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

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Marc Bedard: It’s always an option, Rupert, because this capacity is going to be there. And the reason we’re scaling up to 1.7, I mean it’s a matter of automation. Almost everything is automated. You’ll see that, I mean we’ll do an opening probably in April, and you’ll be able to see that. It’s a very exciting operation. So it’s a matter of automation, it’s a matter of purchasing the right robots. So we felt the 1.7 gigawatt hour was the right number. Yes, you’re right. I mean if we’re selling only trucks, I mean, that will be like 2,500 trucks like if we’re selling only like Lion8 tractor. If it’s only buses, it’s like 10,000 buses. So we do have ample capacity in this regard. We’re not planning on selling our battery packs to anybody else right now because time is — time to market is of the essence as well right now.

And doing this for other OEMs, means a lot more. If you want to do it right, I mean, this means a lot more than just selling a battery pack. That will mean integrating this — the battery pack with their current trucks or buses. So we’re talking years for those OEMs to integrate those packs. This is something that many incumbent that we have through the years have been, I would say, understating, but it takes a lot of time to integrate a battery pack on a truck or on the bus. So we’re not thinking about any like short-term option like that because we don’t feel it’s going to serve us well. We want to keep this capacity because we feel that we will need it on a short or medium-term basis. And we want to make sure that we’re fully focused on selling the Lion products and getting the better costs.

So not an option for now.

Rupert Merer: Thanks. So just one final follow-up on that battery plant. Are there any other limiting factors on the capacity of that plant, do you have any supply chain concerns for the battery plant or I know it’s mostly automated so I imagine a few labor concerns, any other concerns you might be able to hit the run rate?

Marc Bedard: Yes. No labor concern. You’re absolutely right. I mean labor is not — let’s say, it’s not a challenge. Supply chain is always a challenge. So I should say that we have the same supply chain challenges than we have for the rest of our operations. So we do — we know the lead times of all of our suppliers. We have a solid agreement for the cells, which is keen in what we’re doing. So we’ve announced that last year. So this is in place and this is very strong. And we have a long-term relationship with most of those Tier 1 suppliers as well. So we then start — with most of the suppliers, we then start building this relationship just lately. I mean many of them, I mean we had them as suppliers for many, many years.

So it’s a very good relationship. It’s almost partnerships that we have with those suppliers. So I would say in all the comments I’ve made earlier about the supply chain and the challenges for the next 12 to 18 months are the same, but we’re — we navigate with those. And we manage those supply chain challenges the same way we’re doing for the rest of our operations.

Rupert Merer: Great, thank you very much. I will leave it there.

Marc Bedard: Thank you Rupert.

Operator: The next question comes from Michael Glen with Raymond James. Please go ahead Michael.

Michael Glen: Hey, everything has been answered. Thanks.

Marc Bedard: Okay. Thank you, Michael.

Operator: Our next question comes from Abhi Sinha with Northland Financial. Abhi, please go ahead.

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