Tesla radically transformed the auto industry by showing that EVs can be cool cars. But that notion is so 2012. While legacy automakers are just catching up to that idea (see: Mach-E), the next great innovation in electric mobility acknowledges that many urban dwellers don’t give a damn about owning a car at all. They want access without the hassle and expense of ownership. Canoo is the first EV company that fully understands the change.
I spent the morning on Friday last week at the Torrance, Calif. headquarters of Canoo.
Maybe you’re rolling your eyes because you saw images of the prototype of Canoo’s lounge on wheels. I also dismissed the idea when I first saw the vehicle. I said so a couple of weeks ago.
But after spending time with Canoo’s top execs, and sitting in its prototype, I now see what they’re trying to do. The company’s ideas are bold and necessary. They make other EV start-ups already feel behind the times.
We know what an EV company looks like when run by an adrenaline-loving, rocket-blasting mad-genius. But we haven’t yet seen one that combines the expertise of former chief of BMW’s i cars Megacity project, an Uber product whiz, and the ex-leader of BMW’s profitable leasing division.
Uli Kranz, CEO of Canoo, laid out the core premise:
“Most electric cars today look like combustion-engine vehicles. They are SUVs or large sedans with huge batteries and very expensive. What’s missing is affordability. Therefore we put all our focus on an affordable electric vehicle while keeping in mind the ride-hailing and car-sharing that young generations have embraced.”
Truly affordable EVs that you can try on for size
James Cox, the ex-Uber product guy on the exec team, starts with the biggest obstacle today (not yet solved by Tesla or anybody else). EVs are too expensive. At the same time, electric-vehicle companies have not so far shown long-term profitability.
Cox said the solution is going directly to consumers to cut out the cost of a dealer network. Cox believes that as much as 20% of the cost of today’s EVs is represented by a dealership or, to some extent, even Tesla-style showroom operations.
20% of the cost of today’s EVs is represented by a dealership.
So how do you take a test drive of the Canoo? All you have to do is subscribe for a month. It’s like a month-long test drive – perfect for those who are hesitant about EVs. There will be little or no money down, and the customer’s commitment is only for a single month.
Canoo hasn’t announced prices, but I’m guessing about $500. That includes insurance and maintenance.
The flexibility that youthful urban dwellers desire
Canoo customers can return the vehicle whenever they like. I asked Cox if the concept of a pay-as-you-go system is too much for today’s consumers to understand. He recalled his experience launching Uber when people used to think that getting into a stranger’s car was weird. We got over it.
On a personal note, he explained, “I represent a demographic that doesn’t love car ownership and is looking for something bold and new and a little different.” Cox wants an electric car to replace all the Uber rides he takes after recently moving to LA.
Urban dwellers who want a car only for two weeks to six months are entirely unserved now, according to Cox. Canoo will roll out city by city, not country by country. “We don’t have world domination in mind,” he said. The cities that Canoo is targeting represent 70% to 80% of current EV drivers.
Bring your own screen
The shift to giant screens is the wrong way to go, according to Canoo. The prototype vehicle that I saw mostly relies on using your personal smartphone loaded with the Canoo mobile app mounted to the dashboard. The app even controls functions like honking the horn.
“The bring-your-own-screen approach is simpler and doesn’t involve learning a new platform,” said Cox.
Canoo takes design simplicity to a new level. Kranz said:
“Las Vegas style is gone. This is more of a zen atmosphere.”
A right-sized vehicle based on use cases, not segments
Most of the previous reports about Canoo have focused on its design. So I’ll just say it’s like an urban van suited for congested traffic. The Canoo vehicle has the same footprint as a Volkswagen Golf or Toyota Prius. But the interior space is expansive. The front seats can be slid toward the front dash turning the entire interior into a meeting room. The interior is equipped more with furniture than seats. Canoo execs call it a “post-SUV.”
The company leverages the flexibility of an EV’s skateboard platform to a degree not seen before. The wheelbase chosen by Canoo designers covers about 75% of cars on the road.
The flexibility means that the company can use its underpinnings not just for traditional vehicle segments, such as a compact, crossover, or truck. Its design is based on user-centered modes of mobility: urban errands, a long-distance commute, a ride-hailing vehicle, or a delivery machine. I glimpsed at some of the follow-up cars in development.
The company owns the fleet
All the robotaxi companies, including Uber and Lyft, are ready to become capital-intensive operations. Canoo is arguably the first pure-play EV producer getting a head start with this approach. (The company will start with Level 2-plus autonomy.)
Because EVs have low maintenance, the use of a Canoo vehicle can be extended to multiple customers over time, while never entering the secondary market. It’s an alternative to traditional deprecation models that will further reduce the cost of an EV to drivers. “Securitizing assets that have cash flow is something that has already been solved by the world,” said Cox.
Canoo’s Stefan Krause ran BMW’s profitable leasing business. He knows how to manage the capital expense of a fleet. If his business assumptions are correct, it could allow electric cars to compete with internal combustion.
We hear about the approaching era of electric shared mobility. And yet most EV startups keep making the same old types of vehicles that are purchased or leased for years. Canoo is the first to point in a new direction.
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