The Lion Electric Company (LEV-T) is laying off 30 per cent of its global workforce and plans to further streamline its business following Q2 financials that show widening losses at the maker of heavy-duty electric vehicles.

In a plan unveiled Wednesday morning, the Saint-Jérôme, Que.-based company says it will make layoffs over the coming days in Canada and the U.S. across all areas of Lion Electric.

It will affect approximately 300 employees and most layoffs will be temporary. The move will save approximately $25 million (all figures US unless otherwise noted), if the temporarily laid-off workers are not rehired.

Lion Electric had cut 10 per cent and nine per cent of its workforce in November 2023 and in April, respectively, before this latest announcement.

The company will also:

• shift its truck manufacturing to a batch-size approach due to lower-than-anticipated market demand for electric trucks;
• sell its battery packs to third parties;
• possibly sublease a “significant portion” of its Joliet, Ill. factory and its experience centres in North America; and
• implement more reductions to expenses including consultant costs.

Lion Electric's Q2 numbers

Lion Electric reported revenue of $30.3 million in Q2, compared to $58 million in Q2 2023 and $55.5 million in Q1. Net loss stood at $19.3 million in Q2, compared to an $11.8 million loss in Q2 2023 and a loss of $21.7 million in Q1.

“The electric vehicle (EV) market has been challenging in many regards in the last few years for EV manufacturers,” Marc Bedard, Lion Electric’s CEO, said in an investor call. But he noted the “EV market is here to stay,” and Lion will support operators in electrification.

The objective for 2024 is to prepare for 2025 by getting into place an efficient cost structure to reach the company’s profitability goals with its electric school bus business and grow its electric truck sales.

Slowing sales

In Q2, Lion Electric delivered 101 vehicles — 84 in Canada and 17 in U.S. — Bedard said. It represents a 98-unit decrease from Q2 2023, and 95 units from Q1.

The company blamed the decline on the timing of U.S. Environmental Protection Agency funding rounds for its clean school bus program, and delays with subsidies from Infrastructure Canada’s Zero Emission Transit Fund. Deliveries were also affected by slowdowns in Lion Electric’s production because of the integration of its Lion MD batteries into its vehicles and increasing production of its Lion5 and LionD platforms.

Bedard said short-term demand has not been where Lion Electric anticipated. It will focus its efforts with larger fleet owners serious about electric transportation.

The company’s order book as of July 30 is 1,994 vehicles, consisting of 190 trucks and 1,804 buses, valued at approximately $475 million.

A priority will be placed on managing liquidity and controlling costs, CFO Richard Coulombe said on the call. Cost cutting efforts are being felt; previous cuts have added up to $20 million in savings, and approximately $10 million in savings will be made from measures this quarter.

Lion Electric’s action plan

The plan to sell battery packs is an opportunity for Lion Electric because it feels the market is “huge”, Bedard said. Sales will start in 2025, and potential buyers have already called the company, he added.

Bedard said it will offer the MD (medium duty) and HD (heavy duty) packs with possible uses for industries such as aerospace.

Lion Electric is in discussions to sublease its Joliet facility, Bedard said. Delays will be made to truck manufacturing on the site, which makes up approximately 75 per cent of space in the factory.

“The goal is to make this happen for the end of the year, but we need to find a partner to do that in Joliet,” he said.

Lion Electric's stock tumbled 18 per cent on the TSX to $0.98 Cdn as of 11:30 a.m. ET in morning trading.