Walmart Inc (WMT.N) has struck a deal with Canoo Inc (GOEV.O) to buy 4,500 electric vehicles as part of the U.S. retailer’s goal to achieve net-zero emissions by 2040, the companies said on Tuesday.
The deal, whose financial terms were not disclosed, also gives Walmart an option to purchase up to 10,000 units as it electrifies its delivery fleet.
Canoo shares more than doubled in early trading, with the news sparking interest in the company among retail investors and making it one of the most discussed stocks on trading forum Stocktwits.
The movement is strictly retail buying as shorts are not expecting the deal to reduce cash burn or anticipated funding needs, said Roth Capital analyst Craig Irwin.
“This order was already somewhat anticipated, but it is a nice get. It will be exciting to see those vehicles rolling in the DFW (Dallas Fort Worth) area,” Irwin added.
Short interest in Canoo stood at nearly 13% of outstanding shares, research firm S3 Partners said, adding the jump has reduced mark-to-market profit for the shorts by $58 million to around $100 million.
The stock has lost nearly 70% of its value this year, as of last close, amid the selloff in tech stocks and concerns around Canoo’s access to capital.
The deal comes as companies including FedEx Corp , Amazon.com Inc (AMZN.O) and United Parcel Service Inc (UPS.N) pledge to shift their delivery fleets to EVs.
The Canoo-Walmart agreement also includes the EV startup’s fully electric Lifestyle Delivery Vehicle (LDV). Canoo expects to start production of the LDVs in the fourth quarter of 2022, according to the statement.
In June, Walmart said it was expanding transportation pilots with the manufacturers of electric, hydrogen and natural gas-powered vehicles, including Cummins Inc (CMI.N) and Daimler Truck’s (DTGGe.DE) Freightliner.
The retailer has reserved 5,000 electric delivery vans with General Motors’ (GM.N) commercial EV business, BrightDrop.