Saint-Jérôme, Quebec-based Lion Electric saw its share price fall to 98¢ this week and cut 30% of its work force in Canada and the United States, its third layoff in eight months, as it scrambles to adjust to slower demand for its electric school buses and trucks.
The layoffs “will affect approximately 300 employees and most layoffs will be temporary,” Sustainable Biz reports. “The move will save approximately US$25 million, if the temporarily laid-off workers are not rehired.”
Lion had previously cut 10% of its jobs last November and another 9% in April, Sustainable Biz says.
The company is also reorganizing its truck manufacturing in response to lower-than-expected demand, selling battery packs to third parties, and considering subletting a “significant portion” of the space at its 900,000-square-foot bus and truck factory in Joliet, Illinois, and elsewhere.
“Transition to electric is taking longer than initially expected,” CEO Marc Bédard said in a statement. “Since the pace of electrifying transportation depends on many factors, including the timing of government programs, we believe that all the changes we have made through the last year, and the ones we are making today, had to be done to successfully align our business model to this reality.”
It’s a stunning shift for Lion, after entering the New York Stock Exchange in 2020 on the strength of a US$500-million merger deal, announcing a C$185-million battery plant in Saint-Jérôme in March, 2021, heralding the new Joliet plant two months later, and touting the end-to-end control over battery production that its Saint-Jérôme operation would achieve.
“Electrification of transportation is more than transporting goods and people,” said Benoît Morin, Lion’s Canadian VP of bus sales, after Hurricane Fiona hammered Prince Edward Island in 2022 and the community of North Rustico (pop. 600) bought two electric buses as a future source of emergency power supply. “In this case, LionC school buses will be used as energy storage for the benefit of the population. It feels good knowing Lion vehicles could play an important role in the community.”
As recently as February, 2023, the Globe and Mail was producing laudatory coverage of Lion as “a disrupter in an industry ripe for change.”
But with 2,100 buses on the road, Lion has yet to turn a profit, and has seen its shares plummet from a high of $24.21 in June, 2021, the Globe says. The latest layoff amounts to 30% of its work force.
“The bus maker has struggled to get vehicles out the door because of a series of setbacks in recent years, including supply chain disruptions and government red tape,” and “it’s now in retrenchment mode,” the Globe writes. The company delivered just 101 vehicles in the second three months of the year, roughly half of what analysts were looking for, saw revenue fall to US$30 million from the $58 million it took in for the same quarter last year, and took a net loss of $19.3 million.
“Lion has devoted most of its early attention to school buses, specifically to tap public funding,” the Globe says. “It’s the market segment in which EV adoption is growing fastest because governments subsidize purchases by school boards and private transporters.”
But that puts the company and others like it “at the mercy of government efficiency on when those funds get disbursed.” This week, Lion said the delays traced directly back to funding delays and challenges from U.S. and Canadian funding programs.
The Globe has more on Lion’s recent contracts and the “big-name backing” behind the company.
