Why This EV Startup Won’t Let You Buy Its Vehicle

Volkswagen would like you to imagine a world with an all-electric Microbus due sometime in 2022. Now a startup EV brand would like you to imagine a world with two electric vans on the market. 

The only difference is you won’t be able to buy this one. 

Canoo, an LA-based all-electric brand, debuted its first vehicle Tuesday: the canoo (yes, like the boat). It’s a seven-passenger all-electric van that the company hopes to launch in subscription-only programs in some of the world’s largest cities. 

It’s also being built with an eye towards future autonomous applications and commercial last-mile delivery use. 

Canoo — formerly known as Evelozcity — is the brainchild of a trio of former BMW executives, all of whom served brief stints at the ever-struggling Faraday Future (FF) electric vehicle startup before founding this latest venture.

Their goal was to create an electric vehicle that people in cities — especially younger users — could actually afford. To do that, Canoo figured it would change up the ownership model. 

“Our secret sauce is very simple, bring it into subscription,” said Stefan Kraus, Canoo CEO (who was at the debut Tuesday but who is currently on leave for what are described as family reasons). “That’s how you make an electric car affordable.”

By keeping production costs low and because Canoo itself will own its vehicles with no concern for resale value or residual values, it hopes to keep the canoo affordable for a wide variety of urban users. There is also no dealer network or state franchise laws to set up and navigate. This will allow Canoo not only to save money but also helping it fast-track the company’s launch to consumers.

The canoo itself is powered by a proprietary 80 kWh electric motor with 300 horsepower and an estimated all-electric range of about 250 miles. DC fast-charging will allow charging the battery to 80 percent capacity in about 28 minutes, Canoo said. 

The flexible “skateboard” architecture of the chassis allows for either rear-wheel-drive (the default setup), front-wheel-drive or dual-motor all-wheel-drive. 

A no-frills version of a front-wheel-drive canoo will also be offered for commercial applications, including last-mile deliveries.

Though it easily seats seven people comfortably, the canoo’s clever packaging and design mean the exterior footprint is about six inches shorter than a current Prius. Given that it will only be offered in cities where parking is at a premium, this was an essential element to the vehicle, its creators said. 

A single (undisclosed) monthly fee will cover insurance, maintenance, charging, warranty costs, and vehicle registration, and users can walk away at any point without a contract or a penalty.

The canoo that will launch in 2021 will be human-driven, but the automaker says it’s built the van with full autonomy in mind. The interior layout is flexible to accommodate rotating seats for when a driver isn’t needed. Fully-autonomous functionality would also significantly expand the canoo’s use case and user base, given the subscription approach. 

The human-driven launch model will also come with a proprietary infrared driver monitoring system (not unlike Cadillac’s SuperCruise), plus seven cameras, five radar sensors, and 12 ultrasonic sensors to give the car at least a Level II and potentially Level III automation. 

Unlike many of its fellow EV startups (Faraday Future, Nio, Byton, Lucid), Canoo isn’t trying to beat Tesla at its own luxury EV game; the canoo is designed from the ground up to be cost-effective to build and maintain. 

To that end — and counter to the direction of nearly the entire auto industry — the canoo eschews massive touchscreens throughout its interior and instead will rely almost entirely on the driver’s smartphone for most functions. While this certainly makes sense in a vehicle aimed at a subscribing — and therefore fluid — audience, it also saves Canoo huge amounts of money in both R&D and production costs. 

“These things are also massively expensive, these big displays,” said Richard Kim, head of vehicle design at Canoo. “We passed that cost savings back to the customer.”

Another crucial cost-saving move will be the decision to use a contract manufacturer to build the canoo rather than Canoo building its own factory and assembling it themselves. The amount of money this alone will save is staggering — likely in the billions of dollars. 

Canoo hasn’t settled on where the canoo will be built, but Clemens Schmitz-Justen, Canoo’s manufacturing chief says it’s considering sites in the U.S. and abroad. Right now, validation prototypes are being built in Michigan. 

The brand plans to launch in Los Angeles in 2021 and then San Fransisco, before turning its eye towards the larger East Coast cities. The goal would be to deploy the canoo in about eight U.S. cities initially. 

“Only when we are established here will we move to China,” said Ulrich Kranz, Canoo’s chief executive, mentioning that Canoo has identified 18 cities in China where the canoo would work. “Europe we will consider at a later stage.”

As with many of its fellow EV startups, Canoo’s source of funding remains opaque. The company turned heads in 2018 (prior to its name change) when it announced $1 billion in funding aimed at getting its vehicles on the road by 2021. The company says a bulk of its funding comes from three wealthy private individuals who are German, Chinese and Taiwanese and Canadian nationals, respectively. 

Though the subscription-based model has permeated nearly every aspect of consumers’ lives, the notion has yet to find an audience in the automotive space. Consumers remain largely unaware that such an ownership model even exists, according to an earlier survey we did at Autolist.com. 

Numerous automakers — many of them luxury brands — have dipped a toe into pilot subscription services in select cities, and already a few have folded. The relatively high monthly costs of an all-in plan — which often includes all necessary insurance, maintenance, warranty costs, and roadside assistance — have also deterred consumers who commonly think of their monthly vehicle costs in terms of their car payment alone. 

Clearly, Canoo is hoping it will be able to rock that subscription boat.