Quebec ready to support Lion Electric if the private sector joins in

Quebec remains open to loosening its purse strings once again to support Lion Electric, which is experiencing major financial difficulties, but only if the private sector is part of the equation.

Christine Fréchette, Minister for the Economy and Energy, said on Monday that the Quebec manufacturer of electric buses is currently holding discussions "with potential private partners."

"I see that there is a willingness on the part of other private players to invest in the company. Will that be enough to get us in? We want to see players other than the public around the table," she said in a press scrum on the sidelines of an event organised by the Chamber of Commerce of East Montreal.

Fréchette reiterated that the Quebec government "would be prepared to hand over money if the business plan is sound and if there are players other than the public sector."

In particular, Quebec has provided $50 million in loans for the construction of a plant in 2021. The Caisse de dépôt et placement du Québec and Investissement Québec have also supported the company through loans and share purchases.

The CAQ minister deplored the 400 temporary layoffs announced the day before by Lion Electric, both in Canada and the United States.

"My first thoughts are with the workers who have lost their jobs just a few weeks before Christmas. It's always sad to hear about layoffs," said Fréchette.

The company now has just 300 workers, after carrying out three other waves of layoffs in 2024, which involved almost 520 jobs. The company is trying to replenish its coffers.

On Sunday, it managed to obtain a two-week reprieve from its lenders.

At the beginning of November, Lion Electric warned that it feared it would run out of money to continue its activities if it was unable to find other sources of financing. It suggested selling assets as an option, as well as opening the door to selling the company.

The manufacturer is also considering the possibility of sheltering itself from its creditors.

Ottawa responsible?

Lion Electric's management has often blamed its poor financial performance on delays in the Canadian government's subsidy program for zero-emission school buses. Asked whether Ottawa was to blame, Fréchette said that "the opening of the market outside Quebec has been very slow," which "has hampered Lion's development."

"There are also a number of factors that have had an impact. I'm thinking in particular of the international slowdown in the electric vehicle market," she added.

Asked whether the manufacturer had relied too heavily on government programs to sell its vehicles, Fréchette said that the company had perhaps envisaged "developments much more quickly to open up markets that come under the federal government."

"Perhaps there had been a miscalculation on the speed at which this was going to happen. It created an issue. We were there to open up the markets. But the federal government had to do the same, but it took a little while," she said.

At the end of its third quarter, Lion Electric had sold 89 vehicles, including 71 school buses, during the months of July, August and September, which represented 156 fewer units than during the same quarter in 2023.

This report by The Canadian Press was first published in French on Dec. 2, 2024.