UPDATED: Lion Electric Company (LEV-T) temporarily laid off more than half its workforce and received a two-week extension on credit and loan facilities, as it seeks options to stay afloat.

The Saint-Jerome, Que.-based electric vehicle (EV) and bus manufacturer announced Sunday afternoon it had slimmed its workforce by approximately 400 employees in Canada and the U.S., and halted operations at its Joliet, Ill. factory.

It now has approximately 300 staff across manufacturing, sales and servicing, Lion Electric said in a release.

The reprieve on its financial agreements moves the deadline from Nov. 30 to Dec. 16. The facilities include a credit agreement with lenders represented by National Bank of Canada, and a loan agreement with Finalta Capital and Caisse de dépôt et placement du Quebec.

In mid-November, Lion Electric arranged for a similar two-week extension after requesting additional time to search for financing to continue operations. At that time, the company said a sale of the firm or its assets and investments was one of the options on the table.

A group of Lion Electric investors, including Montreal developer Groupe Mach Inc., are reported to be discussing the creation of a consortium to sustain Lion Electric, Le Journal de Montréal reported. A major condition for reinvestment is the Saputo family, one of Canada's wealthiest, joining the consortium. The decision by the Saputo family has not been made, Groupe Mach's chairman Vincent Chiara told the newspaper.

The company has been seeking additional financing for some time. Lion Electric CEO Marc Bedard said in its Q3 financial call if additional funding could not be secured in the next 12 months, the company’s future is uncertain.

Lion Electric limped in 2024

Lion Electric has been challenged by delays on government financing programs, growing pains in its manufacturing operations, and weaker-than-anticipated demand, Bedard said in July.

Cost-cutting measures earlier this year included a 30 per cent staff reduction in July that impacted approximately 300 employees. Over 500 staff were let go this year before the latest round of layoffs, mostly temporary.

The company operated at a loss of $33.9 million (all figures US unless noted) in Q3. Revenue was $30.6 million in the quarter, compared to $30.3 million in Q2 and $80.3 million the year prior period.

Net loss for the nine months ended Sept. 30 was $74.9 million.

It delivered 89 vehicles in Q3, a significant decline from 245 the year prior.

Bloomberg News reports Lion Electric has not yet finalized funding, citing Quebec’s economy minister Christine Frechette. However, the Quebec government will financially support the company if private investors join in, she said.

The provincial government has already invested C$177 million into Lion Electric, CBC News reports.

Electric transportation loses some charge

The setbacks to Lion Electric are not unique to the company. Plans by the Canadian and Quebec governments to establish Quebec as a battery manufacturing hub to supply electric transportation have driven onto a rocky road in recent months.

Northvolt, a Swedish company planning to build a C$7-billion battery factory near Montreal, filed for bankruptcy protection in the U.S., adding uncertainty to the project despite assurance by Frechette the turbulence will not affect the facility.

Ford also exited a plan with South Korean partners SK and EcoPro to build a C$1.2-billion battery materials facility in Becancour, a city between Montreal and Quebec City expected to be a battery manufacturing nexus for Canada.

Additionally, global EV sales growth rates are slowing, research by BloombergNEF found.