Electric Car Maker Canoo Has 'Significant Doubts' About Going Concern Due to Cash Shortage

Canoo Inc, a manufacturer of electric vehicles, issued a warning to investors on Tuesday that it may not be able to pay its financial obligations, stating that it was attempting to obtain more capital but that it had "serious uncertainty" about its viability.

The warning came as the Texas-based corporation posted a net loss of $125.4 million for the first quarter. After-hours trading saw a decline of 13%, following a drop of 5% during the day.

Canoo's liquidity crisis exemplifies the challenge electric vehicle (EV) startups have in scaling up expensive car production in the face of competition from Tesla (NASDAQ:TSLA) Inc and traditional automakers investing billions in new technology and plants.

Canoo reported having approximately $105 million in cash at the end of March, less than the $120 million it burnt in operational expenses during the first quarter of the year. First-quarter capital expenditures of $28.4 million on zero dollars in revenue demonstrate the need for more finance.

Tony Aquila, chairman and chief executive officer of Canoo, stated in a statement, "We have been open about our concept of raising money prudently, and we will maintain this disciplined approach."

Aquila stated that Canoo has more than $600 million in available resources to fund the launch of vehicle production, as well as "considerable experience sourcing capital in difficult markets."

Canoo reported that as of March 31, it had produced 39 Gamma vans and received 17,500 pre-orders with an estimated value of $750 million. During a Tuesday earnings call, executives stated that the company is producing up to 12 vehicles per week and that it is primarily focused on fleet customers.

NASA awarded the business a contract in April to construct vehicles that will transport humans to the launch pad for the planned Artemis mission to the moon.