‘spotlights are on us’
How quebec- based Lion Electric took centre stage of Canada’s EV space in only two years.
it totally changes the value of the product when you can drive that much longer. batteries are bigger, they’re less expensive and the understanding of access for a company like lion ... is totally different than it was 10 years ago. — michael ramsey
Waiting to formally introduce himself and his company to the trucking industry for the first time, Marc Bédard remembers sitting at a table wedged between the outgoing president of the American Truck Association and the incoming one. Both gave him the same advice before he stepped on stage to give a keynote speech at a trade show in Atlanta two years ago: Don’t BS it.
Bédard knew exactly what they meant, having seen his share of empty promises during the eight years he had spent in the electric vehicle space before that conversation took place.
The chief executive of Lion Electric Co., a small, Saint- Jérôme, Que.- based electric school bus manufacturer that was about to step into the electric truck game, told the audience of 700 people that his trucks could be two or three times more expensive than the gas-powered equivalents upfront, but they’d end up saving buyers five to 25 per cent in the long term.
His vehicles weren’t for everyone, he admitted back then, especially if you didn’t plan to put 80,000 km on them per year. As a result, it may have been unreasonable then, even for an executive as ambitious as Bédard, to think that a little- known company from Quebec could be at the centre of Canada’s EV space in only two years, but that’s exactly where Lion finds itself after landing two marquee clients.
“The spotlights are on us,” he said. “A lot of fleets didn’t know Lion existed and now they know and understand we’ve been here for a lot of years.”
The transformation began only hours after Bédard walked off the trade show stage in Atlanta. He learned Amazon. com Inc. was listening — and it was interested.
Over the next 18 months, Lion would welcome Amazon to its factory in SaintJérôme, a suburban town with a population that’s 1/ 13th the size of Amazon’s total workforce, for multiple test drives and inspections from Amazon mechanics.
These visits are part of Lion’s usual process and don’t necessarily lead to a contract being secured. What tipped Bédard off that a partnership was realistic was the increasing frequency of the meetings. Amazon kept coming back with more questions and each time it did, Lion felt that much closer to landing its business.
Finally, in mid- September, Lion arrived on the world stage. The company announced it had secured a contract to provide Amazon with 10 battery-powered trucks to be used for shipments between fulfilment centres.
Only two weeks earlier, Lion had secured the largest contract in company history with a Canadian National Railway Co. order for 50 Class 8 electric trucks. That CN deal was worth more than $20 million, Bédard said.
The news of these partnerships has already led to dozens of new inquiries from leading Canadian and American companies. It’s a change of pace from Lion’s more modest origins.
Lion was founded by Bédard under a different moniker, Lion Bus, in 2008, when the goal was to simply be a school bus manufacturer. The niche industry only produces 45,000 units per year, he said, and within it, Lion would face stiff competition from Georgia- based Blue Bird Corp. and Thomas Built Buses Inc. in North Carolina. His way of competing was through innovation.
Bédard wasn’t quite ready to go the electric route yet — the first models Lion produced were powered by diesel — but he oversaw the creation of a line of buses that were wider than usual so they could accommodate seatbelts without losing passenger space. The buses also incorporated plastics and fibreglass into the exterior so they wouldn’t corrode as easily in Northern Canada.
The diesel buses hit the market three years later in 2011, with Bédard knowing full well that this model wasn’t where the company’s future lay. By then, he had already decided to focus on building electric vehicles going forward.
“We looked at compressed natural gas, liquefied natural gas, hydrogen, propane and electric ... and at the end of 2010 we said the future of Lion is electric because the future of society is electric,” he said.
The Lionc school bus debuted in 2015. The bus, still one of the company’s most popular products, ran on a combination of LG Chem Ltd.'s lithium- ion batteries and a TM4 SUMO MD motor, which allowed it to travel up to 250 kilometres before requiring a charge.
More recently, the company has transitioned to using BMW batteries for their buses. A truck was the next obvious evolutionary step since the DNA of one had already been embedded into the electric school bus design.
Truckers were the ones who noticed that Lion had repurposed a Class 7 truck chassis, a vehicle’s base frame, for its school buses.
“We had a lot of phone calls from truck operators saying, ‘ My God, if you’re doing a class 7 electric chassis, you can do an ( electric) truck,’ ” Bedard said.
From that base, Lion began building prototypes and bringing in members of the trucking industry to run focus groups. The company wanted to know where to place the charging ports: should they be near the front of the truck or the back? Did operators want Level 2 charging, which is done through a 240V plug or did they prefer Level 3 fast charging with a 480V plug? And, most important, where exactly did they want the steering wheel?
The latter seems like an obvious question in North America — it’s the left side. But it wasn’t so obvious for Lion’s engineers, since they were tinkering with the idea of placing it squarely in the middle of the cabin. The trucks could then be sold overseas in countries where the driver sits on the right side of the cabin without modification.
The idea was immediately shot down by North American truckers, Bédard said, and Lion pivoted to a more conventional design.
We l l , c o nv e n t i o n a l enough. Instead of placing the motor at the front end of the truck, they hid it underneath and eliminated the need for the truck to have a “nose,” as Bédard calls it in standard designs.
Like the school buses, it took Lion five years to master its truck design and begin manufacturing. The company now offers a range of vehicles, from refuse trucks for garbage pickup to refrigerated trucks for meat and produce deliveries.
Each one runs on a more powerful motor than the buses do and the batteries have a much larger capacity, allowing the truck to reach a range of about 400 km before needing a charge.
The i ntroduction of trucks has allowed Bédard to diversify his client base. A focus on school buses meant that the company’s orders were mostly coming from school boards. The trucks brought both private and massive publicly traded companies to the table.
Bédard won’t move completely away from buses or fighting for government contracts, though. Lion’s latest electric vehicle, which is scheduled to hit the markets in 2021, is an ambulance.
Lion’s evolution is taking place in what Gartner analyst Michael Ramsey said is the second surge for the commercial EV sector.
The first, he said, took place between 2010 and 2012, when Smith Electric Vehicles landed contracts with Pepsico Inc. and Fedex Corp and Azure Dynamics built components for Ford Motor Co.
Ultimately, both companies failed. Batteries were just too expensive then, Ramsey said, and didn’t offer vehicles the necessary range. The collapse of fuel prices soon after was the final dagger, he said. But in 2020, the space has changed and it comes down to the economics of the batteries.
“If you go back 10 years, you were looking at large delivery vans with at best 180 km of total range and now you’re probably doubling that,” he said. “It totally changes the value of the product when you can drive that much longer. The batteries are bigger, they’re less expensive and the understanding of access for a company like Lion to get good batteries from a bunch of different suppliers, not just the handful of the ones available, is totally different than it was 10 years ago.”
The red flag in the sector, Ramsey said, won’t be the technology itself, but whether startups can continue to generate sufficient capital to scale up and eventually earn the necessary revenue to be profitable. He points at Tesla Inc. as having had to “burn through billions in cash” to get there.
The idea of scaling up is already on Bédard’s mind. It’s becoming clear that the Saint- Jérôme factory, which has a capacity to produce 2,500 units, be they buses, trucks or ambulances, per year won’t be sufficient for much longer.
Lion is looking to aggressively expand and open a factory in the U.S. with a capacity of 20,000 units, good for a 700 per cent uptick in production. Bédard wants it fully operational in two years.
The choice to open the factory in the U.S. is one that relates to Lion’s customer base. Sales are currently split down the middle between Canada and the U. S., Bédard said, although there’s much greater potential for growth south of the border.
The U. S. electric vehicle market is about 10 times the size of Canada’s, he said, and he wants to be geographically closer to that customer base. Doing so would cut down the time it costs to ship his vehicles out and the cost for the buyers.
California is an option that Bedard is entertaining. In June, California’s air quality agency passed the “Advanced Clean Truck” regulation, which strongly pivots the state toward electric truck usage in the coming years.
The regulation will require all manufacturers to begin selling zero- emission trucks by 2024. By 2035, electric vehicles must account for 75 per cent of all heavy- duty truck sales. A decade later, only electric trucks will be available for sale.
Companies embarking on aggressive expansion plans can be tempted to take on every contract that comes their way, especially those from multi- billion- dollar companies. But Bédard hasn’t forgotten the advice he received at that trade show two years ago, even if it means walking away from a big deal.
Last week, Walmart Canada announced the acquisition of 130 semi trucks from Tesla as part of an initiative to convert 20 per cent of its fleet to electric vehicles by 2022. Bédard said Lion was in discussions with the mega-retailer, which wanted trucks with a range of 800 km, double what his can do.
Instead of putting a new truck into production, or making a promise about his vehicles that he couldn’t keep, he turned Walmart down.
“I’m always like this, I’ve always been like this and this is the way at Lion that we’re going to do things,” Bédard said.