Canadian electric vehicle maker Lion Electric Co. faces financial turmoil, prompting a plan to seek creditor protection due to mounting debts, supply chain issues, and slower-than-expected EV adoption.
Quebec committed billions of dollars to carve out its place in North America’s electric vehicle supply chain, but those efforts have been thwarted by a string of bad news. The latest: electric bus and truck maker Lion Electric Co. expects to seek creditor protection. The Saint-Jerome, Que.
-based company announced in a news release the expiry of covenants on a credit line and the maturity on a separate loan as no alternatives have materialized and no further amendments, concessions or waivers have been obtained. As a result, Lion expects to initiate a restructuring process under Canada’s Companies Creditors Arrangement Act, and “pursue a formal sales and investment solicitation process in respect of the company’s business or assets.” Lion’s problems stem from delays in subsidy and incentive programs in Canada and the US, as well as supply chain disruptions, scaling issues, too many vehicle models being developed at the same time and slower EV adoption. The manufacturer, which went public by merging with a special purpose acquisition company in 2021, had $392 million in debt during the quarter ended Sept. 30 — incurred primarily from expansion projects such as an electric bus manufacturing plant in Joliet, Illinois, and a battery pack assembly plant in Mirabel, Quebec. During the same period, the company reported sales of $31 million, down from $80 million the year prior, as deliveries dropped by 64%. After reaching a peak of approximately 1,400 employees in 2022, Lion announced earlier this month that it would retain about 300 staff. The firm also suspended work at the Joliet plant and president Nicolas Brunet resigned. And the company sold its innovation center in Mirabel for C$50 million ($35.1 million) to Aeroports de Montreal to raise cash. Lion’s lenders, which include National Bank of Canada, gave the company temporary help to get through Dec. 16, suspending for a second time the covenants on a credit line
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