Oklahoma has bet big on the EV startup Canoo Inc., offering hundreds of millions of dollars in incentives, plus a no-bid contract for state agencies to buy up to 1,000 vehicles, but the company has pushed back the projected opening date for an Oklahoma factory to 2024. 

While Canoo is a startup that has yet to bring its electric vehicles to market, Canoo CEO Tony Aquila said he believes Oklahoma’s gamble on the company will ultimately pay off. 

“There’s risk in every venture you have,” Aquila said. “And when you’re innovating, there’s more risk. But that’s also where the big rewards are huge.”  

Aquila spoke to The Frontier during a March visit to MidAmerica Industrial Park in Pryor where the company displayed models of its electric vehicles to the public. 

Canoo is now building electric vehicles for final pre-market testing with a contractor in Michigan in order to ramp up production by the end of the year in Arkansas. The company initially said it would have its Pryor factory opened by the end of 2023, but it now could be 2024 before the facility comes online. Canoo first plans to begin production at a factory in Bentonville, Arkansas this year.  

Oklahoma officials waived competitive bidding requirements to award Canoo a five-year contract for state agencies to purchase up to 1,000 vehicles. Aquila believes Canoo will save the state money over time in gas and maintenance costs but admits that some of the vehicles the state could purchase won’t be made in Oklahoma. 

“Most likely, we’ll give them some of the vehicles out of Northwest Arkansas, but not a lot,” Aquila said.  

Inflation has increased the cost of building materials, contributing to pushing back an opening date for the Pryor factory, Aquila said. 

While the company is still clearing land for the Pryor plant, a development agreement with the state-run MidAmerica Industrial Park also hasn’t been finalized. The deal could include up to 400 acres of land for the factory valued at $16 million, according to an incentive package the park has offered Canoo. 

Oklahoma and Arkansas each courted Canoo, engaging in an incentive bidding war to win jobs in the rapidly expanding electric vehicle industry. The company eventually announced it would build its corporate headquarters and a factory over the state line in Bentonville as well as a technology and software development hub in Tulsa.

Flush with federal pandemic relief money, many states are offering big incentive deals to attract investment and new jobs in the electric vehicle industry, said Greg LeRoy, executive director of the economic development watchdog group Good Jobs First. In March, Michigan lawmakers approved $666.1 million in incentives for General Motors electric vehicle projects. Georgia is considering giving electric truck startup Rivian state incentives worth as much as $125 million, on top of millions more in local tax breaks the company could reap. Kansas and Oklahoma are rumored to be in an incentive bidding war to win a Panasonic battery plant that will supply Tesla and other EV manufacturers. 

“One of the problems is that some of the entrants to the market like Canoo are just unproven,” LeRoy said. “Rushing into this market, it’s hard to see them all succeeding.” 

Aquila said the decision to spread operations over three sites in two states was based on the company’s infrastructure needs as well as the challenges of finding enough people to fill thousands of manufacturing, tech and engineering jobs. Incentives have also played a role.  Arkansas and Oklahoma have offered Canoo a combined $400 million. 

“Oklahoma by itself couldn’t win. Arkansas by itself couldn’t win,” Aquila said. 

At the event in Pryor, Canoo exhibited an electric van the company is marketing as a “lifestyle vehicle” surrounded by an array of high-end camping equipment. Another vehicle wrapped in the Oklahoma state logo and the slogan “Made in native America ” was also on display. A sculptor carved a model of a Canoo sedan out of automotive clay for onlookers. 

The exhibition attracted electric vehicle enthusiasts and Canoo investors from as far away as Denver. 

Investor Timur Safin made the 150-mile drive from Oklahoma City to Pryor to see the Canoo vehicles. He said he likes the company’s vision and is encouraged by a federal contract Canoo recently won to build crew transport vehicles for NASA. The contract is only valued at $147,855 but is a big win for the company’s name recognition and credibility. 

The large incentives Oklahoma has offered Canoo don’t bother Safin.

“Oklahoma is not known as a technologically advanced place, so they have to incentivize other companies to come and manufacture products here,” he said. 

Some observers have said Canoo isn’t on track to meet its production goal of 3,000 to 6,000 vehicles this year and is burning through cash in the meantime. Canoo reported in February that it had about $225 million in cash at the end of 2021 and expected to spend $155 million to $195 million in operational and capital expenses during the first quarter of this year. 

“They’re either gonna go manufacture the vehicle or they’re gonna run out of money,” Safin said. 

As first reported by The Frontier, the state has agreed to give Canoo up to $15 million in cash incentives over the next four years, including $10 million to help it build the Pryor factory if the company meets hiring targets and other goals.

Canoo will be able to collect $3 million of that money after it spends at least $48 million and completes 10% of construction on the Pryor plant. The company says Oklahoma has pledged a total package of incentives valued at $300 million to bring new jobs to the state, but many details have been subject to a confidentiality agreement.

The state has yet to pay Canoo any incentive money, the Oklahoma Department of Commerce said this week. 

A Canoo spokeswoman said the company is training more than 100 people for manufacturing jobs and will continue to ramp up hiring workers in Bentonville and Pryor through the end of the year. 

The Cherokee Nation is helping the company recruit workers with job fairs and training.

“The goal is to get as many Cherokee citizens as possible into sustainable manufacturing jobs with a great company, such as Canoo,” Cherokee Nation Principal Chief Chuck Hoskin Jr. said in an emailed statement. 

Correction: An earlier version of this story misstated the date that Canoo expects to begin production at a factory in Arkansas. The company expects to begin production this year, not next year.

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