A potentially huge deal for a startup that’s just two years old
Hyundai and Kia will build new electric vehicles based on the technological platform developed by California EV startup Canoo, the companies announced Tuesday. Terms of the deal were not disclosed.
Canoo and Hyundai Motor Group, Hyundai and Kia’s parent company, will develop a new electric vehicle platform that’s based on the one that powers Canoo’s own vehicle, which was unveiled last year. This EV platform will power small, “cost-competitive” electric vehicles, as well as “purpose built vehicles,” which would more closely resemble shuttles or even autonomous people-movers. (Hyundai previously showed off a purpose-built vehicle concept at this year’s Consumer Electronics Show.) Hyundai and Kia each currently sell an electric SUV based off the same platform, and the larger Hyundai Motor Group has promised 23 electric vehicles by 2025.
The deal is a significant victory for Canoo, which has only existed for about two years and employs around 300 people. While 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. Some of the only exceptions to date have been Michigan-based startup Rivian, which is working with Amazon and Ford, and Chinese startup Byton, which has a deal with Chinese state-owned automaker First Auto Works.
Canoo now joins that small list despite only coming into existence at the end of 2017, when its founders started the company (then called Evelozcity) after an acrimonious split with famously troubled EV startup Faraday Future.
“It’s really important for us, because having a household name like Hyundai do some work with a startup like Canoo proves that we have a good concept, and a good team,” Ulrich Kranz, Canoo’s current CEO, told The Verge in a phone interview. (Canoo was originally led by Stefan Krause, who served as Faraday Future’s chief financial officer following seven-year stints as CFO at both Deutsche Bank and BMW. But Krause stepped away from the CEO role last year and is now the company’s chairman.)
Kranz said Canoo spent about a year talking to Hyundai about a deal, and that the South Korean manufacturer repeatedly sent teams to the startup’s Los Angeles headquarters to evaluate its progress before signing off. He also said Hyundai will pay Canoo for the work it’s doing to get the partnership off the ground, but would not say how much or even whether it’s enough to sustain the startup’s operations moving forward. He did say that Canoo is still seeking outside investment.
Canoo supposedly launched with nearly $1 billion in funding, though it wasn’t immediately clear where that money was coming from. Since then, it’s come to light that the startup was funded by some powerful men. As The Verge first reported in October 2019, Canoo is backed by David Stern, a director at Prince Andrew’s startup incubator, and Pak Tam Li, the head of a massive investment firm in China and the son-in-law of a man who was once the fourth-most senior leader in China. Canoo has also received support from Taiwanese touchscreen supplier TPK, which is run by billionaire Michael Chiang, two people with knowledge of the company’s finances tell The Verge. In fact, Canoo’s headquarters in Torrance, California is owned by a shell company set up by Foster Chiang, TPK’s vice chairman, according to property records.
The deal with Hyundai will not impact Canoo’s plans to release its own vehicle, Kranz said. The company debuted a subscription-only EV in September 2019 that is something of a modern take on the VW Microbus. That vehicle, which the company calls “the Canoo,” is supposed to hit the road in 2021. Kranz said Canoo has built 32 beta versions of the vehicle so far, 12 of which are fully operational and being tested on both public roads and closed courses. (Canoo is building these beta vehicles with a contract manufacturer, which Kranz declined to name.)
Like many other startups, and even some bigger automakers, Canoo developed a so-called “skateboard” for this vehicle that houses the battery pack, electric motors, and other electronics. This neat packaging of all that technology makes it possible to power multiple vehicles using the same adaptable platform, thereby cutting costs. Kranz said that Hyundai liked how Canoo integrated more of the vehicle’s technology into the skateboard than some other companies have, which helped secure the deal.
“We were highly impressed by the speed and efficiency in which Canoo developed their innovative EV architecture, making them the perfect engineering partner for us as we transition to become a frontrunner in the future mobility industry,” Albert Biermann, the head of research and development for Hyundai Motor Group, said in a statement. “We will collaborate with Canoo engineers to develop a cost-effective Hyundai platform concept that is autonomous ready and suitable for mass adoption.”