Could Lion Electric go up for sale?

Lion Electric is not yet ready to put itself up for sale. However, as the company has confirmed in a statement, the step is on the table internally. The statement says that various sources of financing and alternatives are being considered, which “may include a sale of the business or certain of its assets.” It is not known what proceeds Lion Electric hopes to generate.

Specifically, the company has agreed with its lenders to extend the grace period for a loan agreement by two weeks to 30 November 2024. It mentions the possibility that Lion Electric will still not be able to make the repayment on time. “As a result, the Company has been actively engaged in discussions with certain of its lenders regarding potential alternatives relating to a restructuring of its obligations. The Company also continues to fully consider all potential sources of financing and/or other alternatives, which alternatives may include a sale of the business or certain of its assets, strategic investments and/or any other similar opportunities or alternatives,” Lion Electric says.

The Canadian portal CTV News writes that Lion Electric has been struggling with a lack of funds for some time. The company previously indicated that the sale of assets was an option to generate revenue. It said there was an urgent need to cut costs and raise new funds. However, Lion Electric did not mention a direct sale of the company.

The latest business figures also show that things are not going well for Lion Electric. In the third quarter of 2024, the company achieved a turnover of $30.6 million, a decline of $49.7 million compared to $80.3 million in the third quarter of 2023. Instead of a gross profit of 5.4 million US dollars a year ago, the bottom line in Q3 2024 was a loss of $15.95 million. The operating loss totalled 30.2 million dollars – almost the same as the revenue.

According to CTV News, the losses amounted to more than 131 million dollars in the past four quarters, and 520 employees (around 40 per cent of the workforce) have already been laid off in 2024. Lion Electric had already announced staff cuts of around 30 per cent in the USA and Canada in March, after reducing its workforce in the US and Canada by about 10 per cent at the end of last year.

Lion Electric is known for its electric lorries and school buses, widely used in the USA and Canada. Before transferring the technology to truck production, the company started with heavy-duty electric buses. But the slower transition to electric vehicles in North America forced the manufacturer to throw its calculations out the window, to put it bluntly. In the summer of 2023, Lion Electric opened a new plant in the US state of Illinois to build up to 2,500 electric school buses per year, with an expansion to 20,000 electric buses and trucks already planned. However, with falling sales, Lion Electric could no longer recoup this investment.

ctvnews.ca, thelionelectric (possible sale), thelionelectric.com (Q3 figures)