The struggles continue for Quebec-based Lion Electric. As it faces difficulties paying its debts, the electric-vehicle manufacturer has just announced the temporary layoff of another 400 employees and ceased production at its Illinois plant.
The company had a round of financial obligations that came due on November 30th.
The “good” news is that Lion Electric has just received a two-week reprieve from its lenders. The future of the manufacturer of electric buses and heavy trucks is likely to be decided during this period, and the extension shows that discussions are taking place.
After this latest round of layoffs, the remaining 300 employees (down from a high of 1,500) will concentrate on manufacturing, selling and delivering buses.
Lion Electric previously laid off 520 workers in an earlier round.
It’s not unusual for new companies in the automotive sector – especially in the EV segment - to face challenges as they seek to establish themselves, mainly because of the major investments required to achieve mass production and profitability.
Lion Electric recorded a net loss of $33.9 million USD in the third quarter of 2024, according to financial results released on November 6th.
The two-week extension gives the company time to consider its options, including selling the firm or filing for creditor protection. A sale to a private group could mean a delisting from the stock exchange, a solution that could calm tempers, but prove costly for all investors, both public and private.
“There can be no assurance that the company will be successful in capturing and implementing any of these alternatives, and there can be no assurance as to the outcome of any solution or its timeline,” read a statement issued by the company.
The union representing workers at the Saint-Jérôme plant in Quebec says the two-week extension shows that serious discussions are underway to save the company, but does not guarantee a solution.
It won't be long before we know, and as with all other difficult situations affecting the industry, we can only hope for a solution that will enable as many workers as possible to keep their jobs, especially as the holiday season approaches.