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07/15/2022

Walmart’s Last Mile Delivery Deal With EV Startup Canoo Seeks to Keep Amazon Out

Walmart penned a deal with electric vehicle startup Canoo to purchase all-electric vehicles to deliver online orders. But the agreement includes a caveat.
Jamie Grill-Goodman
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Walmart penned a deal on Tuesday with electric vehicle startup Canoo to purchase 4,500 all-electric delivery vehicles with the option to purchase up to 10,000 units.

The vehicles, beginning with the Lifestyle Delivery Vehicle (LDV), will be used to deliver online orders in a sustainable way which will also contribute to Walmart’s goal to achieve zero-emissions by 2040.

[See more: 5 Green Practices for Retailers That Work]

But Walmart’s agreement includes a caveat blocking sales to Amazon, disclosed in a securities filing Wednesday, reports Bloomberg. The report noted that language says that for the duration of the pact, Canoo “will not enter into any agreement for any services involving the design, manufacture, consult, advice, lease, or sale of EVs to, or issue any equity, equity-linked or debt securities of any type, or enter into any agreement for the purpose of transferring control of the Company to, Amazon.com, Inc., its subsidiaries, or affiliates.”

Amazon already has an agreement with Rivian Automotive to buy electric vans and with Stellantis N.V. to be the first commercial customer for the new Ram ProMaster Battery Electric Vehicle (BEV) in 2023.

[See also: Factors in Electric Delivery Vehicles’ Impact on Greenhouse Gas Emissions]

While the LDV is expected to begin hitting the road in 2023, Walmart and Canoo plan to kick off advanced deliveries to refine and finalize vehicle configuration in the Dallas-Fort Worth metroplex in the coming weeks. Canoo anticipates starting production of the Lifestyle Delivery Vehicles beginning in Q4, 2022.

Last Mile Electric Delivery

Canoo’s electric vehicles will be driven by Walmart associates and used to deliver online orders, from groceries to general merchandise, as well as the potential to be used for Walmart GoLocal, the retailer’s delivery-as-a-service business. 

The LDV is engineered for high frequency stop-and-go deliveries and quick vehicle to door drop-off, including grocery and food/meal delivery. Its customized interior is designed for small package delivery, at competitive per stop economics. The modular design and 120 cubic feet cargo volume are adaptable to evolve with customer needs. 

“We’re thrilled to continue diversifying our last mile delivery fleet with Canoo’s unique and sustainably focused all-electric technology which will provide our associates with safe, ergonomic delivery vehicles,” said David Guggina, senior vice president of innovation and automation, Walmart U.S. “Today, the closest Walmart to customers is right in their pockets – it’s the Walmart app. By continuing to expand our last mile delivery fleet in a sustainable way, we’re able to provide customers and Walmart+ members with even more access to same-day deliveries while keeping costs low.”

Last year Canoo announced it had selected Bentonville, Arkansas, as its headquarters and Pryor, Oklahoma, as the site for its U.S. manufacturing, to create thousands of technology and manufacturing jobs in the surrounding communities. “We’re encouraged that by being located in close proximity to the Canoo headquarters, we have the advantage to collaborate and innovate in real-time as well as the opportunity to aid in the creation of manufacturing and technology jobs here in our home state of Arkansas,” added Guggina.

Canoo’s stock skyrocketed on the news of the Walmart deal, and then jumped again this week on news that the company was been awarded by the U.S. Army to supply an electric vehicle for analysis and demonstration.

“Our LDV has the turning radius of a small passenger vehicle on a parking friendly, compact footprint, yet the payload and cargo space of a commercial delivery vehicle,” said Tony Aquila, investor, chairman and CEO of Canoo. “This is the winning algorithm to seriously compete in the last mile delivery race, globally. Walmart’s massive store footprint provides a strategic advantage in today’s growing ‘Need it now’ mindset and an unmatched opportunity for growing EV demand, especially at today’s gas prices.”