Electric bus makers hit the brakes

What happened: Two heavy-duty electric vehicle makers are facing tough financial challenges. Vicinity Motor, a B.C.-based electric bus and truck maker, entered receivership after failing to repay loans totalling more than $22 million. Meanwhile, Quebec’s Lion Electric announced it’s exploring a sale as part of restructuring efforts after a $33.9 million loss in Q3.

The context: Vicinity took on significant debt to finance operations. And while it built a strong order backlog, it ultimately didn’t convert to revenue fast enough. 

Meanwhile, Lion struggled with lower sales, higher manufacturing costs from ramping up new vehicle platforms, and delays in federal subsidies for municipalities to buy electric buses.

Why it matters: These setbacks could slow down the adoption of zero-emission buses and trucks by creating uncertainty for customers that their suppliers will still be around in the future. Some have already been burned by Proterra’s bankruptcy earlier this year. 

However, it’s not all bad news: electric bus manufacturer New Flyer continues to expand, and recently announced it’s bringing end-to-end manufacturing to its Winnipeg facility. 

The bottom line: Operating in capital-intensive sectors is no easy feat, where companies need to constantly balance cashflow, debt, sales, etc while scaling up new technologies. The two companies are still exploring options to keep their operations running, including plans from Lion to start selling its batteries to other manufacturers.

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