The electric vehicle startup Canoo missed a key deadline and lost out on a deal to reap up to $10 million in state incentives from Oklahoma after failing to start construction on a factory in Pryor.
And the company could forfeit the right to collect millions more in state money if it doesn’t finalize the purchase of an Oklahoma City plant later this year, according to documents obtained by The Frontier.
The company is still committed to building the Pryor manufacturing plant and plans to close on the sale of the Oklahoma city facility soon, Canoo CEO Tony Aquila said in an interview with The Frontier at an event at MidAmerica Industrial Park in Pryor on Wednesday.
“We’re committed with the state to kind of take a long term view on this and obviously, there’s other programs in the state,” Aquila said.
Canoo has not yet received any incentive payments from the state, which are contingent on the company meeting hiring goals and other performance measures. Any money would come from Oklahoma’s Quick Action Closing Fund, a pot of state-appropriated cash intended to help the governor to lure new jobs to the state.
When the state economic development officials inked incentive deals with Canoo worth $15 million in Closing Fund money in February 2022, it was the largest award of its kind since the program was created in 2011. The Closing Fund money was part of a larger package of incentives the state has offered Canoo valued at $300 million, including free land, funding for workforce training and discounted utility rates.
While other companies in the EV space like Tesla, Panasonic and Volkswagen have passed on lucrative incentive offers from Oklahoma, less-established Canoo was a willing taker. But the company has faced a cash crunch and shifted plans on how and where to start production.
The Oklahoma Department of Commerce in January moved to terminate one of Canoo’s Closing Fund deals meant to sweeten the company’s plans to build the $482.6-million factory in Pryor and create up to 1,500 manufacturing jobs there.
Commerce officials decided the contract was invalid because Canoo didn’t start construction by Jan. 1, Brent Kisling, executive director of the agency, wrote in a letter to the company.
“The State of Oklahoma remains committed to the success of Canoo, and should the company request Closing Fund for this project again; we will work to present this request to the Governor,” Kisling wrote.
The Department of Commerce also amended the terms of Canoo’s other deals for Closing Fund payments after delays on the Pryor factory, shrinking the company’s total award from $15 million to $7.5 million. Canoo’s Closing Fund deal is still the largest in state history even with the cuts.
After pushing back construction on the Pryor plant, Canoo announced in November that it would first buy an existing factory site in Oklahoma City and instead launch large-scale production there. Oklahoma City officials approved a deal in December to give Canoo another $1 million in local job creation incentives.
While the larger manufacturing plant in Pryor is on hold for now, Canoo is still moving forward with plans to open a plant to make EV battery modules at MidAmerica Industrial Park, said David Stewart, chief administrator for the park.
After the change in plans, the Department of Commerce moved to amend the company’s Closing Fund deals to “reflect the new decisions made by Canoo,” Commerce spokeswoman Becky Samples said.
The company has 180 days from Feb. 21 to close on the site of an Oklahoma City factory and meet other milestones to be eligible for any future payments, according to the new terms.
Gov. Kevin Stitt has been one of Canoo’s biggest advocates in Oklahoma. Stitt has touted Canoo’s promises to create thousands of new jobs in the state as an example of the success of his business friendly policies.
In a statement, Kate Vesper, a spokesperson for Stitt, said the governor still believes in Canoo’s plans for growth in the state.
“The governor’s number one priority is to be a good steward of Oklahoma taxpayer dollars, accordingly, there are pre-set metrics companies must meet to continue to utilize the Quick Action Closing funds,” Vesper said. “While the adjustment in Canoo’s funds is a reflection of those metrics, we are encouraged and optimistic about their economic impact in Oklahoma.”
Canoo has yet to turn a profit or begin meaningful production. The company’s stock price has plunged nearly 90% over the past year. In March, Canoo laid off about a dozen workers at another planned manufacturing site in northwest Arkansas.
In a call with investors last week, Aquila said the company has booked orders valued at $2.8 billion including one deal to make electric delivery vehicles for Walmart. But starting production has been a challenge. The company announced last week it had agreed to pay the U.S. Securities and Exchange Commission $1.5 million to settle claims that previous senior executives misled investors about potential earnings. Resolving the matter could help the company access new financing, Aquila said.
“As we stand here today and reflect, we struggled and underestimated the complexity of some of our milestones, especially taking into account the legacy impacts and the macroeconomic backdrop,” Aquila said.
Aquila said the company hopes to get cars off the assembly line in Oklahoma City by the end of 2023 and has already begun moving manufacturing equipment there. But one analyst predicts the company will only produce a “modest” number of vehicles this year.
Last year, Oklahoma also awarded Canoo a no-bid, five-year government contract to sell electric vehicles to state agencies.
The contract is still valid, but the company doesn’t have vehicles available yet for agencies to buy, a state purchasing spokesman said.