Quebec Cot announce, Lion nearing end of life phase
How Lion Électrique Fell From Grace: A Rough Ride for the Electric School Bus Manufacturer
After a promising debut on the Toronto Stock Exchange and Wall Street, Lion Électrique is staring down the barrel of possible dismantlement. The Quebec government, under the leadership of Premier François Legault, has opted against reinvesting in the company, leaving it struggling to find a way back up[1].
Last December, a Quebec-based group was working on taking over the insolvent electric school bus manufacturer. However, their plan required two non-negotiable conditions - a government financial aid of approximately $24 million and the renewal of a government program that granted Lion a near-monopoly on the Quebec electric school bus market[2].
The proposal was brought before the CAQ caucus during an extraordinary meeting, but the government balked at the idea of pouring more money into the company. "It's a hard but responsible decision," said the office of Minister of Economy, Innovation, and Energy, Christine Fréchette, explaining that the restart plan submitted did not justify the reinjection of significant government funds[2].
This decision adds to the Legault government's growing list of challenges in its strategy for electrifying transportation. Just last March, the parent company of Northvolt, another electrification flagship, declared bankruptcy, costing the Quebec government $270 million and raising doubts about the promised Quebec battery mega-factory[3].
Lion's Downfall
Lion's financial troubles pushed the company into receivership under the Companies' Creditors Arrangement Act (CCAA) on December 18, 2024[3]. If things continue on their current course, the company could lose up to $200 million in public money. This would add to the hundreds of layoffs that have occurred since the fall of 2024[3].
Public funds at risk in Lion Électrique include:
- 2021: $19 million from Investissement Québec (IQ) for the purchase of shares
- 2021: $37 million from a loan offered by Quebec for the battery block plant
- 2021: $21 million drawn from Ottawa's loan for the battery block complex
- 2022: $15 million in loan from the Caisse de dépôt et placement du Québec
- 2023: $98 million loaned by IQ, the Fonds de solidarité FTQ and Fondaction CSN
- 2024: $7.5 million in loan from the Quebec government[3]
Faced with the tough choice of continued support for a money-losing company or letting it fail, the government opted for the latter, as a crucial deadline approached. Unless there is a dramatic turnaround, everything points to Lion heading towards a fire sale[3].
The Road Ahead
The company's financial troubles could cause headaches for many school transporters across the province. As of now, 1175 electric school buses built by Lion are in circulation, representing approximately 75% of the total electric school bus fleet in Quebec. If Lion ceases operations, these buses would lose their manufacturer's after-sales service and technical support, creating uncertainty for school transporters[2].
Quebec is expected to announce a contract with another company to ensure the maintenance of these buses. The Quebec School Bus Association (QSBA) has already expressed concern about the uncertainty in their sector since the beginning of the year[2]. The QSBA claims that the parameters of the School Bus Electrification Program no longer provide sufficient financial support, setting the stage for an "alarming situation" that could lead to service disruptions[2].
The story so far:
- May 2021: Lion Electric makes its stock market debut.
- November 2023: The first wave of layoffs (150) occurs.
- July 2024: Lion shifts its strategy, focusing on electric school bus manufacturing.
- November 2024: It is announced that the company's coffers are almost empty.
- December 2024: The company files for creditor protection.
- April 2025: A bid from a Quebec-based group is accepted. However, the Legault government decides against providing additional funding[4]. [Sources][5][6]
At the moment, the future of Lion Électrique remains uncertain, as the company faces the possibility of selling its assets and restructuring its operations. The impact of this decision will be felt across the electric school bus industry in Quebec and North America, as customers grapple with the implications of the company's bankruptcy and the uncertain fate of their electric school buses.
- The electric school bus industry in Quebec and North America may face challenges due to potential layoffs at Lion Électrique, with the company having built approximately 1175 electric school buses, representing 75% of the total electric school bus fleet in Quebec.
- In its efforts to electrify transportation, the Quebec government has had to deal with significant financial losses, having invested approximately $270 million in Northvolt, another electrification flagship, which declared bankruptcy in 2023.
- QSBA, the Quebec School Bus Association, has already expressed concerns about the uncertainty in their sector since the beginning of the year, claiming that the parameters of the School Bus Electrification Program no longer provide sufficient financial support, potentially leading to service disruptions.
- The financial troubles of Lion Électrique have pushed the company into receivership, and if things continue on their current course, the company could lose up to $200 million in public money, with this amount including various investments since 2021 totaling around $205 million from the Quebec and federal governments.
