Walmart doesn’t want Canoo selling EVs to Amazon – TechCrunch

Walmart kicked off a deal with electric vehicle company Canoo on Tuesday to purchase 4,500 of its last-mile delivery vehicles. While the deal is not exclusive, it does prevent Canoo from making sales to Walmart’s rival Amazon.

Walmart’s agreement to purchase up to 10,000 electric vans from startup-turned-SPAC Canoo includes a caveat blocking sales to Amazon, according to a regulatory filing first reported on by Bloomberg. Canoo had warned last quarter that it may not have enough money to stay in business, so it’s no surprise that the company took this deal with Walmart, despite the restrictions.

Canoo shares surged more than 50% when the news of the deal broke, but have since fallen 1.65% in after-hours trading on Wednesday. The company’s shares are down nearly 56% year-to-date.

Amazon may not be interested in Canoo anyway. The online retail giant has ordered 100,000 vehicles from Rivian, of which it also owns a 20% stake. While it’s not clear how many EVs Rivian has yet delivered to Amazon, the company says it is on track to hit its goal of producing 25,000 EVs this year. However, that is about 15,000 shy of Rivian’s initial production target — the company lowered its production guidance in March after disappointing 2021 Q4 earnings.

Amazon also signed on to be the first commercial customer for the Ram ProMaster electric van, which Stellantis plans to launch in 2023.

In terms of pure revenue, Walmart is still a good bet for Canoo. Total sales topped $141 billion in the company’s first-quarter results, compared to $81 billion in retail-related sales for Amazon. And per the terms of the deal, Walmart could end up owning more than 20% of Canoo through a warrant issued to the retailer to buy 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, according to the filing.

The rest of the shares will be vested quarterly and proportionate to any revenue realized by Canoo from transactions with Walmart or its affiliates or any products or services offered by Walmart to Canoo until the net revenue equals $300 million, at which point the warrant will have been fully vested.

Canoo’s filing also indicates that Walmart’s purchase order is non-binding, but that seems to be the standard for risky deals with EV SPACs — Amazon’s deal with Rivian is also non-binding and subject to change.

Walmart has also reserved 5,000 e-delivery vans from BrightDrop, General Motors’ commercial EV unit, as part of its larger goal to reach a zero-emissions logistics fleet by 2040.