For many investors right now, the electric vehicle (EV) market looks highly questionable. While several EV stocks have performed well over the past month, sector leader Tesla (TSLA) continues to battle high volatility.
Meanwhile, the recent automotive tariffs levied by the U.S. government against Canada and Mexico continue to cast uncertainty over the U.S. economy, particularly for companies in the car space. Additionally, rising prices across many different industries are causing customers to scale back their spending on luxuries such as highly priced vehicles.
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One EV company’s troubles didn’t start this year, though. They started years ago as the trendy automaker went from being a high-profile startup to a cautionary tale for companies in its space as share prices crashed.
However, this company may have done more than slowly bleed out value. In fact, according to one of its rivals, it may have engaged in illicit activity.
A startup that Tony Aquila helped build declared bankruptcy in January 2025 but its problems aren’t over.
An ugly bankruptcy saga may be about to get worse
Between 2019 and 2020, Tesla’s success kicked off an EV boom in which many small companies attempted to enter the space. This included Canoo (GOEV) , an electric van maker that opted to go public in December 2020 through a special purpose acquisition (SPAC) merger.
Despite making a splash in early 2021, Canoo’s success in the market would prove extremely short-lived. The stock reached its peak in early February 2021 when it passed $6 per share, only to quickly fall back to the penny stock line and never recover.
Related: A once-promising EV startup files for Chapter 7 bankruptcy
Over the next few years, Canoo stock would fall by roughly 99%, leading to the company losing its spot on the Nasdaq. After experiencing significant cash flow problems and failing to effectively scale operations, Canoo filed for Chapter 11 bankruptcy in early January 2025.
“Canoo’s bankruptcy filing just a few weeks after Canoo made some desperate attempts to save whatever little cash it had on hand. Before its Chapter 7, the startup furloughed the remainder of its workers, idled its factory in Oklahoma, and struggled amidst an executive exodus,” reported TheStreet’s James Ocha.
Only a few months later, though, bad news is still piling up for Canoo. Its former CEO Tony Aquila recently offered to purchase its assets but now another company is making the deal more complicated.
Fellow EV startup Harbinger Motors has objected to the sale in a regulatory filing on the grounds that Canoo has allegedly hid certain assets from the sale and listed assets that it did not actually have ownership of. Per the filing:
“Specifically, Harbinger found that certain data and information was either insufficient,incomplete, referenced assets that the Debtors do not own or omitted assets that Harbinger believes the Debtors do own (such as certain assets the Debtors acquired from Arrival Automotive UK, Ltd., a former competitor).”
Harbinger also makes clear that it sees the asset purchase deal has unfairly favoring Aquila, a company insider. In the objection filing, it argues that Canoo’s trustee in charge of the sale accepted Aquila’s offer before widely marketing the assets for sale.
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“No information was provided concerning the Trade Secret Assets that would enable third-parties to assess their value, such information (to the extent it actually exists) being in Mr. Aquila’s exclusive possession,” the fling adds.
This development is part of an ongoing EV startup rivalry
It should be noted that this isn’t the first time that these two startups have targeted each other. It’s actually the latest development in a bitter rivalry that dates back years.
Harbinger’s founders include multiple Canoo leaders who left to build their own company in 2021. The following year, Canoo filed a lawsuit against their new rival, accusing its founders of leaving with trade secrets, a case that hadn’t been settled as of the latter’s Chapter 11 filing in 2025
Related: Analyst reboots Tesla stock price target ahead of deliveries
“One particular clause of the purchase agreement states that Aquila and the trustee have effective approval over any settlement in the Harbinger case,” reports TechCrunch. “Harbinger argues this could violate the Department of Justice’s handbook for Chapter 7 trustees.”
As of this writing, Canoo has issued no statement in response to Harbinger’s allegations, nor has Jeoffrey Burtch, reported to be the trustee referred to in the objection filing.
It remains unclear as to if the deal will proceed and if further action against Canoo will be taken.
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