Financially troubled electric vehicle (EV) producer Lion Electric Company (LEV-T) says it is considering all options to continue operations, including a sale of the business.

The Saint-Jerome, Que.-based producer of electric buses said in a Monday announcement it had extended a covenant relief period for a credit agreement led by National Bank of Canada from Nov. 15 to Nov. 30, and removed a minimum liquidity covenant from another agreement involving Finalta Capital Fund and Caisse de dépôt et placement du Quebec (CDPQ).

If Lion Electric is unable to raise more funds or negotiate new terms with its lenders, the company expects it will not be able to meet the terms of its agreements and loans.

It is considering “all potential sources of financing and/or other alternatives”, including the sale of the company or its assets and investments, the release states.

Lion Electric indicated in October it would consider the sale of assets following news of amendments to its debt.

Lion Electric’s struggling sales

Lion Electric, known for its battery-powered buses, reported a net loss of $33.9 million (all figures US unless noted) in Q3. It reported revenue of $30.6 million in the quarter, compared to $30.3 million in Q2 and $80.3 million the year prior.

Lower sales and increased manufacturing costs contributed to the weaker financials, Lion Electric explained. Eighty-nine vehicles were delivered in Q3, a decrease of 156 EVs compared to Q3 2023.

Net loss for the nine months ended Sept. 30 stood at $74.9 million, compared to $47.2 million in the same period the prior year.

The company held on to $26.3 million in cash as of Q3, down from $35.7 million in the same quarter the year prior.

Efforts in its “relentless march towards improving our liquidity position and build(ing) sustainable foundations for both the short-term and long-term success of Lion” were made to streamline its operations, CEO Marc Bedard said in the Q3 financial call. But challenges put pressure on its cash flow and liquidity, he continued.

Lion Electric has faced testing times, including hundreds of layoffs capped by a 30 per cent cut to its global workforce in July. Blame was put on the mismatched timing of U.S. Environmental Protection Agency’s funding for its clean school bus program, and delayed subsidies from Infrastructure Canada’s Zero Emission Transit Fund, as well as slower-than-expected demand and production issues.

In response, Lion Electric said it would switch gears on manufacturing to a batch approach, sell battery packs to third parties, possibly sublease a portion of its Joliet, Ill. factory, and make further spending cuts.

If the company could not secure additional funding in the next 12 months, the future of Lion Electric was uncertain, Bedard said in the Q3 call. In response, more financing was being sought by the company.

Positive developments in Lion Electric’s favour were steps to improve the timing of the Zero Emission Transit Fund and reduced development costs, he said.

Slowing EV demand globally

The headwinds affecting Lion Electric are not unique, with North American automakers and EV battery companies making U-turns on their expansion and growth plans.

Ford shifted from planning to build electric SUVs at its Oakville, Ont. assembly plant to hybrid vehicles. Northvolt’s C$7-billion EV battery factory expected to be built near Montreal could be delayed by over a year, according to the Quebec government.

A survey commissioned by car-sharing marketplace Turo found great reluctance among Canadians to purchase an EV, with only 13 per cent indicating interest in buying one as their next car.