The underside of the Lion Électrique fiasco: “They spent like there was no tomorrow”

Messy vehicle development, insufficient road testing, massive cost overruns… The Journal lifts the veil on Lion Électrique, this pillar of the battery sector which received more than $200 million in public aid and on which several small shareholders were betting heavily.

Seen by many as a “Quebec Elon Musk”, Marc Bédard, the founder of Lion, and his entourage “wanted to create a large company, but they did not have the sales team or the necessary infrastructure to get there”, summarizes a former executive on condition of anonymity.

“They thought that with government money, or going public, he could have solved the problems,” notes another ex-worker.

Far from predictions

A few months before entering the stock market, in May 2021, Lion presented investors with dizzying financial projections. In 2024, the company would sell 15,800 trucks and 2,600 buses, its managers predicted. Its revenues would reach $5 billion.

The reality is quite different. During the first nine months of this year, Lion’s sales just crossed $165 million. Fewer than 400 vehicles were sold, including barely 36 trucks.

The company is currently facing an urgent need for funds. On the Toronto Stock Exchange, its stock has lost 68% of its value in one month and almost 99% since 2021.

The ex-employees we spoke to denounced certain ways of doing things at Lion, even though they were bound by confidentiality agreements. They pointed out the lack of experience of leaders, who allegedly made many bad decisions.

No member of senior management has previously worked in the road vehicle sector.

Big bosses “can’t go into the factory and make a decision quickly,” explains a former executive. They must first consult specialists, which adds delay and cost.

Scattering

Our sources believe that Lion has spread itself too thin by developing too many models simultaneously. The company eventually had to abandon its garbage truck and minibus projects. In the latter case, more than $60 million had been spent.

“They wanted to attack all the markets at the same time, and there were cost overruns after cost overruns,” regrets a former employee.

“Some trucks were sold on paper even before the prototype,” another former employee went so far as to say.

“We imagined something, and we sold it to the customer, which was completely absurd,” he added.

He maintains that validation tests were not always carried out thoroughly because Lion did not want to damage the prototypes too much in order to be able to sell them to customers. “Lion was first and foremost a financial company which then had to produce a product to obtain subsidies and grow,” says a former employee.

“Lion has conducted, in collaboration with third-party testing partners, rigorous testing to meet the certification requirements,” reacts a Lion spokesperson, Patrick Gervais. Lion only sells its customers vehicles with all the required certifications.”

“When a new product is offered, as is the case with other manufacturers, it is possible to make pre-orders. This represents standard practice in the industry,” insists Mr. Gervais.

Cost overruns

The employees with whom The Journal spoke, all underlined the messy management of the company.

For example, it was not uncommon for Lion to order custom-made pieces at the last minute, which cost a fortune.

“Often, the parts didn’t work, so you either had to rework them or throw them away,” reveals a former executive.

– With the collaboration of Mathieu Boulay

Electric Lion in eight dates

• Two former managers of the bus manufacturer Michel Corbeil, Marc Bédard and Camille Chartrand, founded Autobus Lion.

• Power Corporation is making a “significant investment” in Lion that gives it a 43.8% stake in the company.

• Lion Électrique raises US$200 million by entering the New York Stock Exchange and the Toronto Stock Exchange.

• Mr. Bédard sells $16.5 million worth of Lion shares at an average unit price of $14.85.

• Lion delivers a first bus assembled in its Illinois factory, which remains largely unused due to lack of demand.

• Lion opens its battery factory in Mirabel, which currently has excess capacity.

• Lion raises the sum of US$142 million, more than half of which comes from Quebec, the Fonds FTQ and Fondaction.

• Lion announces the layoff of 300 workers. These job cuts are in addition to the 370 announced in previous months.