Walmart and Canoo signed a deal on Tuesday to purchase 4,500 electric delivery vehicles. The deal prevents Canoo from selling to Amazon.
According to a regulatory filing, Walmart's agreement to purchase up to 10,000 electric vans from startup-turned-SPAC Canoo includes a caveat preventing them from being sold to Amazon. Canoo warned that it may not have enough money to stay in business, so it was no surprise that it took a deal with Walmart.
When the news of the deal broke, Canoo shares jumped more than 50%, but have since fallen. The company's shares are down a lot this year.
Amazon might not be interested in Canoo. A 20% stake in Rivian is owned by the online retail giant. Rivian is on track to hit its goal of producing 25,000 electric vehicles this year, despite not knowing how many have been delivered to Amazon. Rivian lowered its production guidance in March after disappointing fourth quarter earnings.
The first commercial customer for the Ram ProMaster electric van will be Amazon.
Walmart is a good bet for Canoo. In the first quarter of the year, the company had total sales of over $150 billion, while Amazon had retail sales of over $81 billion. Walmart could end up owning more than 20% of Canoo through a warrant issued to the retailer to purchase up to 61.2 million shares at an exercise price of $2.15 per share. The warrant has a term of 10 years and is vested immediately with respect to 15.3 million common shares.
The rest of the shares will be vested quarterly and proportional to any revenue realized by Canoo from transactions with Walmart or its affiliates or any products or services offered by Walmart to Canoo at which point the warrant will have been fully vested.
Walmart's purchase order is non-binding, but that seems to be the standard for risky deals with EV SPACs, as evidenced by Amazon's deal with Rivian.
Walmart reserved 5,000 e- delivery vans from BrightDrop as part of its larger goal to reach a zero-emissions logistics fleet by 2040
Canoo is setting up headquarters in Walmart’s hometown, picks Panasonic as battery supplier
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