Walmart deal for 4,500 vans sends electric vehicle stock soaring

Retail giant Walmart signed an agreement with an automotive startup company called Canoo to purchase 4,500 all-electric delivery vehicles.

The deal starts with the Lifestyle Delivery Vehicle, a compact van expected to go into production in the fourth quarter of this year, with the option to purchase up to 10,000 of the vans, Walmart explained in a recent press release. The vans will be driven by Walmart employees and used to deliver online orders. They will also contribute to Walmart’s goal to achieve zero emissions by 2040.

While the vans are expected to hit the road in 2023, Canoo plans to send some pre-production vans to Walmart in the coming weeks to “refine and finalize vehicle configuration” in the Dallas-Fort Worth area, according to the release.

Both companies declined to disclose what the deal cost, but Canoo’s Lifestyle Delivery Vehicle retails for $34,750 each.

“We are proud to have been selected by Walmart, one of the most sophisticated buyers in the world, to provide our high-tech, all-electric, American-made Lifestyle Delivery Vehicle to add to their impressive logistics capabilities,” Tony Aquila, investor, chairman and CEO of Canoo said in the release. “Our Lifestyle Delivery Vehicle has the turning radius of a small passenger vehicle on a parking-friendly, compact footprint, yet the payload and cargo space of a commercial delivery vehicle. This is the winning algorithm to compete in the last mile race delivery, globally .”

Aquila called Walmart’s massive store footprint “an unmatched opportunity for growing EV demand, especially at today’s gas prices” in the release. Walmart provides same-day delivery to 80% of the US population, according to the release.

Canoo stock jumped 53% on July 12 after the deal was announced. Walmart was granted a warrant that gives it an option to buy 61.16 million shares of Canoo, or more than a fifth of the company’s outstanding shares, at an exercise price of $2.15 per share, per Canoo’s official 8-K filing with the US Securities and Exchange Commission.

The agreement also prohibits Canoo from selling EVs to Amazon was previously aligned with electric truck maker Rivian Automotive in 2019 but signed a deal to buy electric vans from rival automaker Stellantis, formerly known as Fiat Chrysler, in January.

Rivian said in a January statement that Amazon’s deal with Stellantis was “good news for the industry” because it helps further reduce carbon emissions by using more electric vehicles. “Amazon’s scale is global, and we expect them to purchase vehicles from many providers,” the company said. “Our own partnership with them is intact, thriving and growing.”

Both companies insisted in January that the deal was still on. Rivian is supposed to deliver 10,000 delivery vans to Amazon by the end of this year.

Many automakers beyond Rivian, Stellantis and Canoo have detailed plans to electrify large portions of their fleets over the next decade, with some announcing goals for fully electrified lineups within five years.

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