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Maine School Districts Find Issues With Lion Electric Buses

The Maine Department of Education has advised that districts park their Lion Electric Co. buses until further inspections, given mechanical and service problems arising with many district fleets.

A line of yellow electric school buses parked and plugged into charge.
(Lion Electric)
(TNS) — The Canadian manufacturer of electric buses drawing complaints from several Maine school districts about mechanical and service problems is financially struggling and negotiating with creditors for more time to come up with cash.

Winthrop, Vinalhaven and Yarmouth are among the districts reporting problems with electric school buses. The Maine Department of Education advised that Lion Electric Co. buses be parked until further inspections.

Lion Electric last month posted a steep drop in third-quarter revenue and a wider financial loss than in the same period last year. The company warned investors it may not have enough cash to meet its obligations in the next year.

The electric vehicle manufacturer said Nov. 6 it's not certain that cash and expected cash flows from operations will be sufficient to meet its obligations coming due in the next 12 months. As a result, remaining a "going concern" — an accounting term that means a company is financially stable and will meet its obligations and continue its business — depends on, "among other things," its ability to raise more money to meet its capital requirements and satisfy its obligations such as interest payments and debt repayment.

"Inclusion of a going-concern note is a reflection of the challenges we are currently facing," Chief Executive Officer Marc Bédard told analysts on the company's third-quarter conference call Nov. 6. "But it does not mean we are out of options."

Lion Electric announced Nov. 18 an agreement with creditors for a two-week extension of its credit agreement. Nearly two weeks later it announced it temporarily laid off about 400 workers in Canada and the U.S., leaving it with about 300 employees who will focus on bus manufacturing, sales and delivery and helping customers repair and maintain vehicles. The company suspended manufacturing at its Joliet, Illinois, site.

Lion Electric also said it received more liquidity that will give it time to "continue to actively evaluate potential alternatives relating to a restructuring of its obligations, a sale of the business or certain of its assets, strategic investments and/or any other alternatives."

In the most recent third quarter, Lion Electric posted revenue of $30.6 million, down 62 percent from the July-September period in 2023. The company said in a Nov. 6 release that it delivered 89 vehicles in the three-month period, down from 245 in the same quarter last year.

And it reported a net loss of $33.9 million, steeper than a $19.9 million net loss in the third quarter of 2023.

Lion Electric said falling vehicle sales were due primarily to the impact of the timing of funding from the U.S. Environmental Protection Agency and "continued delays and challenges" with subsidies to customers related to a Canadian zero emission transit funding program. Lion Electric also cited the impact on production of installing batteries onto its vehicles and the continued ramp-up of production of its Lion5 all-electric truck and LionD electric school bus.

In addition, the company said production was hampered by its need to preserve cash.

The Quebec government has supported the firm with committed investments of $192 million. It has said it will do more to save the company, but only if other private investors also participate.

Lion Electric became a publicly traded company in 2021 and has since run into a cash crunch while facing supply chain disruptions and a dispute with a battery supplier, Bloomberg News reported Dec. 1.

Shares have fallen 81 percent since January, and closed at 34 cents Thursday.

The Maine Department of Education in February urged schools to take Lion Electric buses off the road. Inspection reports from the state agency, which inspects school buses, indicate the buses in Winthrop and Vinalhaven show wear that's consistent with older buses with higher mileage, not new buses that have yet to be driven 1,000 miles.

Because of the conditions of a federal grant, the school district must continue using the buses or may be required to repay the grant amount.

Lion Electric did not respond to a request through its website seeking comment on Wednesday.

Yarmouth Superintendent Andrew Dolloff said the school district had numerous problems with the buses before Lion Electric's financial problems emerged.

"They've been a problem to deal with from the word go," he said in an interview Wednesday. "It's a complete lack of response by the company or an inadequate response when they are here."

"It's just been extremely frustrating. It's a terrible experience," Dolloff said.

The school district used federal money to buy two Lion buses for the 2023-24 school year, Dolloff said. School officials encountered "consistent mechanical and technical problems," such as erroneous readings about battery failures and error codes.

The Yarmouth School Department worked with an industry consultant when it bought the buses, analyzing different products, he said. "Lion at that point had a pretty good reputation," he said.

Yarmouth schools, which operate fewer than 15 diesel buses, won't easily approach the subject of electric vehicles again because of its experience with Lion, Dolloff said. "It's giving EVs a bad reputation."

In July, the company recalled a part on Winthrop's electric school buses. By mid-September, the district was still waiting for the part to arrive from Lion Electric to fix the buses.

The Winthrop school board decided Wednesday to put its electric school buses back on the road, even as school districts across the state continue to experience problems with Lion Electric buses. Winthrop's four electric school buses were taken out of service for about a month after a part on the buses was recalled by the Canadian manufacturer.

©2024 the Portland Press Herald (Portland, Maine). Distributed by Tribune Content Agency, LLC.