Walmart agrees to buy at least 4,500 Canoo electric vehicles to use for deliveries

Electric vehicle manufacturer Canoo landed its first major deal for modular electric vehicles that will be built in Oklahoma.

Walmart agreed to buy at least 4,500 electric vehicles for last-mile delivery of the retailer's products. Canoo said Tuesday that its 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.

Walmart says it can reach 80% of the U.S. population with same-day delivery.

This is the largest purchase agreement secured by Canoo, a company that was heavily recruited to build a production facility in Pryor by Oklahoma Gov. Kevin Stitt. The state offered the company $15 million in performance-based cash incentives over the next four years, plus $10 million in assistance to build the facility, with the expectation the company would attract quality jobs and provide a boost to the Oklahoma economy.

The facility was expected to be operational by 2024, but The Tulsa World recently reported it could face delays because of "unfavorable economic conditions." Canoo is planning to produce some vehicles out of a European manufacturing facility until its U.S. production is functioning.

The company, headquartered near Walmart's home office in Bentonville, Arkansas, anticipates starting production this fall.

“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 for 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.”

Walmart joins state of Oklahoma, NASA in plans to purchase Canoo vehicles

Walmart is the third customer known to have plans to buy Canoo EVs.

When Canoo announced it would manufacture its vehicles in Oklahoma, state officials waived competitive bidding requirements to award a statewide contract to buy up to 1,000 electric vehicles. The Frontier previously reported that the purchase agreement was part of an incentive package used to lure Canoo to Pryor.

The contract states that Oklahoma will pay between $35 million and $50 million for the vehicles over a span of five years.

NASA also has announced it will buy three vehicles to transport astronauts, support staff and equipment at the Kennedy Space Center in Florida. Canoo will provide Crew Transportation Vehicles (CTVs) for NASA's crewed Artemis lunar exploration launches. The all-electric models will be delivered to NASA by June 2023.

Last-mile delivery

The use of Canoo's electric vehicles, driven by local Walmart store employees, is part of a broader push to grow the retailer's last-mile delivery service. Its main competitor in the market, Amazon, already uses contracted drivers in branded vans to deliver online purchases directly to the buyer.

With Walmart's 3,800 stores in the U.S., the company effectively owns a small warehouse within 10 miles of 90% of the country's population. Walmart currently uses a combination of Walmart associates, independent contractors driving on the Spark Driver Network, third-party delivery service providers, and in some locations, autonomous vehicles and drones, to make deliveries.

Canoo promotes its LDV design as optimized for sustainable last-mile delivery. It is engineered for high frequency stop-and-go deliveries, and its interior can be customized for small package delivery.

“We are proud to have been selected by Walmart, one of the most sophisticated buyers in the world,” said Tony Aquila, chairman and CEO of Canoo. “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.”

In March, industry news outlet Retail Touchpoints reported that Walmart has plans to increase its last-mile capacity by 35% in the next year.

Walmart plans to redesign stores to accommodate pickup and delivery, schedule delivery rounds in three-hour increments to maximize space and use the crowdsourced Spark Driver network to fulfill overflow orders.

Deal comes amid Oklahoma's continued embrace of the electric vehicle industry

If the deals come to fruition, it would justify Oklahoma's embrace of electric vehicles and the industry that produces them. Gov. Stitt and his administration have put intense focus on EV manufacturing, both with Canoo and "Project Ocean," widely believe to be a deal to recruit Panasonic's EV battery manufacturing to the same industrial park in Pryor.

The aggressive recruitment of EV companies marks an apparent recognition that fossil fuels won't always drive the economy, much less Oklahoma's economy. It's also coming at a time when Stitt says he favors an "all-of-the-above" approach to energy production.

Two years ago, after Tulsa tried and failed to bring Tesla's Cybertruck plant to Oklahoma, the Oklahoma State Department of Commerce formed an accelerator program to help lure automotive manufacturing back to the state. As it turned out, the future they saw was in electric vehicles.

"We started understanding where research and development dollars were headed, and they were all headed to electric vehicle manufacturing, EV technology," Stitt said. "And so with that type of displacement in this market, you know, billions and billions of dollars worth of factories were going to be up for grabs — and these opportunities don't come around very often."

This article originally appeared on Oklahoman: Walmart will buy, use Canoo electric vehicles for delivery