Walmart signs deal with EV startup Canoo, startup shares surge

On Tuesday, Walmart signed a deal with an electric vehicle startup Canoo Inc. to buy up to 4,5000 vehicles which could rise to 10,000 battery powered vans. The EV maker’s share surged by over 50 percent in pre-market trading, after the deal was announced. The startup has also granted a warrant to Walmart that will allow the retailer to acquire 61.2 million shares at $2.15 per share over a period of ten years. It currently has 15.3 million common shares.

According to an SEC filing, on Wednesday, the startup will not be allowed to sell its EVs to other retailers including Amazon. Amazon has a similar arrangement with Rivian Automotive Inc., to buy up to 100,000 electric vans. This makes the e-commerce giant a priority buyer for Rivian’s electric vehicles.

Canoo has recently moved its headquarters to Bentonville, Arkansas, which is the headquarters of Walmart. It is expected to rollout its “lifestyle delivery vehicle” (LDV) in 2023. It also said that it expects to start LDV’s production during the fourth quarter of 2022.

The LDV will be optimized to provide sustainable, last-mile delivery. It will use a proprietary multipurpose platform architecture that would bring together motors, battery module as well as other components that are required to manufacture the vehicle. It will use steer by wire technology, to reduce moving parts and cabin intrusion.

Walmart will be using the LDVs to deliver online orders. These orders will include groceries as well as general items. It might be the method by which Walmart will deliver its GoLocal service. This service is Walmart’s delivery-as-a-service business.

The big box retailer’s agreement with the EV startup will help Walmart increase its existing commitments in Arkansas. Canoo is not only moving its headquarters but has also leased space in Bentonville for a low-volume production facility.

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