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EV startup Canoo under SEC investigation

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The Securities and Exchange Commission has opened an investigation into newly public electric vehicle startup Canoo, CEO Tony Aquila shared on a conference call on Monday.

The probe is broad, though the startup said in a regulatory filing that the SEC has characterized it as a “fact-finding inquiry,” and that the agency has not yet concluded whether anyone violated the law. It covers Canoo’s merger with a special purpose acquisition company (or SPAC), plus its “operations, business model, revenues, revenue strategy, customer agreements, earnings and other related topics, along with the recent departures of certain of the Company’s officers.”

Canoo says it plans to provide all requested material and fully cooperate. Aquila declined to take any questions about the probe on the call, which was the startup’s second as a public company.

Canoo is one of a number of electric vehicle startups that went public by merging with a SPAC over the last year. These mergers provided a different path for these startups to go public than a traditional IPO. But since these mergers are regulated differently, it woudn up giving startups more leeway in regards to their business projections. In April, the SEC said it would start taking a closer look at this discrepancy to make sure that investors weren’t being misled. Canoo received its notice from the SEC on April 29th.

A number of other newly-public EV startups are facing pressure from the SEC and various regulators. Lordstown Motors disclosed in March that the SEC is investigating whether the electric pickup truck startup misled investors. Hydrogen trucking startup Nikola also faces investigations from the SEC and the Department of Justice after being caught lying to investors.

Aquila stressed on the call that Canoo has been overly conservative with its projections to date, and also said the startup will be careful when reporting total deposits for its vehicles versus binding orders. The startup began taking deposits for its electric van, pickup truck, and delivery vehicle earlier Monday.

Aquila came in as an investor last year around the beginning of the SPAC merger process, and quickly became Canoo’s executive chairman. He has since reoriented the startup’s business to be more focused on commercial vehicle sales. Aquila recently took over as CEO after co-founder and former BMW executive Ulrich Kranz resigned. Kranz was the latest in a recent rash of departures from the startup.

On Canoo’s first quarterly investor call in March, Aquila announced that Canoo was pivoting away from providing engineering services to other companies, effectively killing a deal with Hyundai. He also obliquely referenced how some of the Canoo’s previous leadership made what he felt were “premature” statements about potential partnerships, though the startup was still promoting the Hyundai deal in January after he took over as chairman.

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