Electric vehicle (EV) startup Canoo has officially filed for Chapter 7 bankruptcy, bringing an end to its seven-year attempt to carve out a space in the competitive EV market. The move follows months of financial struggles, executive departures, and failed attempts to secure funding.
With its operations ceasing immediately, the company will liquidate its remaining assets under the oversight of a federal Bankruptcy Trustee.
A Downward Spiral for Canoo
Canoo showed signs of promise over the years, signing agreements with major organizations like NASA, the Department of Defense, and Walmart. Despite this, the startup was unable to turn those partnerships into sustained financial success. The company had relied on external funding and government incentives but failed to secure a much-needed loan from the U.S. Department of Energy’s Loan Program Office. Efforts to attract foreign investment also fell through, leaving Canoo with no viable path forward.
Adding to its troubles, Canoo was fined $1.5 million by the Securities and Exchange Commission (SEC) in 2023 for misleading investors about its financial outlook during its initial public offering (IPO). The company had gone public in 2020 through a merger with Hennessy Capital Acquisition, raising approximately $600 million.
Poor Management and Missed Opportunities
Canoo’s struggles were exacerbated by questionable financial management. Reports revealed that in 2023, the company spent $1.7 million on its CEO’s private jet—nearly double its annual revenue of $900,000 that year. Additionally, whistleblower claims suggested that Canoo misrepresented its production activities in Oklahoma, where it had secured $100 million in state incentives without actually manufacturing vehicles in the state.
The company’s downfall mirrors the fate of several other EV startups. Fisker, Lordstown Motors, and Arcimoto are just a few examples of companies that have either filed for or are on the verge of bankruptcy in recent years after burning through cash reserves with little return on investment. Canoo itself had previously acquired the assets of struggling EV startup Arrival, though it remains unclear whether those resources were ever put to use.
A Broader Trend in the EV Industry
Canoo’s demise highlights the broader volatility in the EV startup space. The wave of new entrants hoping to replicate Tesla’s success has faced an uphill battle amid economic downturns, supply chain disruptions, and increased competition from established automakers. Many companies, including Canoo, struggled to scale production while managing high development costs.
While legacy automakers and well-funded startups continue to push forward with electrification efforts, smaller players like Canoo have found it difficult to survive.
With Canoo’s assets now set to be liquidated, it remains to be seen how creditors will be compensated and what, if anything, will be salvaged from the once-promising venture.
