Canoo (NASDAQ: GOEV) shares declined almost 3% on Wednesday despite securing a deal with the U.S. Postal Service for electric vehicle purchases.
Electric vehicle (EV) manufacturer Canoo (NASDAQ: GOEV) has disclosed that the U.S. Postal Service will be acquiring six (6) battery-electric Canoo vehicles. The Postal Service is expected to receive these right-hand drive versions of the LDV 190 in the first quarter of 2024.
The Post Office unveiled the first of its new electric vehicles and charging stations at an event south of Atlanta. The Postal Service aims to roll out 66,000 EVs by 2028 in its 106,000-vehicle modernization plan. The service currently operates around 220,000 vehicles.
Course Correction on Electric Avenue
In 2021, Postmaster General Louis DeJoy faced significant backlash for awarding his main new vehicle contract to Oshkosh (NYSE: OSK). The company is primarily known for producing gas-powered vehicles for the Army and had no prior experience in EVs. OSK stock has surged by around 50% since securing the deal.
Companies relying on the contract, such as Workhorse Group (NASDAQ: WKHS), have rapidly faced financial downturns. Workhorse shares are trading at 30 cents per share, facing a risk of bankruptcy.
The Post Office, with $3 billion from the Inflation Reduction Act, is undergoing a course correction. DeJoy admitted that financial reasons, not environmental concerns, prompted the change. He said,
“The biggest thing was financial ability and operational suitability.”
Hope was rekindled for small electric vehicle makers in 2022 after the Biden administration pushed for half of the Post Office fleet to be electric.
While Oshkosh is expected to secure most new electric fleet orders, Dan Ives from Wedbush has upgraded Canoo to outperform, citing fresh orders from Walmart (NYSE: WMT) and total commitments amounting to $750 million. He set a price target of $4 for the stock.
Canoo continues to be viewed as the underdog compared to Oshkosh, who affirmed their capability to produce electric vehicles if necessary upon securing the contract. However, this could serve as a crucial opportunity for smaller EV manufacturers.
Canoo (NASDAQ: GOEV) Stock Price Action
GOEV stock declined -2.94% on Wednesday. The traders had exchanged hands with 40,246,109 (40.24 million) shares compared to the average daily trading volume of 40.46 million.