Editor’s note: This story was updated on March 15, 2021 to include comments from our interview with Lion’s CEO this afternoon.

Following through on hints made in late 2020, Lion Electric Co. today announced their new battery pack factory will be situated in Quebec and operational by 2023

Canada’s electric vehicle battery supply chain is one step closer to realization with today’s confirmation from Quebec-based electric bus manufacturer, Lion Electric Co., that it will build a battery pack manufacturing plant and innovation centre in its home province. The factory will cost $185 million — with $50 million each coming from the Quebec and federal governments — and will manufacture lithium-ion battery packs and modules.

At peak capacity, Lion says the plant’s output will be capable of electrifying 14,000 medium- and heavy-duty vehicles annually.

“It’s a dream come true,” says Marc Bédard, Lion’s CEO in an exclusive interview with Electric Autonomy Canada following the morning announcement alongside Prime Minister Justin Trudeau and Quebec Premier, François Legault

“Prime Minister Trudeau told me this morning that we are the first Canadian OEM to do something like this right now. It’s really going to the next level with what we are doing in terms of technology control, in terms of cost reduction going forward as well. The cost reduction we will get from controlling everything is huge. We are controlling the potential shortage of cells going forward. We are totally controlling quality going forward.”

Better vertical integration

The announcement follows months of speculation that, due to an influx of American financial backing, Lion would set up the plant in the U.S. However, in an exclusive interview in November with Electric Autonomy Canada, Bédard said the company’s SPAC partnership with investor Northern Genesis — which will see Lion listed on the New York Stock Exchange once the transaction concludes — meant he was “very optimistic” that they’d build the plant in Canada.

“This factory will allow Lion to integrate a fundamental element to the supply chain of our electric vehicles,” said Bédard in a release issued in tandem with the announcement.

“Thanks to the financing provided by the federal and provincial governments, we will now be able to manufacture in Canada what we previously imported. Lion, Quebec and Canada will gain from this, both on the economic and environmental fronts, to the great benefit of generations to come.”

Bédard told Electric Autonomy that he estimates Lion will see almost 50 per cent cost savings in battery pack assembly when the plant is operational — game-changing numbers for any company. It will also bring Lion more propriety control of their innovations.

“I think it’s great,” says Bédard. “What’s exciting me very much is the technology is evolving so fast and if you do not control your technology, who will?

A first in Canada

Lion is one of five major electric bus manufacturers headquartered in Canada. The company has made major growth strides in the last year and has become a national example of electric mobility potential. This factory further cements Lion’s standing as an electric OEM in the North American market and provides an important paving stone in Canada’s road to a vertically integrated battery national supply chain.

The company says their automated factory’s capacity will be 5 gigawatt-hours, which equates to production of a battery module every 11 minutes and a full battery pack every five minutes. Lion’s factory will create 135 direct jobs, with hundreds more indirect jobs predicted. “We are continuing to take steps to support our Canadian businesses, invest in innovation, and protect the environment,” said Prime Minister Trudeau in the press release.

Added Quebec Premier Legault: “With its new facilities at the cutting-edge of robotization, the company will be able to increase its productivity and will further its contribution to the growth of our economy. In the actual context of economic recovery, this is the type of initiative that can help Quebec differentiate itself in promising sectors, such as that of batteries, and one that my government commits to support.”

Lion did not disclose the new factory’s location, saying that those details will be announced soon. It hopes to start construction in a few months.

Building the battery supply chain

Calling further development of a national battery sector “a priority for our government,” Pierre Fitzgibbon, Quebec minister of economy and innovation, said Lion is helping to amplify Canada’s reputation as a prominent player in the mid to heavy-duty vehicle sector — particularly in electric buses. Some of Lion’s biggest contracts are held by Amazon and CN — both companies looking to transition their fleets in the coming years with Lion vehicles. Other international companies are constantly circling the Canadian electric vehicle space for sourcing.

Bédard points to both Trudeau and Legault voicing their support not only for Lion and the other electric vehicle manufacturers, but for the Canadian clean transportation and battery space at large in the context of staying focused on a growing national priority: building out a battery supply chain.

The ultimate prize in fulfilling that supply chain goal will be the construction of a battery cell production facility, which would carry a price tag of about $1.5 to $2 billion. It’s a cost Lion says doesn’t make sense for their model and that they won’t be looking into branching into cell manufacturing, but that Canada is an excellent space to host a battery cell plant.

“I think this is the missing piece right now,” says Bédard. Lion, he says, is currently in negotiations with third parties — the world’s go-to major cell manufacturers — to get their supply of cylindrical 21700 cells, but that’s largely because there isn’t a Canadian option.

“In some provinces we do have the natural resources, we do have the minerals. Both [Trudeau and Legault] were saying we will work on trying to manufacture those types of cells in Canada in the near future. If they can do that [Lion] can be a major buyer of those cells. It’s the missing piece right now. I’m looking forward to it.”