Gather around folks, hope y’all made some gains the last time around. This DD is split into 8 parts, so feel free to jump to whichever section you’re most interested in.
Part 1 – Introduction
Part 2 – sector Trends and Upcoming Catalysts
Part 3 – enterprise Overview and Unique Value Proposition
Part 4 – Recent Updates
Part 5 – Financials and Valuation
Part 6 – Bear Case
Part 7 – SI and Squeeze Potential
Part 8 – TL;DR
Part 1 – Introduction
It was a warm Monday morning on August 23rd almost a month back, when seemingly for no reason – GOEV shot up from ~$5.9 to ~$8, a 30% gain on the day. The next day – GME popped, for a 30% gain as well, with AMC and BB also making up big gains, leading to the ‘meme mania’ we’ve been experiencing for the last couple of weeks.
Why’d this happen? Well there were no enterprise/field catalysts. The only event that seemed to occur in the prior week was the expiration of monthly options. One of the theories going around is that there’s an almost quarterly cycle going on at this point where FTD’s are leading to a surge in prices in the next cycle for ‘meme equities’ which tend to be heavily shorted for the most part. How accurate this is I have no clue and whether this applies to GOEV I don’t know, haven’t investigated that particular theory but there’s plenty of posts/comments floating around for you to look into if you’re so inclined.
The quick point I’m trying to make here is that if a heavily shorted stock is popping 30% in a day, with no major catalyst for the field or the enterprise in question – and that enterprise is now advancing towards realizing its major milestones with favorable tailwinds expected for the sector, it could pop a lot more than 30% in the months to come. GOEV is among the youngest EV companies – having been around for less than 5 years, with arguably the most unique vehicles coming out (on schedule – seems to be pretty amazing in the EV space) that very few, if any, of the established or other up and coming competitors are producing, and has been shorted more it seems – for the failure of its peers than any real fault of its own.
Part 2 – sector Trends and Upcoming Catalysts
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From an capital into equities point of view – S&P 500 has fallen about 0.5%, on average, during the month of September. equities have tended to go up, on average, during every other month — other than a slight dip in February — over the past half century link. However, this may soon be coming to an end as in the past week Investors stampeded into equities and out of cash as global equity funds witnessed their biggest inflows since March 2021 while large-cap U.S. funds enjoyed a record haul, a weekly round-up by BofA showed. link
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Let’s take a look at the EV sector dynamics and upcoming catalysts before getting into GOEV specifically, so we get a high-level understanding of the bigger picture. The global EV sector is expected to be valued at $725.1 Billion by 2026, growing at a CAGR of 27.19% from $171.26 in 2021 source. This is expected to grow to $1.007 trillion by 2027 which is an average of 2 sources – source 1, source 2, another source actually has the sector valued at $2.5 trillion but it’s a bit of an outlier compared to the other 2 source 3.
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Global EV forecast is for a compound annual expansion rate of 29 per cent achieved over the next ten years: Total EV sales growing from 2.5 million in 2020 to 11.2 million in 2025, then reaching 31.1 million by 2030. EVs would secure approximately 32 per cent of the total sector share for new car sales. Despite the pressure exerted on the sector by the COVID-19 pandemic, the long-term outlook for EVs is strong. The significant shift in expected volume of BEVs and PHEVs by 2030 is based on four factors: consumer sentiment, policy and regulation, OEM approach and the role of corporate companies. All four of these factors saw major changes in direction over the last year, prior to the emergence of COVID-19, and have since been shaped further by the pandemic. link
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In November 2018, an post came out stating that the number of EVs on U.S. roads was projected to reach 18.7 million in 2030, up from 1 million at the end of 2018. This is about 7 percent of the 259 million vehicles (cars and light trucks) expected to be on U.S. roads in 2030. Annual sales of EVs will exceed 3.5 million vehicles in 2030, reaching more than 20 percent of annual vehicle sales in 2030. About 9.6 million charge ports will be required to support 18.7 million EVs in 2030. This represents a significant capital in EV charging infrastructure. link.
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As it turns out, that number of annual EV sales of 3.5 million vehicles in 2030 was revised to almost double of that in a November 2020 report, just 2 years after the previous post. The US electric vehicles sector is now expected to reach 6.9 million unit sales by 2025, up 5x from 1.4 million unit sales forecast for 2020, due to government incentives driving EV ownership. Over 90% of states offered incentives for setting up EV charging infrastructure, with meaningful quality of life incentives and exemptions are offered across 39 states in the US, including easier payment plans for the purchase of EVs, limited-time incentives to accelerate EV adoption/conversion and lack of requirements for emission inspections across several states. link
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President Biden is seeking a pledge from auto manufacturers that would see EVs make up 40% – 50% of new U.S. vehicle sales by 2030 link 1, link 2 which is double of the 20% forecast just three years earlier in 2018, and would likely occur only with strong support on the supply side through infrastructural and other support that would enable EV manufacturers to develop the capacity to produce the target number of vehicles, and demand side with respect to incentivizing people to purchase EVs.
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EV duty credits jump to $12,500 in proposed $3.5 trillion financial plan blueprint Democrats passed a couple of weeks ago. This bill adds $4,500 to the current $7,500 duty loan available for a total of $12,500 potentially available to EV buyers. It includes passenger vehicles and light-duty trucks. The proposal calls for $160 billion to fund subsidies and purchase incentives, EV charging infrastructure funding, EV manufacturing incentives, federal EV procurement requirements, and incentives to electrify heavy-duty commercial fleets. link
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The proposed EV credits in the financial plan blueprint would last for 10 years and consumers would be allowed to deduct the value of the loan from the sales price at the time of purchase. In 2027, the $7,500 loan would only apply to U.S.-made vehicles. It would also create a new smaller loan for used EVs of up to $2,500. There are also lower credits for EVs with smaller battery packs. The bill says individual taxpayers must have an adjusted gross earnings of no more than $400,000 to get the new EV duty loan. It would limit the EV loan to cars priced at no more than $55,000, while trucks could be priced up to $74,000. In August, the Senate in a non-binding amendment narrowly voted in favor of prohibiting taxpayers from claiming EV duty credits if they make more than $100,000 annually or if vehicles cost more than $40,000. link
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Furthermore, the bipartisan infrastructure plan, titled the American Jobs Plan, includes billions of dollars for other electrification efforts and for a national charging network. Specifically, the bipartisan plan includes $7.5 billion for a network of EV charging stations across the country. It also includes another $7.5 billion for electric buses and other transportation methods. link
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States area also providing EV incentives to residents e.g. Gov. JB Pritzker signed Illinois’ clean energy law which includes a $4,000 rebate for residents to buy an electric vehicle (EV). link.
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By 2030, there’s expected to be an 8% divergence between EV demand estimates and production plans, meaning there needs to be a massive scaling up of infrastructure/capacity of EV manufacturers over current projections in order to fill the gap in the sector. link
Part 2 – enterprise Overview and Unique Value Proposition
Before we look into what’s happened since my last post, let’s go over a quick refresher on what the enterprise does. Canoo is a Los Angeles-based enterprise that has developed breakthrough electric vehicles, with over 650 employees link from leading technology and automotive companies link. Canoo’s Chairman Tony Aquila mentioned that the enterprise was focused on a product lineup that fits in the gaps of everybody else’s lineup… take the turning radius of a Prius, the size of a Ford Ranger, Payload of F-150 and sell it as one vehicle link. What makes this Canoo so special compared to other EVs is their modular platform, which is purpose-built to deliver maximum vehicle interior space and adaptable to support a wide range of vehicle applications for consumers and businesses.
It is this modular platform that led to Apple’s finance charge and having talks with Canoo (the talks are assumed to have fallen apart because Canoo was looking for an investor while Apple was looking to for an acquisition), as the platform is different from ones developed by other startups and larger automakers because it integrates more of the car’s electronics, allowing for greater flexibility in cabin design. It also features steer-by-wire technology, which also increases design flexibility and is not yet widely adopted in the field. link.
Apple wasn’t the only major enterprise interested in Canoo, Hyundai Motor Group (Hyundai and Kia’s parent enterprise) actually went a lot farther than Apple did with Canoo, announcing a partnership in February 2020 to develop new electric vehicles based on the technological platform developed by Canoo link. This was extremely unusual and referred to as a significant victory for Canoo, as ‘pretty much every electric vehicle startup has talked about wanting to license out their technology or partner with legacy automakers, almost none have landed a deal… Canoo now joins that small list despite only coming into existence at the end of 2017, when its founders started the enterprise’ link.
Ultimately this partnership did not go ahead because Canoo’s chairman didn’t feel as though it was worth it for Canoo, saying that the original deal with Hyundai didn’t factor in the value of Canoo’s IP, so a shift in approach was made from licensing out the technology to protecting the IP and manufacturing and selling Canoo’s own vehicles to commercial operators link
Regarding the technology/IP – Canoo has developed the world’s flattest skateboard platform, which enables class-leading passenger and cargo volume on a small vehicle footprint. For example, the lifestyle vehicle, which will offer the interior space of a large SUV, but on the exterior footprint of a compact car. To help achieve this, Canoo’s suspension utilizes a double wishbone with two fiberglass leaf springs, mounted transversely in the front and rear of the platform. The dampers are mounted to the frame, eliminating the need for large shock towers that take up vital cabin space. The entire suspension system is incorporated into the skateboard and sits below the height of the tires. link.
Let’s take a look at the current automotive model and see how Canoo’s approach and the use of the skateboard platform add so much more value than conventional ICE manufacturers link, currently the model is broken because 70-80% of the portion of vehicle lifetime profit is only generated after the first owner. The current model is geared towards the first owner and nothing more, with an assortment of OEMs/spare parts retailers/3rd party installers servicing vehicles after the initial sale. Canoo aims to change this by targeting multiple owners after the first purchase i.e. owners 2-4, offering customers the ability to upgrade the model of whichever vehicle they have or switch them entirely as the platform on which the vehicles are built is the same link.
The use, and subsequent re-use of the skateboard platform enables significant cost savings and uncertainty reductions link, with the platform providing a strong company advantage as it is consistent across Canoo’s vehicle lineup. If a project is started for a new vehicle which will have the skateboard platform as its foundation, they will be able to carryover engineer and labor, ~half, from one project to the next. It’s also worth pointing out that in traditional ICE, it would be exceptional if Bill of Materials cost carryover across variants reached 25%, with Canoo, this is exceeding 50%. The specific savings include:
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45% – 55% labor savings for new variants developed
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57% of the BOM cost carryover across variants
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70% of critical functions are delivered by the platform.
These enable the development of space efficient cabins that integrate simply onto platform link, and provide the key basis for engineering Canoo’s new value proposition of having a harmonized and articulated 3 – layer vehicle concept that keeps fresh and returns capital over an entire vehicle lifecycle link. This image also showcases how Canoo aims to capture the full vehicle lifecycle value link
The three vehicles that Canoo has publicly announced as part of its lineup are:
Lifestyle vehicle link – Fully electric, highly versatile and offering more utility inside and out for city explorers, businesses, families and adventurers. The multi-purpose platform unlocks SUV-size interior space on a smaller exterior footprint. It’s pretty hard to put into an image of the vehicle into words so I’d recommend clicking on the above link to check it out for yourself. Some key figures (note the range provided in certain cases is for the variants):
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Launching late 2022.
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Starting at $34,750*
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2 seats – 5 seats – 7 seats
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250 mi range
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Up to 350 Horsepower
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28min charge time 80%
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188 ft³ interior volume
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80 KWh battery
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1,464 lbs payload – 2,000 lbs capacity
Multi-purpose Delivery Vehicle link – company ready vehicle that lowers the total cost of ownership while providing easy maintenance. More cargo in a small footprint to enable easy maneuverability. A productivity tool that enables you to plug in your tools and get to work. Some key figures (note the range provided in certain cases is for the variants):
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Starting at $33,000*
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200 ft³ – 500 ft³ cargo volume
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130 – 230 mi, 90 – 190 mi range (EPA)
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1,540 to 1,980 lbs
Pickup link – All Electric, All American, All Utility – The Pickup Truck is built to be the new standard in function, form and utility — ready for work and the weekend. The picup truck is as strong as the toughest trucks out there and includes features for people who use trucks on the job, weekend, and adventure. Some key figures (note the range provided in certain cases is for the variants):
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Launching as early as 2023.
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Price – Not currently listed, but during the Q&A portion of the investor day portion on June 30th, somebody asked what the base pricing for the pickup was, given that the Ford lightning F-150 base price was being advertised at $32,000. Chairman Tony Aquila said Canoo was not prepared to announce the pricing at that time, but Canoo would not be beaten in this category – you can check it out at the following link link
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Targeted HP – 500+
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Payload Capacity – 1800 lbs
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Range – 200+ mi
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Powertrain – AWD or RWD
There’s actually a fourth vehicle as well that hasn’t been listed anywhere officially but was found by /u/Mcardiel007 when he was having issues communicating with Canoo and went to their Torrance location and spotted them unloading what is potentially the new sedan. All credits to him/her for the following pictures pic 1, pic 2, pic 3, pic 4, pic 5.
We can see that Canoo is targeting the most attractive segments at a lower incremental cost. The most profitable and highest carbon dioxide emitting segments are pickups and SUVs, with $115B+ accounting for 90% of 2020 profit pool in US, and ~60% of the transportation emissions (Canoo is targeting these segments with its Lifestyle Vehicle and Pickup). One of the fastest growing segments is delivery vans, with ~2M more delivery vehicles needed globally by 2030 link. It’s important to keep in mind existing fleet conversion to EV as well. Using the common platform provides a pivot-ability to focus on high margin products and is a large and profitable opportunity – highly lucrative and accretive to overall margin link.
Canoo is also looking at car data and not just strictly being a vehicle manufacturer – with an opportunity for harmonizing hardware and software + superior cleaning leading to actionable data instead of the status quo of outsourced hardware + poor cleaning leading to disjointed data. Each connected vehicle offers 1 – 2 TB of raw data per day, with car data monetization globally valued at $250 Billion – $400 Billion link.
To sum it up – Canoo is well-positioned for success with a differentiated company model link, developing exceptional products that are aimed at the most profitable segments ($115B+ for 90% 2020 profit pool) in the US, addressing upfitting and accessories sector in the US by monetizing full vehicle lifetime value with emphasis on 2nd, 3rd and 4th customers (valued at $24B+), and monetization of car data globally through customer-centric, software ecosystem generating exponential network effect ($250B+).
Part 4 – Recent Updates
Now let’s take a look at some of the hires that the enterprise’s been making (note that almost all of these hires have happened since the last quarter, with most being in the last two months, and this is not an exhaustive list). Canoo has quietly been putting together an all-star management team experienced in three key areas – diplomacy, automotive, and technology.
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Ambassador Josette Sheeran – President at Canoo, Executive Chairman at the The McCain Institute, former UN Special Envoy for Haiti, Vice Chairman of the World Economic Forum, Executive Director of the World Food Programme, Undersecretary for Economics Agriculture, Energy at the US Department of State.
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Ram Balasubramanian – Chief Information Officer at Canoo, former Senior Vice President, company Technology at Salesforce, Chief Information Officer at Motorola offerings, Chief Information Officer (CIO), India Region, Global company offerings Leader at PepsiCo.
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Christian Treiber – Senior Vice President of Global Customer Journey & Aftersales at Canoo, former Member of the Board of Directors at the German American Chamber of Commerce, Inc., Member of the Board of Directors, RepairSmith (backed by Daimler AG), Vice President Customer Service, Mercedes-Benz USA, Member of the Supervisory Board at Mercedes-Benz Versicherungs AG, Director, Service and Parts Sales Mercedes-Benz Passenger Cars at Daimler AG etc.
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Govin Ranganathan – Director Logistics, Materials & Transportation at Canoo, former Head of Logistics at Nio, Engineering Manager at Tesla, Sr. Manager of Production Control at Fiat Chrysler, Lean Manufacturing Specialist at Damien Chrysler.
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Arnold Abernathy – Chief Information Security Officer at Canoo, former Deputy Chief Information Security Officer at Toyota, Programmer at NASA, with other experience including McAfee, Deloitte & Touche, Ernst & Young, CA technologies.
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Randy Rodriguez – Director of Advanced Design at Canoo, former Director of Advanced Design at General Motors, Creative Manager Design and Styling at Tesla, Project Lead Designer at Nissan Motor Corporation.
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Senon Franco – Senior Exterior Design Manager at Canoo, former Senior Exterior Designer at Hyundai, Creative Designer at Honda, Exterior Designer at GM, Exterior Designer at VW.
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Branden Coté – Vice President Product Management & Sales at Canoo, former Director, sector Management North America & Greater China at Mercedes-AMG
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Bryce DeArmond – Manager of Strategic Partnerships, Data Customer Journey at Canoo, Former Account Manager at Samsung Electronics America, Samsung Field Operations Manager at Samsung Electronics America, Director of Sales at IRIO.
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Kristen Harris – Senior Commercial Counsel at Canoo, former Director, Legal Affairs for EMEA and Latin America at the Harley-Davidson Motor enterprise, Regional Legal Counsel at Texas Instruments, Legal Consultant at Taiwan International Patent and Law Office
Now why on earth would these long-established and assumingly well-reputed individuals with executive level careers at places including the United Nations, U.S. Department of State, Nio, Tesla, Fiat Chrysler, Daimler AG/Mercedez-Benz, General Motors, Nissan, Toyota, Hyundai, Honda, Salesforce, NASA, McAfee, PepsiCo, Samsung, Harley-Davidson etc. move to an upstart EV manufacturer within the last couple of months if they didn’t believe in it’s potential for success? Some of these individuals have spent 5-10 years with their prior companies, it doesn’t make sense that they’d all be jumping over to Canoo for a 1 year engagement.
Other than the talent, Canoo has made a number of moves in in recent months as it moves closer to bringing the first of the Lifestyle Vehicles to production, including:
Announcing plans to build its new factory outside of Tulsa, Oklahoma, creating more than 2,000 jobs and opening in 2023. The facility will be built on a 400-acre site at the MidAmerica Industrial Park complex in Pryor, Oklahoma. It will house a paint shop, body shop, and general assembly plant. Oklahoma is providing an incentive package that totals over $300 million, and may kick in millions more based on whether Canoo hits or exceeds a target of hiring military veterans to make up 10 percent of the workforce at the facility link.
Partnering with VDL Nedcar as a contract manufacturing partner to manufacture the Lifestyle Vehicle for the US & EU markets while it builds its US-based mega micro-factory. By parallel pathing contract and owned manufacturing Canoo will meet its commitment to start production and deliver vehicles in Q4, 2022. Canoo Chairman Tony Aquila mentioned that VDL Nedcar ‘is the top trusted European manufacturer building high quality products for leading OEMs, and they significantly outcompeted the other contenders. VDL is also independently owned by the van der Leegte family of entrepreneurs – which aligns with our commitment to support businesses that form the backbone of communities. This strategic partnership will enable us to deliver vehicles to sector while we build our Phase 2 factory in Oklahoma. It also strongly positions us for geographic expansion in Europe and builds a lasting relationship with VDL Groep of companies. Our capital will help us scale quickly and fulfill our mission to bring affordable, purpose-built EVs to Everyone.” The Nedcar facility is slated to build up to 1000 units for both the US and European markets in 2022 with a target of 15,000 units in 2023 link
De-risking the path to sector, Canoo designed, built and tested beta for its lifestyle vehicle link, with highlights including:
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$250M invested in Beta
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~1.5M hours of engineering
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~500k miles of testing
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13 beta runners / 32 beta properties tested
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US NCAP 5-star overall rating targeted, with simulated, sled and vehicle level crash testing.
Undertaking the Gamma Phase with SOP on track for Q4 2022 link, with key highlights including:
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12 months of testing
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~120-150 vehicles will be built and validated
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~70 crash tests
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30 sled tests
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Full slate of vehicle tests; no shortcuts
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80% of all components are sourced
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63% of all engineering is released
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54% of tooling is committed
Partnering with the frontdoor collective for 10,000 MPDVs, the frontdoor collective are a network of delivery service partners that provide dependable last-mile delivery experience, with founders and executives with experience from FedEx, Walmart, XPO, Amazon, Instacart and the U.S. military. With more than 100 franchisees with experience in delivering for companies like Amazon, XPO, Axlehire and Ontrac, the enterprise, aims to expand that to 300 franchisees by the end of this year link.
Surpassing 9,500 non-binding pre-orders across lifestyle vehicle, pickup track and multi-purpose delivery vehicle link
Showcasing its vehicles at various events including the ACT Expo and Cars & Coffee (both of which were attended by some of the amazing folks at the canoo subreddit who attended, took detailed notes/pictures and shared it with everyone), and receiving invites to others such as the LA Auto show link.
Part 5 – Financials and Valuation
Before looking at Canoo/Competitors, here are some analyst PTs
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R.F. Lafferty – $19 link
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H.C. Wainright – $15 link
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lender of America – $5 (can’t find the post at the moment but I’m sure I’ve seen it somewhere)
Average = $13, current SP = $6.7
As of Canoo’s second quarter 10Q, the enterprise had cash on hand of $563.6 million link, which according to the enterprise is more than sufficient to cover the cost of bringing its first products to markets link.
The enterprise could raise $273M from warrants if the SP is greater than $18 for 20 out of 30 days.
At a pre-revenue stage there’s not too much to say in this department, other than to note that value of a couple of orders:
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Over 9,500 non-binding preorders – which if they are followed through with would be worth at least $313,500,00 (assuming 9,500 orders of the cheapest vehicle which is the base model MPDV).
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10,000 MPDVs for the frontdoor collective which would be worth at least $330,000,000 (assuming cheapest MPDV).
As far as valuations go, let’s divide the pre-revenue EV manufacturers into tiers for an easier look – based on their sector cap. I’m sure some are missing because I only took a few, let me know and I’ll add them in later. These sector caps were taken within a few moments of each other on 9/21 from yahoo financial.
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Lucid Motors – $41.23B, 11,000 pre-orders, delivery delayed to fall 2021
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Nikola Corporation – $4.25B, lowered delivery guidance of 25/50 vehicles for 2021
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Fisker Inc – $3.917B, >17,000 pre-orders, value of $637,483,000
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Faraday Future – $3.66B, 300 FF 91 Vehicles, value of $54,000,000 delivery in 2022
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Canoo – $1.63B, 19,500 pre-orders (9,500 individual + 10,000 front door collective), value of $643,500,000, delivery fall 2022 for LV, 2023 for MPDV
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enterprise A (sector cap too low, has a DOJ investigation ongoing and issued a going concern for whether it would have cash to make it to production) – $1.2B
Just looking at a couple of examples here it would seem that Canoo is undervalued purely on a pre-orders/revenue perspective. Fisker and Faraday Future, which are both expected to deliver in 2022 as is the case with Canoo, have over double the sector cap despite Canoo having similar preorder value (compared to Fisker) or much higher (compared to Faraday Future). Haven’t done a funds movement examination of every enterprise but even taking into consideration Fisker having $400M more in cash on hand source, there’s a significant discrepancy. Faraday Future meanwhile has less than half of Canoo’s cash on hand at $230M link.
Part 6 – Bear Case
With anything pre-revenue, the biggest issue is always going to be do we have enough cash to get the product off the ground imo. I could write a really long paragraph but yea that’s pretty much it in a sentence. Since I’m on the bullish side for the enterprise, I’ll lay out a few reasons why I think Canoo won’t be running out of $$$ before it comes to sector – these have mostly been stated here and there throughout this document but I’ll summarize them below:
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As of Canoo’s second quarter 10Q, the enterprise had cash on hand of $563.6 million which according to the enterprise is more than sufficient to cover the cost of bringing the Lifestyle Vehicle to sector.
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Oklahoma is providing an incentive package that totals over $300 million, and may kick in millions more based on whether Canoo hits or exceeds a target of hiring military veterans to make up 10 percent of the workforce at the facility.
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EV funding is a significant portion of the upcoming financial plan, this is less grounded than the others but there is assumedly some hopium that Canoo would be able to receive some federal support if needed.
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The enterprise could take on debt to assist in getting to production – H.C. Wainwright in their coverage indicated that they expect $500M to $525M in funding could be raised in debt to 2023. Tony has previously stated that they are looking for as non-dilutive an approach as possible, and given the current SP it wouldn’t make much sense to go the additional equity route.
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In May, the SEC opened a fact-finding inquiry into Canoo as it did with many former EV SPACs, unlike others such as NKLA and (enterprise A) – nothing further has come as of yet, nor have any DOJ investigations been launched.
Part 7 – SI and Squeeze Potential
I know y’all have just been waiting for this so I’ll get right down to it. Famously developed by the esteemed /u/pennyether, the SMELL system is going to help us take a look at some key numbers that’ll help understand GOEV’s squeezability.
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Short finance charge – 31.8 million shares, 32% of free float
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sector Cap – $1.63 Billion, not big enough that it’s immovable, not small enough that shorts would be able to cover without investing a decent amount of capital
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Extremely Memeable – I mean… GOEV, like Go… EV, idk I think it ticks off the memeability criteria
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Low Liquidity – Average volume per yahoo financial is 2.7M shares, which is 2.7% of the free float so any inflow will cause the share price to move pretty significantly. Over the last quarter, it seems that institutions have been loading up on Canoo for cheap, with institutional inflows of $177M and only $2.56M sold link
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Low uncertainty (IV) – Yep, current IV is 77.1% for 9/24 and 10/1 options. Please do NOT consider this financial advice, like at all, but if you’re one of the folks who look to just buy options for the sake of contributing to a gamma squeeze, take a look at the post by /u/ChemaKyle on how buying far OTM options and how it’s not the best idea if you want the MMs to hedge. There’s not much of a need to hedge vs something that doesn’t have a ramp up and no OI at the ATM values. I’d agree with his/her post and the commentators that buying ATM options and the underlying shares would have a greater chance at causing a gamma squeeze, but this is something you should research and do your own DD on as well based on your uncertainty tolerance and capital threshold.
Part 8 – TL;DR
The global EV sector is expected to be valued at $725.1 Billion by 2026, growing at a CAGR of 27.19% from $171.26 in 2021, with total EV sales growing from 2.5 million in 2020 to 11.2 million in 2025, then reaching 31.1 million by 2030. EVs would secure approximately 32 per cent of the total sector share for new car sales. The US electric vehicles sector is now expected to reach 6.9 million unit sales by 2025, up 5x from 1.4 million unit sales forecast for 2020, due to government incentives driving EV ownership.
President Biden is seeking a pledge from auto manufacturers that would see EVs make up 40% – 50% of new U.S. vehicle sales by 2030, to support this EV duty credits jump to $12,500 in the proposed $3.5 trillion financial plan blueprint Democrats passed a couple of weeks ago. In August, the Senate in a non-binding amendment narrowly voted in favor of prohibiting taxpayers from claiming EV duty credits if they make more than $100,000 annually or if vehicles cost more than $40,000. Either way, this is huge for Canoo which is offering base models of the Lifestyle Vehicle and MPDV at <$35,000, with the base pickup model expected to be priced similarly.
Canoo aims to disrupt the current automotive model by taking a piece of the 70-80% of the portion of vehicle lifetime profit which is generated after the first owner and traditionally ignored by manufacturers. Canoo aims to change this by targeting multiple owners after the first purchase i.e. owners 2-4, offering customers the ability to upgrade the model of whichever vehicle they have or switch them entirely as the platform on which the vehicles are built is the same. Canoo is targeting the most attractive segments at a lower incremental cost. The most profitable and highest carbon dioxide emitting segments are pickups and SUVs, with $115B+ accounting for 90% of 2020 profit pool in US, and ~60% of the transportation emissions (Canoo is targeting these segments with its Lifestyle Vehicle and Pickup) and targeting one of the fastest growing segments of delivery vans, for which ~2M more delivery vehicles will be needed globally by 2030, with its MPDV.
To facilitate this disruption, Canoo has developed the world’s flattest skateboard platform, which enables class-leading passenger and cargo volume on a small vehicle footprint. Canoo’s Chairman Tony Aquila mentioned that the enterprise was focused on a product lineup that fits in the gaps of everybody else’s lineup… take the turning radius of a Prius, the size of a Ford Ranger, Payload of F-150 and sell it as one vehicle. The use, and subsequent re-use of the skateboard platform enables significant cost savings and uncertainty reductions, with the platform providing a strong company advantage as it is consistent across Canoo’s vehicle lineup. If a project is started for a new vehicle which will have the skateboard platform as its foundation, they will be able to carryover engineer and labor, ~half, from one project to the next.
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45% – 55% labor savings for new variants developed
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57% of the BOM cost carryover across variants (compared to ~25% on ICE)
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70% of critical functions are delivered by the platform.
If we take a look at the funding incentives being proposed for consumers e.g. with the LV, the maximum federal rebate would be $12,500, and if we add in state incentives e.g. Illinois with it’s $4,000 rebate – that turns into $16,500. The LV is priced at $34,750 which means that post-rebates you’re getting it at almost half the price, pretty ridiculous in comparison to ICE vehicles, add in tighter emissions standards for ICE vehicles and Canoo starts looking pretty good.
If you made it this far, I’d like to thank you for reading this – I’d like to give a big shoutout to the community over on the canoo subreddit (not sure if I can link other subs so won’t). They’re extremely dedicated individuals who provide a wealth of knowledge on the ongoings of the enterprise – from driving to HQ and coincidentally finding an unrevealed product to attending EXPOs and other showcase events and sharing vehicle images and detailed write-ups. Y’all the real MVPs. Position – 1k shares @ 11.69.