The Lion Electric Company (NYSE:LEV) Q4 2022 Earnings Call Transcript

Page 11 of 14

Rupert Merer: Hi, good morning everyone. So on the call so far, we talked about supply chain, and it does seem to be limiting your production run rate, and I think you mentioned these issues could be around for another 18 months or so. But in Joliet, you believe you could have capacity to do 50 units a week by the end of the year, if you hire enough people. So it sounds like you think the supply chain may not be a limitation for Joliet by the end of the year, is that a fair comment?

Marc Bedard: Well, we feel that it’s under control. It’s more and more under control, Rupert. Let’s put it this way. If you — the discussions we had like a year ago, I mean, the tone was totally different. Right now, I mean, we feel better and better about the supply chain. We still feel this is going to be an issue, but this limiting factor we feel is going to go away within the next 18 months. You’re absolutely right. So hopefully, I mean, in a year from now, supply chain, I mean, will be something that will almost not be a limiting factor anymore, yes.

Rupert Merer: And are there any other limitations to the production, we know the order book is big enough, but are there enough of those orders that you could deliver on this year, let’s say, to produce that kind of run rate?

Marc Bedard: Well, there’s always the final approval of the subsidies and all of this, but it’s going well because most of the orders that we have always rely on subsidies. But absolutely, no red flag. It’s going well, but we’re aligning obviously, the subsidies, I mean with the delivery schedule. And also when I was talking about our ecosystem in the past, making sure that the customers are very well equipped in terms of charging infrastructure to receive the buses and that they are being trained, is always something that is top of mind for us. So thank God that we had this Lion energy that we’ve launched several years ago. We feel this is making a huge, huge difference, I mean, in terms of — for the operations of the operators.

So I would say for them, it’s really receiving the buses and trucks when they need them, but they need to be fully prepared to receive them to make sure that it’s going to be a very, very efficient operation. And I feel this is something that throughout the years, we became very, very good at doing. So you heard me talk a lot of time about this ecosystem. I think it makes a huge difference. And I think it’s one of the big advantage we have when we’re comparing to some of the other OEMs that are selling to dealers. Not easy for dealers to take, let’s say, the EV turn and equip themselves with everything that they need to do that. And that’s one of the reasons we’ve decided to sell direct. And I think it’s serving us very well.

Rupert Merer: Great, thanks for that. And then secondly, on the battery plants. So you believe your capacity could be 1.7 gigawatt hours. I think you said that’s enough for 5,000 vehicles. So obviously, by the end of the year, the battery plant capacity could be greater than what you need for your internal uses. Are you contemplating using any of that capacity to sell to third parties or are there any other ways you can optimize those operations for say, improving your margins?

Page 11 of 14