Lion Electric faces workforce cuts amid restructuring efforts

The Lion Electric Company, a North American leader in zero-emission vehicle manufacturing, announced on 3 January 2025 that it has temporarily laid off approximately 150 employees across Canada and the United States. This workforce reduction, impacting all departments, comes as the company navigates financial restructuring under the Companies’ Creditors Arrangement Act (CCAA). Following these layoffs, Lion Electric’s workforce will be pared down to about 160 employees, whose primary focus will be on the maintenance and servicing of the company’s electric school buses and trucks.

This restructuring marks a critical chapter for Lion Electric, known for its innovation in electric transportation, particularly in manufacturing all-electric school buses and medium- to heavy-duty urban vehicles. The move highlights the financial and operational pressures electric vehicle (EV) companies face as they seek to balance technological advancement with economic viability.

Why Did Lion Electric Reduce Its Workforce?

The layoffs were necessitated by conditions tied to debtor-in-possession (DIP) financing, a key component of the company’s ongoing restructuring. This financing arrangement ensures operational funding during the restructuring process and supports the sale and investment solicitation process (SISP) approved by the Superior Court of Quebec.

On 18 December 2024, the court granted Lion Electric and its subsidiaries protection under the CCAA, facilitating a controlled restructuring process. The SISP allows potential investors or buyers to submit proposals for acquiring the company’s business or assets, aiming to maximise value for stakeholders.

Deloitte Restructuring Inc., appointed as the court monitor, will oversee Lion Electric’s restructuring efforts and provide regular updates to the court. Despite these financial challenges, the company has emphasised its commitment to maintaining customer relationships, focusing on essential vehicle servicing and support during this transition.

Restructuring Under CCAA: What It Means for Lion Electric

The CCAA protection offers Lion Electric a legal framework to address creditor claims, pause contractual disputes, and secure financing to sustain operations. However, the availability of DIP financing is contingent on meeting specific conditions, including ongoing court approvals.

The company is also seeking recognition of its Canadian CCAA proceedings under Chapter 15 of the U.S. Bankruptcy Code. This recognition would extend the legal protections across borders, ensuring stability in its North American operations.

The restructuring process, while challenging, provides an opportunity for Lion Electric to streamline its operations, attract investment, and potentially emerge as a more resilient player in the competitive EV sector.

Lion Electric’s Vision Amid Financial Challenges

Despite its financial difficulties, Lion Electric remains steadfast in its vision of driving sustainable mobility. The company designs and builds critical components for its vehicles, including chassis, battery packs, and bus bodies, to ensure performance reliability. Its all-electric vehicles have been lauded for their environmental benefits, offering significant reductions in greenhouse gas emissions and operational costs.

While layoffs and restructuring may create immediate uncertainties, Lion Electric has reiterated its commitment to supporting its customers. The company’s efforts to retain a core team focused on vehicle servicing highlight its dedication to maintaining quality and reliability during this period of transformation.

What’s Next for Lion Electric?

As Lion Electric restructures under court protection, its future depends on the outcome of the SISP and its ability to secure investor confidence. The electric vehicle industry, though growing rapidly, remains highly competitive and capital-intensive. For Lion Electric, navigating these challenges while retaining its market position as a leader in zero-emission vehicles will be crucial.

With the court-monitored restructuring process underway, the coming months will likely shape the company’s trajectory, determining whether it can stabilise operations and capitalise on its innovative capabilities.