Canoo Stock Soars After Oklahoma Facility Gets Foreign-Trade Zone Designation

A rendering of Canoo's manufacturing facility in Oklahoma City (Canoo)

Shares of electric vehicle maker Canoo Inc. (NasdaqCM: GOEV), the company that has announced plans to move its headquarters to northwest Arkansas, have surged as much as 140% since Friday on news that the company’s production facility in Oklahoma City has been granted status as a federal Foreign-Trade Zone.

In a news release, Canoo said the U.S. Department of Commerce designation will eliminate all customs duties on its vehicles sold to customers overseas and defer customs duties on imported parts used in vehicles sold domestically, saving the company up to $70 million in 2024 and 2025.

For international sales, the designation will lower the vehicle cost by up to 5% on parts imported from the rest of the world. For domestic sales, the designation improves working capital for a company that has been burning through cash.

The FTZ designation can help businesses reduce production, transaction and logistics-related costs by lowering effective duty rates, allowing special entry procedures and encouraging production closer to market, according to the International Trade Association. Reducing those costs can lead to more competitive U.S. operations, thereby helping to maintain U.S. activity and jobs.

Shares of Canoo soared 50% on Friday from $1.29 to $1.94. The rally resumed Monday, with shares opening higher at $2.34 and rising 24% to $2.90. Canoo’s stock popped again at Tuesday’s market open, climbing as much as 7% to $3.10.

The rally comes after Canoo conducted a 1-for-23 reverse stock split on March 8 to regain compliance with the $1 minimum share price to be listed on the Nasdaq Capital Market, the lowest tier of the Nasdaq. Shares were trading at 9 cents before the split.

Arkansas HQ update

Canoo announced in November 2021 that it planned to move its headquarters from Justin, Texas, to Bentonville and open a research and development center in Fayetteville, creating more than 500 jobs.

But since then, almost all of the news surrounding the company has focused on its expanding operations in the Oklahoma City area. Meanwhile, a 275,000-SF Bentonville facility leased by the company has sat mostly empty and its workers have been laid off, according to a report by KNWA.

Canoo did not respond to questions from Arkansas Business about the company’s plans for northwest Arkansas.

The state had been working on performance-based financial incentives for the company, but as of Feb. 29, there was still no deal, according to the Arkansas Economic Development Commission. There was also no agreement for Canoo to become a state vehicle-fleet provider, though Aquila has said such a deal is in the works.

In a statement, AEDC said, “Any questions about Canoo’s plans for their Bentonville HQ should be directed to the company itself. We are committed to the transportation and mobility sector. We are looking forward to partnering with established and promising mobility companies with solid market fundamentals and potential for growth.”

For now, Canoo’s focus is on Oklahoma, where it landed a $113 million incentives package and is pursuing FTZ designation for its other facilities in the state, which include a battery module plant.

The company also plans to expand its manufacturing capabilities in Oklahoma City and eventually employ more than 1,100 people.

“This strategic expansion is in the heartland of America, directly on I-40 in Oklahoma City,” Aquila said in the news release, “one of the most important and efficient routes for transporting products across the country.”

Canoo is scheduled to report fourth-quarter and fiscal 2023 results on April 1.