Canoo is a Los Angeles based start-up that will offer subscription based electric vehicles for urban use, breaking away from traditional vehicle design. And when I say “breaking away” from conventional cars, I really mean it. Other EV manufacturers understand that there is no need for a separate compartment to house an engine, but the company has taken this to new heights, developing a unique and uncompromising EV design that maximises interior space and looks very different from the cars we are used to today.
To achieve this vision, you need to have visionaries. Sohel Merchant is one of the founding members of Canoo and is in charge of overall vehicle architecture at the company. His career spans across the automotive industry with positions at Ford, Faraday and has even worked alongside Elon Musk in his early days at Tesla.
He tells Auto Futures that the company, founded in 2017, wants to create four vehicles: a lifestyle vehicle, passenger car, ride-sharing vehicle and delivery vehicle which, he says, “all share a common skateboard architecture with different cabins installed over this platform allowing us to cost-effectively develop four separate vehicles.”
He spearheads the company with other industry leaders, who each have their own impressive pedigree and expertise in global finance, R&D and vehicle design. “Our leadership team is taking a very pragmatic and asset-lean approach,” adds Merchant.
Not Your Typical Car Brand
The first thing that you are greeted by on the Canoo website is a quote which instantly separates the brand from the crowd of typical automakers. It reads: “Truth is, the further you are from behaving like a car company, the better.”
As I’m sure we all know by now, the automotive industry is currently tangled up in a major shift, but it is up to new automakers such as Canoo to drive this change. Merchant says that “we need creative thinking and a new approach. For instance, we are breaking away from traditional car design. We think there is an opportunity to create vehicles that meet the changing needs of customers today but also stand out and look different. We are applying this fresh thinking to all areas of our business.”
Unfortunately, most new automakers will not survive unless they gain investment and talent from elsewhere, but Canoo has something up its sleeve. The newly-formed company has former Faraday and BMW executives who bring with them vital knowledge from the automotive and technology industries.
“Unlike a software start-up, the automotive industry is one that appreciates experience as it is very complex and a highly regulated space,” echoes Merchant. “We are proud to have an experienced team that knows how and where to innovate. For instance, we know that building a factory is hugely capital intensive and we decided that there is little room left to innovate with manufacturing. We are therefore taking an Apple approach wherein we are designing and engineering the vehicles ourselves and partnering with experts to build the vehicles for us.”
By leveraging its start-up and legacy automotive experience, Merchant and his team have been able to significantly lower development time and costs without impacting quality, utilising innovation such as virtual reality to speed up the design process and developing a standardised skateboard architecture as the basis for all of its vehicles to reduce development time and investment. “The result is that, after just a year of existence, Canoo already has a prototype.”
Replacing Production with Innovation
Many other new EV manufacturers are designing but not building their own vehicles. For most, this is because they don’t have the manufacturing capabilities, but there many which want to outsource as they focus on their strengths.
Merchant believes that outsourcing manufacturing will become a trend in the EV sector. “It isn’t a matter of not having the manufacturing expertise; rather, we believe there is no need for an EV company to focus on this area as a core strength. There are already players in the automotive space with experience in contract manufacturing. Instead of using large amounts of capital to build a factory, we are able to fund production as needed. This also protects us from the issue that many OEMs struggle with, which is excess capacity.”
This is a two-way street, with automakers that have production capabilities seeking software specialists to understand new innovations coming into the industry. This shift in the industry can be identified by looking at the number of automakers getting involved with technology events such as the Consumer Electronics Show. This shows that automakers are trying to understand technology and are open to collaboration.
“Most automakers want the car to be the centre of the universe and own the interaction with the consumer,” says Merchant. “As a result, they focus on developing their proprietary infotainment systems and fancy screens; but most customers just want to use their phone when inside the vehicle.”
Rather than recreating the vehicle entirely, Canoo is developing a lean user interface that connects with the users existing digital life, not overwhelming them with technology.
Subscribing to Change
The influx of new automakers has taken the industry by storm. However, what is not covered as much is the reality that many of these companies are not sustainable and are, in some cases, destined for failure. Merchant explains that there are more than 480 EV makers in China alone – many of which are competing for “razor thin margins” due to the higher costs of EVs.
Canoo centres its business model around subscription-based EVs, which is possible due to electric powertrains having a longer maintenance-free life than conventional vehicles. Merchant says that this allows the company to “amortise our vehicle costs over a longer period, which enables lower monthly subscription costs.”
Through this approach, Merchant’s company will pull away from other newly-formed rivals and look to profit as soon as possible. Being a relatively new brand, it is staggering to see that it is well on its way to introducing products to the market by 2021.
The company is led by Stefan Krause, who was the Global CFO for both BMW and Deutsche Bank. This alone is enough to show that Canoo’s approach is very pragmatic, and its business case is solid. It also shows that industry leaders are identifying this shift and are moving over to new, exciting companies that are ready to penetrate the market.
Redesigning the Future
This is all extremely promising, but the product must match up to the business behind it. Canoo has integrated and collaborated with, what Merchant says, are the best partners to deliver the highest quality vehicles to customers. Due to this, its first production vehicle will be designed with new technology such as self-driving capabilities and infotainment.
“With Canoo’s first production vehicle, consumers can expect a vehicle that has the exterior footprint of a mid-sized compact vehicle and the interior space of a large SUV. Both the exterior and interior will look like no other car on the market,” ensures Merchant. “Our progressive approach to tech will provide maximum connectivity with a unique and lean user interface.”
In terms of autonomous technology, Merchant also explains that all vehicles will be autonomous-ready, by partnering with leaders in self-driving technology. The company is also working on technologies in the area of wellness to help keep drivers as healthy as possible, which Merchant will share closer to the first vehicle launch.
“It is still the early days at Canoo but we look forward to sharing more as we get closer to our market introduction in 2021,” he concludes.