Lion Electric, a Quebec-based manufacturer of electric buses, is grappling with severe financial difficulties and is now considering various alternatives, including a potential sale of the company. While the company is not yet ready to put itself up for sale, it has confirmed that the possibility is being explored internally. In a recent statement, Lion Electric revealed that it is evaluating several sources of financing and other strategic options, which could include selling the business or certain assets.
The company is currently in discussions with its lenders to extend the grace period on a loan agreement until November 30, 2024. However, there is uncertainty over whether the company will be able to repay the loan on time. Lion Electric’s statement highlights ongoing efforts to restructure its obligations and explore potential financial solutions. While the company has not specified how much it hopes to raise from any asset sales, it is clear that urgent action is being taken to address its financial situation.
Lion Electric has faced mounting losses in recent quarters. For the third quarter of 2024, the company reported a turnover of $30.6 million, a significant decline from $80.3 million in the same period last year. This resulted in a loss of $15.95 million, compared to a gross profit of $5.4 million in the previous year. The operating loss for Q3 2024 was $30.2 million, almost matching the company’s revenue. Over the past four quarters, Lion Electric’s total losses amounted to more than $131 million. In response to these financial pressures, the company has already laid off 520 employees, roughly 40% of its workforce, in 2024, following earlier staff reductions.
Known for producing electric school buses and heavy-duty electric trucks, Lion Electric has seen slower-than-expected growth in North America’s transition to electric vehicles. The company had hoped to capitalize on the demand for electric school buses by opening a new plant in Illinois in 2023, with plans to scale production to 2,500 electric school buses per year, and ultimately 20,000 electric buses and trucks. However, with declining sales and mounting losses, Lion Electric has been unable to recover its significant investment in this new facility. As the company continues to explore ways to address its financial issues, including the possibility of selling assets or seeking new investment, its future remains uncertain.
Source: ctvnews