Negative 29% gross margin: the EV maker that lost money on every bus

Today, I’m digging into The Lion Electric Company, the once-hyped electric school bus maker that turned its SPAC windfall into one of the ugliest gross margin trajectories that I've ever seen.

(Before I get into this one, I just want to ask that if you have a spare 5 seconds of time, I'd appreciate if you would review how well you like these emails with the one-question short survey at the bottom. That will help me fine-tune and steer this ship in the right direction.)

Here’s the quick rundown:

• Lion was supposed to be the North American leader in electric school buses and medium trucks.

• They went public in 2021 through a SPAC backed by the Algonquin Power founders.

• By 2024, they were burning cash faster than they could build buses, posting a −29% gross margin and entering creditor protection. When I first ran the numbers on this, the negative 29% gross margin almost made me fall out of my chair! What an epic disaster.

• Their Joliet, Illinois plant now sits idle, and new ownership has effectively abandoned U.S. customers including even voiding warranties.

Why this one matters:
Lion is a masterclass in how not to scale a manufacturing startup. They built ahead of demand, relied on subsidies, and convinced themselves that “unit economics” would magically fix everything later. In 2024, volumes tapered off, and their high fixed manufacturing costs sunk the company.

All to me, this appears to be a SPAC-fueled financial train wreck that likely enriched a handful of the SPAC sponsors. Sadly, public equity investors were essentially wiped out in the process.

I'm sure their modeling and financial planning assumed volume growth that would fix their gross margins. So, it's not like they did this completely blindfolded. But at the end of the day, we all need to do some thorough downside planning to help build a business structure that can support not meeting top-line budgets.

If you come across a business that has 9-figures of revenue and worse than -29% gross margins. Please send it my way. I'd like to see it!

With that, I'll see you tomorrow!

Nick

Full report below for anyone who wants to nerd out on the numbers and see just how brutal this spiral got.

TL;DR

• The Lion Electric Company builds and sells all-electric school buses and medium-duty trucks, mainly to public-sector fleets in North America.

• Despite early hype and an Amazon partnership, production never hit efficient scale and margins stayed negative.

• The company entered creditor protection in late 2024, showing how quickly capital-intensive startups can burn out.

• Entrepreneur lesson: Validate your unit economics before scaling, especially when your customers rely on subsidies or grants.

The 30,000-Foot View

• Business model: Lion designs, manufactures, and sells electric school buses and trucks. It also provides charging infrastructure through LionEnergy.

• Revenue mix: Vehicles (~90%+ of revenue), energy infrastructure and services (<10%).

• Geography: 2023 breakdown - Canada 65%, U.S. 35%.

• Core stats:

  • Market cap: Effectively distressed after 2024 creditor protection filing

  • TTM Revenue: $176.8M

  • TTM Gross Margin: -29% (🤮)

  • TTM Net Loss: $131M

  • (TTM period used in this report covers Q4 2023-Q3 2024)

  • Employees: ~1,350 in 2023, reduced to ~160 in 2025

  • Industry: Industrials – Commercial Vehicles (EV focus)

Company History

• 2011: Founded in Saint-Jérôme, Quebec, focused on electric school buses.

• 2020: Signed major agreement with Amazon to supply electric trucks.

• 2021: Went public via SPAC merger with Northern Genesis Acquisition Corp.

• 2022: Opened Joliet, Illinois manufacturing plant.

• 2023: Record revenue ($253M) but persistent losses; postponed minibus programs and cut staff.

• 2024: Entered creditor protection (CCAA) due to liquidity crisis; major layoffs followed.

Show Me the Money

Stand-out Financial Features

• Gross margins negative for three straight years; worsened in 2024.

• Net debt ballooned from near zero to $266M by Q3 2024.

• CapEx spiked in 2022–2023 for new plants, then fell sharply as cash ran out.

• Heavy dependence on Canada; U.S. sales rising with EPA grants.

Financial Data

The N.O.O.B. Nine — Competitive Powers

The Nerd Out on Business Nine is made up of Hamliton Helmer's famous "7 Powers" of competitive advantage (Scale Economies, Network Economies, Counter-Positioning, Switching Costs, Branding, Cornered Resource, and Process Power) combined with two of my own (Data Flywheel and Distribution Advantage).

Average Score: 2/5 - Weak moat.

Memorable Marketing

Approach: Focused on B2B trust and policy-driven storytelling. Positioning centers on safety, total cost of ownership, and environmental compliance.

Campaign Snapshots:

• Clean School Bus Funding Playbooks (2022–2024):

  • Hook: Helping districts apply for EPA grant money.

  • Channels: Webinars, playbooks, PR.

  • Why it worked: Simplified bureaucracy for buyers.

  • Result: Drove modest U.S. market share gains.

• Amazon Partnership (2020):

  • Hook: Partnership and warrants with Amazon for delivery trucks.

  • Channels: Press, investor decks.

  • Why it worked: Gave early credibility.

  • Result: Boosted awareness but not profits.

• Plant Openings & Delivery PR (2022–2023):

  • Hook: Local job creation stories and customer showcases.

  • Channels: Regional media and PR.

  • Why it worked: Positive optics for municipalities and schools.

Tactical Takeaways:

1. Create grant guides that make it easy for customers to secure outside funding.

2. Anchor your credibility with one large partner, but tie it to actual purchase orders.

3. Use every delivery or milestone as a marketing event.

4. Bundle the “headache removers” (like permitting and grant support) to speed up sales.

AI Uses & Opportunities

• Current usage: Minimal evidence of AI; operations mostly manual.

• Potential use cases:

  • Predictive maintenance and warranty optimization.

  • AI-driven grant scoring and lead prioritization.

  • Automated quote configurators for RFPs.

  • Factory scheduling optimization to reduce downtime.

Bumps in the Road

• Financial collapse: Filed for creditor protection in Dec 2024.

• Unit economics: Consistent negative margins show poor cost control.

• Funding dependence: Revenue tied to government grants and subsidies.

• Debt and liquidity: Rapid debt growth and cash burn undermined operations.

Your Swipe File

• I'm still blown away at their TTM gross margin performance. What a disaster. Easier said than done, but don't do that.

• Don’t scale production until you’ve proven positive unit margins.

• If your customer base depends on grants, own the process—help them win funding.

• Public partnerships only matter when they generate real orders.

• Treat capital efficiency as a moat; pace your expansion with demand.

• Cash flow management is survival for hardware startups.