The electric vehicle startup Canoo Inc. is running out of cash and has until Aug. 20 to buy a factory site in Oklahoma City or lose up to $7.5 million in state incentives.
A spokeswoman for the Oklahoma Department of Commerce said the agency was in ongoing talks with the company but declined to release additional information.
Canoo said in November 2022 that it had a contract to buy a 630,000-square-foot factory near Interstate 40 in far-west Oklahoma City. But in April, the company announced that AFV Partners, a different company controlled by Canoo CEO Tony Aquila, had purchased the factory instead. Canoo has a 10-year contract to lease the facility from AFV Partners.
The lease arrangement has eased the financial strain on Canoo as it tries to conserve money while trying to bring its vehicles to market, Aquila said in a call with investors on May 15.
But under the terms of two current incentive contracts with the Department of Commerce, Canoo must purchase a factory to qualify for millions of dollars from the Governor’s Quick Action Closing Fund, a pot of state-appropriated cash intended to help lure new jobs to Oklahoma. Canoo’s Quick Action incentive deal is the largest of its kind in state history, but collecting the money is contingent on the company meeting hiring goals and other performance measures.
Becky Samples, a spokeswoman for the Oklahoma Department of Commerce, confirmed there is a deadline looming in August.
“However, Commerce is continuing discussions with Canoo to find a mutually beneficial outcome for the company and the state,” she said in an email.
When Canoo announced in 2021 that it wanted to begin manufacturing electric vehicles in Oklahoma, Aquila boasted that the state had offered more than $300 million in incentives to seal the deal. But the company has not collected any of that money after shifting plans to launch production several times. The Oklahoma Department of Commerce already canceled another incentive deal with Canoo worth up to $10 million after the company missed a deadline in January to start construction on a factory in Pryor. In March, Canoo laid off about a dozen workers at another planned manufacturing site in northwest Arkansas.
The company also hasn’t finalized a development agreement with Oklahoma City officials to reap up to $1 million in additional local job creation incentives, six months after the Oklahoma City Council approved negotiating such a deal, The Frontier has learned.
The terms of the Oklahoma City incentive contract are still being worked out, a spokeswoman for the city said.
Oklahoma City Mayor David Holt has been a vocal supporter of Canoo’s plans. The company said it wants to create 550 new jobs in Oklahoma City. If Canoo is successful, it could create a projected $3.9-billion economic impact over the next decade, according to one estimate presented to the City Council in December.
Holt told The Frontier that he’s not concerned about Canoo’s progress on the factory because all of the incentives the city offers are “performance-based,” meaning the company doesn’t get paid unless it creates jobs and meets other goals.
“Obviously, it’s a startup—it doesn’t have that same track record as some of the other recipients of our incentives,” Holt said. “But again, once you’ve made the choice to make your incentives performance-based, you don’t really have to worry about it.”
Canoo said in a statement that it is still shooting to launch large-scale production by the end of the year.
“We are working closely with the Department of Commerce and other partners to best align Oklahoma’s many incentive programs to support manufacturing and create jobs across the state,” the company said.
Canoo has booked orders worth $2.8 billion for electric vehicles but is scrambling to begin production before it runs out of money.
“Bringing manufacturing is hard. We recognize it. We are embracing it and we know we do not have all the answers,” Aquila said during the May call with investors.
The company had $6.7 million in cash left at the end of March.