Lion Electric reports surging revenue amid increased deliveries, but profitability remains elusive

Article content

The Lion Electric Co., the upstart maker of electric buses and trucks with ambitions of being a player in the energy transition, said revenue surged in its most recent quarter as the company ramped up production.

Article content

Saint-Jérôme, Que.-based Lion reported revenue of US$54.7 million over the three months ended March 31, compared with $22.6 million in the same period a year earlier. Lion said it delivered 220 vehicles in the quarter, 136 more than it shipped in the first quarter of 2022.

Article content

“We are pleased with our Q1 2023 performance, as we increased the number of vehicles delivered for the sixth quarter in a row,” chief executive and founder Marc Bédard said in a press release on May 8. “With manufacturing operations at both our Joliet vehicle plant and our battery factory now underway, we are focused on achieving profitability and are putting the right elements in place to achieve this objective.”

Indeed, profitability remained a problem for Lion despite the big increase in sales.

Article content

Article content

The company recorded a loss of $15.6 million, compared with net income of $2.1 million in the year-earlier quarter, due to the company’s increased investment in manufacturing facilities and costs related to inventory management. Those burdens should lessen over time and could set the stage for more deliveries.

Lion said its order book consisted of 2,565 vehicles as of May 8, worth some $625 million. The company said its factory in Joliet, Ill., produced its first LionC zero-emission school buses in the quarter.

At the same time, cost of sales jumped to $57 million from $23.6 million in the year-earlier period, suggesting Lion’s path to profitability won’t be easy. The company attributed the rise to increased production, expansion of existing capacity, higher input costs and ongoing “challenges” related to global supply chains and inflation.

Article content

Lion faced some negative press earlier this year when Radio-Canada released a report on March 28 stating that the Société des alcools du Québec, or SAQ, one of Lion’s earliest customers, was dissatisfied with the Lion8 truck model it had purchased.

This was “fake news,” Bédard said in an interview on April 18. “Is it normal that the truck is sent back? Yes,” he said. “It’s completely normal. Someone misconstrued it, but it’s normal.”

Investors shouldn’t be worried about the company’s bottom line, he said. “To grow and be profitable at the same time is extremely difficult,” mainly because of the price, Bédard told a conference of Montreal business leaders on April 18.

To mitigate the supply chain snags, the company is using a vertical integration approach, taking control of some aspects of its supply chain in order to ensure it has the parts and components it needs to grow while reducing its dependency on third-party suppliers. It will also cost less, and give them more control over the battery pack, Bédard said during the conference.

Article content

Looking ahead, Canadian electric vehicle manufacturers will need to keep an eye on the U.S. Inflation Reduction Act, Bédard said, which offers tax credits of up to $7,500 for light- and medium-duty vehicles and $40,000 for heavy-duty trucks. He said that American policy is a lot more “aggressive” than Canadian policy when it comes to subsidizing electric vehicles.

• Email: [email protected] | Twitter: marisacoulton