‘Demand is growing and growing fast’: Quebec electric vehicle company gets help to build $185 million battery assembly plant

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Montreal area-based Lion Electric Co. announced Monday it’s building a $185-million lithium-ion battery assembly plant in Quebec — a crucial piece in the electric vehicle supply chain that could help position the province for future growth in the sector.

The company, which manufactures electric trucks and buses in St. Jerome, Que., said the federal and Quebec governments are each lending $50 million to help advance the project, which is expected to create an additional 135 jobs, and produce around 14,000 batteries once operational in 2023.

The announcement came at a press conference on Monday with Prime Minister Justin Trudeau and Quebec Premier Francois Legault, among other dignitaries, in front of a Lion electric school bus and truck.

It marks the latest example of the federal government working with a province to help bolster the electric vehicle industry, having announced a roughly $600-million deal with Ontario in October to refit a Ford Motor Co. plant in Oakville for electric vehicle production. The funding comes as major automakers, from General Motors Corp. to Volkswagen AG and others, shift away from internal combustion vehicles over the next decade toward electric vehicles.

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As city governments and businesses move more and more to electric (vehicles), demand is growing and growing fast

Prime Minister Justin Trudeau

“As city governments and businesses move more and more to electric (vehicles), demand is growing and growing fast,” Trudeau said at the press conference.

The federal government has also committed to purchasing 5,000 zero-emission buses over the next five years, as Trudeau put it on Monday, “to fast-track the electrification of transportation,” and help Canada meet its net zero carbon emission target by 2050.

Lion Electric, founded in 2008, has capitalized on the growing investment in electric vehicle companies. In November, it announced a deal to merge with Northern Genesis Acquisition Corp., a special purpose acquisition company that raised US$500 million on the New York Stock Exchange.

Lion chief executive Marc Bédard told the Financial Post that his company is likely to take over Northern Genesis’ NYSE listing within the next month, and should also announce more details of its plans to open a U.S. factory around that time.

The company has also announced deals in recent months to sell its trucks and buses to companies such as Amazon.com Inc., and municipalities such as the Los Angeles Unified School District.

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“It’s funny what some people are saying, ‘Lion is an overnight success years in the making,’” Bédard said. “We’ve been working for the last 12 years on making it happen.”

He estimated that the company has sold an average of 100 vehicles per year for the past few years and has around 300 vehicles on the road.

Bédard said this year the company will experience step-change growth and expects to produce at least 650 vehicles from its Quebec facilities, which have the capacity to produce 2,500 vehicles.

Amazon may purchase up to 225 vehicles. “If they like what we are putting on the street then our chances are pretty good they will fulfill the order,” he said, “and this is what we’re trying to do, gain market share.”

The proposed battery assembly plant, also located in St. Jerome, will help the company reduce its costs, Bédard said. Because his company will not be utilizing the full capacity immediately, it is open to producing battery packs for other electric vehicle companies, he added.

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“What we’re really seeing right now is Canada is starting to get a foothold in electric vehicle production,” said Cedric Smith, an analyst in Ontario with the Pembina Institute, which is focused on the transition away from fossil fuels.

Electric vehicles are expected to represent the majority of new sales within 15 years

In Canada, there are at least two other electric bus manufacturers, including Saint-Eustache, Quebec-based Nova Bus, which is owned by The Volvo Group, and also Winnipeg-based New Flyer, a subsidiary of NFI Group Inc., a large bus and coach manufacturer.

According to a report by Smith, between 2012 and 2018, the annual global growth in electric vehicle and electric heavy-duty vehicle sales has averaged 60 per cent and 140 per cent per year respectively.

Flavio Volpe, president of the Automotive Parts Manufacturers Association in Toronto, said that electric vehicles currently represent just under three per cent of new car sales, but are expected to represent the majority of new sales within 15 years.

“Government investment is going to happen in every single country that wants to play in this space,” said Volpe, adding that consumers need incentives because electric vehicles are still more expensive, and there is also a lack of infrastructure, such as charging stations.

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He praised the federal government for working with Ontario and Quebec to support the burgeoning industry.

In Quebec, Volpe said the automotive industry hasn’t had much presence in 15 years, but a host of new companies are helping to make the province a hotspot for an electric vehicle industry. Some companies have technology that will help manage the new demands on the electric grid, for example, he said.

“While Ontario has always been and will continue to be the beating heart of the auto sector of Canada, Quebec is coming back with a vengeance,” said Volpe.

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