plant a flag in the UK
08:41and eventually maybe be able to expand
08:43some of our manufacturing operations in the UK,
08:46and then just providing them incremental product, right,
08:49because they're trying to meet these requirements
08:51from the government,
08:52but they also are struggling to get, you know,
08:54good quality product.
08:56And they know, and based on our relationships
08:59and all the work and testing we've done in the US
09:01and in the Middle East and in very extreme environments,
09:03they knew that our product
09:04could be a really, really strong fit
09:06because it was designed to fit in an environment like theirs.
09:10So we've been incubating those relationships
09:12and making a lot of progress this year.
09:14Actually, we announced a couple of weeks ago
09:15that we opened up our initial office location in Bicester, UK,
09:21so we're excited about that.
09:22And we're continuing to try to advance these things
09:25as best we can.
09:27You know, look, we're still a small company.
09:28We're still, you know, we have a lot on our plate,
09:31but we think that this is a tremendous opportunity for us.
09:35So that's one that we're pursuing,
09:36and we think will ultimately pay dividends.
09:37Remember, the sales cycle for commercial
09:40is not just somebody comes in and buys, right?
09:43It takes six months.
09:44It takes maybe 12 months
09:45to be able to go through that entire cycle.
09:46So you have to start it earlier than later.
09:49And that's one of the things
09:50that we wanted to start doing
09:51both in the UK and in the Middle East.
09:53I'm in Atlanta, so I'm gonna have to stop my mailman,
09:55Winston, and see what he's driving
09:57and check out the vehicles there.
09:59Before I let you go,
10:00I've gotta know what's in a pipe
10:01that you're able to tell us.
10:02What can investors or potential investors
10:05be excited about, let's say, in the next year,
10:07three to six months?
10:08What insights can you give us on the future to look out for?
10:11Well, look, I mean, we're gonna be,
10:13you know, as we've always said,
10:14we're gonna announce things when they're real,
10:16and we don't wanna get ahead of ourselves.
10:19But like I said,
10:20there's a lot of exciting things happening internationally.
10:22We're obviously continuing to make progress
10:24in our manufacturing footprint in the US.
10:28And ultimately, you know,
10:30the milestones for us are gonna be those announcements
10:32that continue to advance the business for us.
10:34And I'll just leave it at that.
10:37I mean, there's gonna be, hopefully,
10:38some exciting things to talk about in the future.
10:41All right, appreciate your time here.
10:42Thank you so much.
10:43And, you know, like I said,
10:44there's always different ways to play in the EV space.
10:46You got some exciting things on the commercial aspect,
10:49not just in terms of the actual unit being sold,
10:51but also different technology and components
10:54within the vehicle itself as well.
10:55Thank you so much for your time here, Greg.
10:57Thanks for having me again.
10:59Thanks for having me again.
11:00Thanks for having me again.
11:01Thanks for having me again.
11:01Thanks for having me again.