The EV-startup Canoo Inc. says it can reap more than $100 million in incentives and tax breaks to manufacture its vehicles in Oklahoma, but three previous economic development deals with the state have fallen through in as many years.
Canoo’s latest deal for up to $7.5 million in cash from the Governor’s Quick Action Closing Fund omits an earlier requirement for the company to purchase a factory in Oklahoma City to collect any of the incentive money. The company had been facing a deadline later this month to purchase the facility or lose out on the incentives.
The Quick Action money is part of more than $113 million in incentives Canoo is eligible to collect through state tax breaks, economic development incentives and a Cherokee Nation job training program.
Oklahoma Department of Commerce spokeswoman Becky Samples said Oklahoma’s latest incentive package is only the first round of funding. Once Canoo meets all of the benchmarks in its most recent agreements, future incentives are not out of the question, Samples said.
Canoo has yet to collect any state money, because all of the deals have been contingent on the company hitting hiring and development goals that haven’t been met.
In 2021, Canoo announced that Oklahoma had pledged incentives valued at $300 million to help build a vehicle production facility at the Mid-America Industrial Park in Pryor and hire 1,500 workers. The state-run industrial park offered incentives including land and infrastructure for the factory. Canoo also said it would develop a tech hub in Tulsa that would create 700 new jobs in the fields of software development, research, customer support and financing.
In early 2022, Canoo signed deals to receive up to $15 million in cash from the Quick Action Closing fund to help create jobs in Pryor and Tulsa. Canoo’s deal was the largest the state had ever pledged since the Quick Action program was created in 2011.
But Canoo missed a deadline to start construction on the Pryor factory by January 2023, losing out on the opportunity to collect up to $10 million of the Quick Action money. While plans for a Canoo battery factory in Pryor are still moving forward, the larger vehicle manufacturing plant is on hold for now, said David Stewart, chief administrative officer for the Mid-America Industrial Park
Stewart said that the industrial park is still a long-term partner with Canoo, and the 400-acre plot of land that it offered the company during the first incentive package is still available, should it decide to go forward with a vehicle production factory there.
“Basically, the site is still there, we haven’t deeded it or transferred it to anyone,” Stewart said. “And we’re there when Canoo is ready to be supportive and deal with it at that time.”
Canoo’s contract for the other $5 million chunk of Quick Action money to create jobs at the Tulsa tech hub has also been canceled. Chris Moore, vice president of Canoo, said the Tech Hub still remains part of Canoo’s future plans.
In late 2022, Canoo’s shifted its plans to buy an existing factory site owned by the company Terex in Oklahoma City and launch manufacturing there.
The state made two new Quick Action agreements with Canoo in February, promising a combined $7.5 million to create 1,200 new jobs at the Pryor battery plant and the Oklahoma City factory. There was a catch, however — Canoo would be required to close on the purchase of the Terex facility by Aug. 20.
The Terex property was later purchased by AFV Partners, a separate company owned by Canoo CEO Tony Aquila and leased to Canoo under a 10-year agreement. The lease arrangement helped ease financial strain on the company, Aquila told investors.
Canoo has yet to turn a profit and has also faced cash shortage as it tries to ramp up production.
The new Quick Action Closing Fund agreement with Canoo, which overrides the previous ones, offers up to $7.5 million in exchange for creating 1,362 new jobs with an average wage of $60,512 and a capital investment of $321.6 million by Canoo over a period of 10 years. The agreement would provide Canoo with $1 million if it creates 100 jobs this year.
Canoo can also receive up to $40 million from the state’s Quality Jobs Program over a period of 10 years. The deal is subject to the company generating $2.5 million in new gross taxable payroll within three years on jobs that pay at least $40,472 a year and at least 340 full-time jobs with average salary of $60,512.
During Monday’s call with shareholders, Aquila told investors that the company was entering a “new era” after settling charges with the U.S. Securities and Exchange Commission for $1.5 million on Aug. 4 in connection with misleading revenue revenue projections under two former executives.
The settlement has helped put the company in a stronger financial position moving forward, Aquila said.
“This has been a significant burden on the company’s time, resources, and the process has taken us 28 months and millions of dollars, which reduced our ability to access the capital markets into higher cost channels during this period because of perceived uncertainty,” Aquila said.
The company currently has $3 billion in orders booked, he said, 70% are from commercial customers.
Oklahoma awarded Canoo a no-bid contract in 2022 to purchase up to 1,000 of its electric vehicles over five years. The deal could be worth as much as $35 million to $50 million over the life of the deal, but it’s still unclear how many vehicles state agencies will actually buy. Canoo has yet to start full-scale production.
Canoo could also be in line to collect millions more in local and federal incentives.
The company is finalizing an agreement with Oklahoma City for a $1 million incentive from the city’s Strategic Investment Program to help Canoo create 550 jobs.
The company’s battery production facility in Pryor also could be eligible for around $35 million in federal tax credits annually, said Jacob Whiton, researcher for Good Jobs First, a national policy resource center that promotes corporate and government accountability in economic development.
A breakdown of Canoo’s most-recent $113- million incentive package
- $40 million in Quality Jobs Program payroll incentive payments over 10 years
- $7.5 million from the Governor’s Quick Action Closing Fund
- $28 million from Oklahoma’s Investment/new Jobs tax credit
- $19.7 million from state sales and use tax exemptions on machinery and equipment
- $5.4 million from the state freeport tax exemption
- $7.9 million from sales and use tax exemption on energy used in manufacturing
- $1.9 million from the Oklahoma Training Incentive Program
- $1.7 million from the state’s automotive engineer tax credit
- $663,312 from the Cherokee Nation’s workforce development program
- A to-be-determined amount from the state’s sales and use tax exemption for goods consumed during manufacturing