Lion Electric Company (LEV)

[WeTheMarket]

Lion Electric Slams Slow Federal Grant Allocation
February 29, 2024
https://www.ledevoir.com/economie/808156/mises-pied-temporaires-lion-electrique-saint-jerome

Half of Lion Electric's backlog for school buses outside Quebec depends on federal grants. However, while Ottawa is ready to move forward with some of these funds, the majority has been delayed for more than two years. As a result, these orders are on ice and the manufacturer says it is suffering as a result. On Thursday, the company announced the layoff of 100 employees at its Saint-Jérôme plant, in addition to posting a net loss of more than $100 million for the past year.

"We have orders for about 1,200 vehicles that can't move forward," said Marc Bédard, founder and CEO of Lion Electric, in an interview with Le Devoir.

These come from outside Quebec and are conditional on receiving grants from the Zero Emission Public Transit Fund. This federal fund has a budget of $2.75 billion over five years and can cover up to 50% of the funding for eligible projects.

"In fact, to our knowledge, unfortunately there are no electric school buses that have been approved under this program so far," says Mr. Bédard, who laments the processing times.

In fact, a conditional order for 200 LionC buses, placed by Ontario-based Langs Bus Lines in December 2021, received an initial grant offer last September from Infrastructure Canada. In a letter from December, a copy of which was obtained by Le Devoir, Ottawa reiterated its offer.

Langs Bus Lines and Infrastructure Canada have not reached a final agreement to date. A source at the department argues that the delay in this file is not the fault of the federal government and believes that the carrier would be willing to move forward with the terms of the current contract.

However, another, much larger order has yet to qualify for the federal program: the conditional order for 1000 LionC buses placed in October 2021 by the organization Student Transportation of Canada. The file is still being analyzed.

"These backorders are just the tip of the iceberg," says Bédard. "There are a lot of operators who want to place orders in the rest of Canada today, but are waiting for approval from the Ministry of Infrastructure to place their orders."

Layoffs and losses
On Thursday, Lion Electric laid off 100 employees at its plant in Saint-Jérôme, in the Laurentians. The company made the announcement during the presentation of its financial results for the fourth quarter of 2023 and for the full year.

"We're eliminating the evening respite until the program's grants are approved," Bédard said in an interview. "It's very sad. But how can we pay employees when we are missing all this part of income? We can't put the company in difficulty," says the company's director. Until then, production continues, but the "rate is temporarily reduced under the circumstances."

These layoffs are in addition to the 150 layoffs announced last fall.

In the fourth quarter of 2023, Lion Electric's net loss was $56.5 million, compared to a loss of $4.6 million in the same period a year earlier. For the full year, its net loss was $103.8 million, compared to net income of $17.8 million in fiscal 2022. The company delivered 852 vehicles in the past year, 333 more than the 519 vehicles delivered last year.

Lion Electric's stock tumbled on the Toronto Stock Exchange following the announcements. At the close of trading on Thursday, it was worth $1.99, down 12.7% from the start of the day.