Government Agencies Abandon Canoo's Electric Vehicles as EV Startup Collapses

The story of Canoo’s rapid decline illustrates the challenges facing early-stage electric vehicle manufacturers in competing with established players. Despite securing high-profile government contracts, the company’s inability to deliver reliable vehicles ultimately undermined confidence in its business model. Both NASA and the United States Postal Service have now discontinued their use of electric vehicles manufactured by Canoo following the company’s bankruptcy filing in early 2025.

Why NASA and USPS Ended Their Electric Vehicle Programs

NASA’s experience with Canoo’s vehicles provides a cautionary tale about the risks of backing unproven EV manufacturers. In 2023, the space agency invested in three electric vans intended to transport astronauts to launch sites for the Artemis lunar missions. However, Canoo proved unable to meet NASA’s operational requirements, prompting the agency to pivot toward proven alternatives. By October 2024, NASA had transitioned to leasing vehicles built by Airstream for Boeing’s crewed space missions, specifically the purpose-built Astrovan platform.

The USPS similarly wound down its evaluation program. The postal service had acquired six Canoo electric vehicles in 2024 for testing purposes as part of its broader sustainability initiative. In a terse official statement, USPS confirmed that the assessment phase has concluded and no further procurement plans are underway. Unlike NASA’s public acknowledgment of performance issues, USPS provided minimal detail about what its testing revealed regarding the vehicles’ suitability.

The Department of Defense also received at least one demonstration unit from Canoo, though the military branch declined to clarify whether it continues operating the electric vehicle or has similarly moved on. This pattern of quiet withdrawal across multiple government agencies signals deeper systemic problems with Canoo’s product and support infrastructure.

Financial Instability and Bankruptcy Proceedings

Years of mounting losses and an inability to establish meaningful market demand led Canoo to file for bankruptcy protection in early 2025. The company’s collapse reflected broader challenges facing the electric vehicle startup sector, where manufacturing complexity and capital requirements often exceed founder expectations.

Shortly after filing, former CEO Tony Aquila submitted a $4 million acquisition offer to purchase the company’s remaining assets. Aquila publicly stated that his primary motivation was preserving Canoo’s obligations under government contracts. However, neither NASA nor USPS confirmed receiving any direct outreach from Aquila regarding continued support for their vehicles, and the former executive declined to comment further on his post-bankruptcy involvement.

A bankruptcy judge approved the asset transfer to Aquila in spring 2025, though the process revealed significant contested interests and procedural complications. The trustee’s decision to accept Aquila’s proposal without broader marketing of the intellectual property and equipment sparked pushback from alternative bidders.

Competing Interests and Foreign Investment Concerns

The bankruptcy auction attracted substantial outside interest in Canoo’s remaining value. According to court filings, up to eight groups executed non-disclosure agreements to examine the company’s intellectual property, prototypes, and manufacturing equipment. Several of these parties approached formal bidding but ultimately withdrew or failed to submit completed offers.

Among the notable contenders was Harbinger, a California-based electric truck manufacturer founded by former Canoo employees. Harbinger contended that Canoo deliberately obscured certain assets during the sale process and accused the bankruptcy trustee of displaying favoritism toward Aquila by accepting his offer without conducting a comprehensive market canvassing. This allegation underscored tensions between established insider claims versus outsider competitive interests.

Another bidder, UK-based financier Charles Garson, reportedly expressed willingness to commit up to $20 million for Canoo’s complete asset package. However, Garson failed to submit his formal offer before the court-imposed deadline. Legal representatives for both the trustee and Canoo’s creditors defended the outcome, arguing that Aquila’s proposal represented the most reliable path forward. They also noted that one unnamed potential buyer raised potential complications under the Committee on Foreign Investment in the United States (CFIUS) due to foreign ownership concerns, particularly given Canoo’s existing government relationships with NASA, USPS, and the DOD.

Both Harbinger and Garson declined requests for comment on the bankruptcy proceedings or their respective bid strategies. The outcome reflects how national security considerations and foreign investment scrutiny can shape asset sales even within the private bankruptcy context, particularly when sensitive government contracts are involved.

What This Means for the Electric Vehicle Industry

The Canoo saga exemplifies the fragility of venture-backed electric vehicle manufacturers attempting to scale production while maintaining government confidence. The decisive withdrawal by NASA, USPS, and the DOD sends a chilling signal to other EV startups pursuing similar contracts. Government agencies’ willingness to switch to alternative suppliers—whether established automotive suppliers like Airstream-Boeing or internal assessments determining insufficient product maturity—demonstrates that federal backing, once lost, proves difficult to rebuild.