Canada’s automotive technology industry is at a crossroads as three companies simultaneously try to navigate out of financial crises.
LeddarTech, a Québec City-based software provider for self-driving cars, has warned that it has to raise $9.7 million USD (about $13.6 million CAD) in additional equity investments by May 23. If it doesn’t, it will be in default on its credit facility with Desjardins, which requires the company to hold at least $1.8 million CAD in cash from April onward. It had $9.2 million at the end of March, but just $4.1 million by May 8.
The crises come as Canada’s automotive sector faces troubles prompted by the United States’ (US) trade war, market conditions, and failed investments.
The company is also obligated to share a financing plan with lenders by May 16 (today). A default might require that LeddarTech repays all its debt to Desjardins, and that the company’s ability to operate might be “materially and adversely affected.” The auto tech firm said in a release that it doesn’t believe it can meet either of those deadlines, but that it was working with Desjardins and bridge lenders on a “potential solution” that could provide extra funding and a reprieve from its financing, minimum cash, and planning requirements.
Exro Technologies, a Calgary cleantech company focused on power controls for electric vehicles (EVs) and energy storage applications, has simultaneously struck a deal with an undisclosed “long-term institutional shareholder” to get up to $30 million USD ($42 million CAD) through a loan facility.
This will help Exro “maintain operations” while giving an independent advisor more time to conduct a “strategic review process” of the company’s business, according to a statement. The review could lead to capital restructuring, corporate mergers, or partnerships. Exro has to provide an operating plan to the lender by May 20.
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Embattled heavy-duty EV maker Lion Electric, in turn, has entered into an agreement that will put the Montreal company’s ownership in the hands of a Québec-based investor consortium that includes Lion director Pierre Wilkie and real estate mogul Vincent Chiara. The move will see all of Lion’s common shares cancelled, with the buyer group subscribing to a new class of shares as it takes over.
The consortium intends to focus on making electric school buses at a facility in Saint-Jérôme, Que., discarding its truck business outright.
All three brands have been in trouble for a while. LeddarTech was at risk of being delisted from the Nasdaq stock exchange in 2024, and in March was told it had 180 days to reach a $35-million USD ($49-million CAD) minimum market value to stay on the exchange. Exro, meanwhile, faced a potential class-action lawsuit in November over allegedly “delusional” 2024 revenue forecasts.
Lion Electric went bankrupt in December 2024, and revealed that it owed over $244 million to creditors. It closed a battery assembly plant in Mirabel, Que. and a bus factory in Illinois. It faced the threat of liquidation after the Québec government declined to provide more funding.
The crises come as Canada’s automotive sector faces troubles prompted by the United States’ (US) trade war, market conditions, and failed investments. Most recently, Honda paused a $15-billion expansion of its EV efforts in Ontario over a “recent slowdown” in the electric car market. In 2023, the federal and Québec governments invested $7 billion to help Sweden’s Northvolt establish an EV battery plant, only for the manufacturer to declare bankruptcy in its home country this March. It’s not yet clear how this affects the fate of the Québec facility.
Battery production expansions from Stellantis and Volkswagen remain on track, according to the respective companies. However, uncertainty has persisted over concerns the US might enact tariffs on Canadian auto parts and make it impractical to produce some cars or components in Canada. Most recently, the US said that parts complying with the Canada-US-Mexico Agreement (CUSMA) wouldn’t be subject to tariffs.
Feature image courtesy of LeddarTech.