Shares of electric vehicle maker Canoo Inc (NASDAQ:GOEV), a penny stock, skyrocketed almost 90% in early trading after it announced that Walmart Inc (NYSE:WMT) agreed to buy at least 4,500 of its electric delivery vans. According to Canoo, Walmart signed a “definitive agreement” to buy between 4,500 and 10,000 of its all-electric Lifestyle Delivery Vehicles.
Walmart Agrees To Buy Vans From Canoo
The vans Walmart agreed to buy are small electric vehicles designed to be used for local deliveries. The Lifestyle Delivery Vehicles are also designed to be used in stop-and-go traffic, making them ideal for city use where traffic is heavy.
The vans have 120 cubic feet of cargo space, making them roughly the size of a 2021 Chevy Tahoe, Toyota Sequoia or Ford Expedition Max, according to Axios. Canoo added that the vans are modular, enabling Walmart to adapt them specifically for its needs.
The big-box retailer intends to use the vans to make local deliveries of items ordered online. Walmart aims to reach zero carbon emissions by 2040, and using electric vehicles for its last-mile deliveries will give those efforts a boost.
In a statement, Walmart Senior Vice President David Guggina said, "By continuing to expand our last-mile delivery fleet in a sustainable way, we're able to provide customers and Walmart+ members with even more access to same-day deliveries while keeping costs low."
The big-box retailer plans to utilize Canoo's electric delivery vans in the Dallas-Forth Worth metro area as it finalizes its configuration in "the coming weeks." The vans won't be used more widely until next year.
Why Canoo Really Needed This Deal
Canoo will build the vans at its Dallas-area factory, and they are expected to be ready next year. Although the terms of the deal were not disclosed, Axios recalled a contract Canoo struck with NASA for two rugged, custom astronaut transports for almost $150,000.
With so many other more-established EV makers in the space, some might wonder why Walmart would choose Canoo. However, it could be because the EV maker announced last year that it planned to relocate its headquarters to Bentonville, Arkansas, Walmart's hometown.
The Walmart deal is a massive win for Canoo, which has been teetering on the edge of collapse. In May, the electric vehicle maker warned investors via a regulatory filing that "substantial doubt exists about the company's ability to continue as a growing concern." In other words, Canoo needed more capital just to stay in business.
More recently, the EV maker warned that supply chain issues could result in delays at its factory in Pryor, Oklahoma.