(Saint-Jérôme) The storage of components to manufacture the batteries for its electric buses and trucks has not protected Lion Électrique from supply chain disruptions.
The Saint-Jérôme-based company produced fewer electric vehicles than expected in the third quarter, due to these disruptions. The company delivered 40 vehicles during the three-month period ended in September.
“Let us be clear, even if our deliveries represent a significant increase compared to the 10 vehicles that we delivered during the same period last year, this figure is significantly lower than our objective”, admitted the president and founder Marc Bédard, during a conference call to discuss quarterly results.
Desjardins Capital Markets analyst Benoit Poirier predicted the company would be able to deliver 80 vehicles during the quarter. “It’s a surprise, since management had pointed out that its strategy of storing key components would have the effect of reducing supply chain issues. ”
Lion had prepared for supply chain disruptions by increasing its reserves of “critical” components used in the construction of its batteries and engines. “We have not suffered a shortage for any of these items,” explained Mr. Bédard.
However, the global crisis has caught up with the company for other materials, such as metal and plastic. The president clarified that an electric vehicle contained at least 2,000 parts and that some of them had been difficult to obtain. Suppliers have also experienced difficulties due to the supply chain, but also the shortage of manpower.
To mitigate the impacts of the crisis, Lion has expanded its pool of suppliers, which has grown from 430 to 500 in three months, some of whom are doing equivalent work. The company tried to favor local suppliers. It also ordered materials directly on behalf of subcontractors.
Its engineers also worked to replace certain items ordered, such as electrical cables, with other available components.
“All of these efforts have enabled us to maintain our production, even if we had to delay deliveries,” said Mr. Bédard. Several manufacturers were unable to do as we did and had to shut down their operations. ”
Mr. Poirier said he was disappointed that the supply difficulties were worse than expected. The analyst still maintains his optimistic long-term thesis. He believes Lion will be able to carve out a niche for itself in the electric bus and truck market.
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