Is Canoo an EV Opportunity, Or Trying Too Hard to Be Different?

Electric vehicle (EV) companies are succeeding by turning existing transportation models upside down. Moreover, the public is finally buying into the EV vision in a big way. As a result, EV stocks had a banner year in 2020. For instance, Canoo (NASDAQ:GOEV) closed it out with a massive surge in price. However, that was followed quickly by a crash. Now only a month into 2021, GOEV stock has already had another big surge and slide. 

A photo of an electric car with the charger plugged in.
Source: Nick Starichenko/InvestorPlace.com

Currently trading in the $15 range after peaking at $22 in early December, GOEV stock represents the epitome of that transportation-model disruption. But is today’s price a buying opportunity? Or is this unique EV startup trying too hard to be different, doomed to be a novelty instead of a long-term success?

Let’s find out.

GOEV Stock: Standing Out in a Crowded EV Market

One of the ways to make a splash in the automotive world is to go against the grain — when everyone is doing things one way, companies can stand out by doing it differently. DeLorean took that approach in the 1980s, for instance, with its gull-winged and stainless steel sports car. But, of course, that didn’t end so well.

Right now, Canoo seems to be following a similar playbook, but taken to extremes. 

First, GOEV stock is representing change by releasing EVs. True, that alone is hardly earth-shattering these days. After all, no one is going to be interested in an auto startup selling gas-powered cars.

But the fact that Canoo is making EVs is not what makes it stand out from the pack. Instead, to differentiate itself from the growing flood of electric vehicles in the automotive space, the company is developing cars on its highly adaptable Skateboard platform.

Is Canoo Being Too Different?

The Skateboard platform is interesting for a couple of reasons.

Primarily, the Skateboard has potential in that its a self-contained chassis which becomes the base for all Canoo vehicles. Plus, the Skateboard goes beyond the platforms used by other automakers by incorporating tech such as the industry’s “first true steer-by-wire system.”

The idea is that the Skateboard can be used with any body shell that the company’s design team comes up with. That offers lower manufacturing costs and much more flexibility product-wise. What’s more, Canoo has actually demonstrated the Skateboard being driven bare-bones, with only a steering wheel attached to the platform to create a stripped down “skatekart.”

The first Skateboard-based vehicle that the company plans to release is its namesake “Canoo.” The EV looks like a very futuristic minivan — a bold choice given consumer preference for aggressive-looking SUVs.

But Canoo is marketing this car as a “lifestyle vehicle.” The interior is minimalist, with sectional sofa-like rear seating. The steering wheel is square. And instead of a huge front dash display (like the ones finding their way into current vehicles), the Canoo uses the driver’s smartphone or tablet. Finally, it offers a 250-mile driving range. The design is certainly unique, but guaranteed to be polarizing.

And it’s not the only vehicle in the pipeline from GOEV. The MPDV — which stands multi-purpose delivery vehicle — is aimed at last-mile delivery and will follow the Canoo.

However, what’s most disruptive about the way Canoo does business is that it won’t sell anyone an EV. Instead, the company is going to offer a monthly subscription plan. The details haven’t been finalized yet, but it’s another risky approach. Several auto makers have tried subscriptions before and most have thrown in the towel after demand failed to live up to hopes.

All this is to say that GOEV stock represents a company that’s undeniably different. Now, the question is is it too much? 

Bottom Line

Some of the things that Canoo is trying to do are promising, like the flexibility of its Skateboard platform. However, having plans is one thing — being able to execute them is another. That takes time and money. And by the time the first “Canoo” is available for sale — or subscription — in 2022, the EV market will have had an entire year to mature. Market leaders will have entrenched themselves, traditional automakers will offer more EV models and other new entrants will also be in production. 

In other words, it will be a much more competitive landscape. So, we won’t really know until then whether the company’s futuristic designs will attract customers or turn them off. We also won’t know if its plan to make vehicles available only by subscription will resonate enough with consumers.

At its current price, GOEV stock could turn out to have massive upside. That’s assuming its first EV is a runaway hit. However, I’m not ready to make that assumption just yet. Canoo is definitely worth watching, but it’s also far from being a must-have EV stock this year.

On the date of publication, the InvestorPlace writer primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.


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