By Bill Moore
What do you mean you won't sell me a Canoo? Note: that's the electric car kind, not the boat: that's a 'canoe.'
Once you figure out the difference, Canoo vs. canoe, not a few potential customers are going to be confused at first when they try to buy Stefan Krause and company's all-electric minivan. But that's exactly what this California-based EV startup intends to do: not sell you, lease you or techncially even rent you their vehicle. Instead, they will allow you to subscribe to it.
While the exact terms of the program are still being refined, the general idea is you will pay a recurring fee for the use of the vehicle, but you won't own it: nor will you be liable for all the mundane - and costly - stuff that comes with buying or leasing any typical automobile: ICE or EV. No downpayment, no taxes or registration fees, no maintenance.. okay, maybe parking will be on your, but pretty much all of the expenses that come with car ownership will be on Canoo's dime. This is about as trouble-free as transportation can get, except for the congestion and maybe the price of electricity; and even here there might be a 'free' work-around. But for the time being, Krause, who spent nearly twenty years at BMW and another eight at Deutsche Bank, is taking the rollout of the Canoo one strategic step at a time.
So, why the subscription model and not just sell you the car like everyone else does? Well, here's the ingenious part: by never selling the car to the public, they can take a straight, long-term depreciation like you would on factory equipment; and in that neat little trick, Canoo can extend the working life and amortization of their EV out to 12 or 15 years, instead of the typical 3 years. The result, Krause calculates, is a lower cost to their subscribers by avoiding the serious finacial hit everyone takes in depreciation once we drive any new car off the dealer lot.
My entire 50+ minute dialogue with Krause is available to our Patreon supporters, but you're free to listen to this fascinating 5-minute except where he explains the kernel of Canoo's subscription model.
First Published: 2019-10-15
Pages Viewed: 13581