July 23, 2020 - From the July, 2020 issue

Lion Electric’s Zero-Emission Trucks & Buses Lead the Pack in Southern California

In June, the California Air Resources Board adopted a first-in-the-world Advanced Clean Truck rule requiring truck manufacturers to transition from diesel trucks and vans to electric zero-emission trucks beginning in 2024, so that, by 2045, every new truck sold in California will be zero-emission. TPR interviewed The Lion Electric Co Founder & CEO, Marc Bedard, and VP of Sales, Nate Baguio, to share discuss the market expansion of zero-emission heavy-duty vehicles throughout Southern California and North America. They share how mandates and incentives have worked to expedite innovation and remaining barriers to scaling clean truck fleets and infrastructure.


Marc Bedard

“California is one of the strongest economies in the world and has always been leading the way in terms of EV technology. What happens in California happens 5 to 10 years before it happens anywhere else."—Marc Bedard

You're seeing the private sector respond to these incentives and grant funding packages in the way they are intended; the performance curve is going way up, the cost curve is going way down, and we need to continue that momentum.”—Nate Baguio

Our interview takes place one week after the California Air Resources Board finalized its landmark Advanced Clean Truck rule, the world’s first zero-emission commercial truck requirement. With the Province of Quebec long committed to the electric vehicle market—are California public incentives and market conditions likely to scale the zero-emission heavy-duty truck market?

Nate Baguio: Yes. Mainly, what I see happening in Southern California is a shift in what's possible. Even with 30 years of professional experience with heavy-duty fossil fuel vehicles, I believe the transition to EV is inevitable.

One of the things that is very attractive to us is the demand in Southern California for electric vehicles. People in California get it; when you look in some of the urban areas—especially Los Angeles—EV implementation on the consumer side is leading the nation.

The leadership here is looking to leverage grant funding to expedite deployment of electric vehicles and infrastructure. We're seeing the adoption of EVs—not only in the school bus and airport shuttle market—but the South Coast Air Quality Management District is going to be managing the VW Mitigation Trust to significantly accelerate implementation of zero-emission trucks across the state.

When you look at the impact of incentives that have been issued so far, it’s clear that they are working. For every dollar in incentive investment, you get six dollars in economic development in return with EVs. Looking at Lion specifically, the bottom line is that the grants are working. Our cost to the consumer has almost been cut in half, and our range has more than tripled since we first deployed in 2016.

You're seeing the private sector respond to these incentives and grant funding packages in the way they are intended. The performance curve is going way up, the cost curve is going way down, and there are no signs this momentum will slow. I do see a world where grants and incentives won't be necessary; the return on investment for these vehicles in some fleets is already there, even at current prices.

There's also sufficient labor here to achieve what you need to do, and not just the availability of labor, but labor that is properly trained. The education centers are here. Los Angeles is a sweet spot with its university system both UC, Cal State, and private colleges.

There are a lot of resources and conditions in the state that support the success of EV and the new ACT rule.

Marc Bédard: Yes, California is one of the strongest economies in the world and has always been leading the way in terms of EV technology. What happens in California happens 5 to 10 years before it happens anywhere else. With respect to electric, California is clearly a leader and Quebec is trying to mirror a lot of things that it’s doing.

As you're probably aware, Lion, fully appreciating the California market, just started selling electric trucks; and our first deliveries in California for the electric truck business will occur within the next few months. So it's a good step in the right direction.

We have also received some phone calls from many other states and Canadian provinces, and they're all looking at what California is doing. This is just the tip of the iceberg, but now any OEMs serious about doing electric vehicles will need to step up to the plate. 


Marc, as the founder and president of Lion Electric, share how you started and have grown your company 

Marc Bédard: I started 12 years ago and basically, I just wanted to make a difference in the way school bus transportation was done. I had the idea—at that point—that we need to go to a different kind of technology for school buses; but 12 years ago I didn't know that it was going to be electric.

We started with diesel, but if you look at our buses, they’re different from all the other buses. They're lighter. We do have one model that is wider, but that’s because we wanted three-point safety belts on all of our buses and at least give the option to the operators. There are over 100 innovations on that bus that we put to market in 2011, and we also made the decision to look at the other technologies.

We've looked at electric, CNG, LNG, propane, as well as hydrogen. We knew some of these technologies were better than diesel, but it wasn't where we wanted to go. Then, we made the decision to go electric in 2010. We kept selling diesel buses for years—and we sold a little over 1,000 of them—because we recognized that at some point you might need a range that will be higher than what you can get from electric at this point.

We've been investing in electric now for over 10 years. We have over 100 engineers at Lion and source specific engineering from third parties as well. We've invested over $50 million in electric, and this is why the products are reliable. Any OEM that decides that they want to go electric is great, but they'll need to invest a lot of money and it'll take at least 3 to 5 years to get a decent product.

Elaborate on the decision and challenges of expanding into the truck market from the bus market.

Marc Bédard: A school bus has a Class 7 chassis. Utilities, amongst others, came to Lion asking if we could put a cabin on top of the Class 7 chassis for it to become a truck. It's not that easy, but all of the technology was there. We started from the technology we've been lapping throughout the years, and we decided to do a truck. We like to purpose build buses and trucks to be electric—we don't like the retrofit. When you're doing a retrofit, you will always rely on another OEM that might not have the same view of where EV should be going and diesel chassis are not designed to receive an electric powertrain.

That's why we decided to control our own destiny, so we are building almost everything. This is why we've decided to do our own trucks, including our chassis and cabin. For us, going from an electric school bus to an electric truck took us about 4 years. The biggest challenge for us was not the electric part of it, it was mechanical things like building the doors.

Right now, for example, we're really agnostic to the type of charging system; it's really up to the operator to decide what kind of system they want to use, and as an OEM, our job is to make sure they can use whatever they want to be using. We offer Level 2 charging and Level 3 DC charging, and it also depends on whether they want to do V2G as well. The good thing at Lion is that we're agnostic and we offer them all of the options.

Nate Baguio: Lion has the capacity to build large numbers of electric vehicles, and can build them fast enough to get them in the hands of fleets in a timely manner. But the area where I would say there is a real challenge is that the region’s charging infrastructure needs to keep pace with the manufacturer’s capacity to build and deliver.

We're going to have to plug-in all of these vehicles. We are past the pilot stage in EV and are deploying 10 or 20 vehicles at a time at this point. There are fleets with 50 vehicles in one location and there are some grid considerations that affect these deployments. There needs to be a very robust focus not only from the federal government, but from state and local governments on getting infrastructure installed for medium- and heavy-duty industry. 

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Did Lion ever consider hydrogen when choosing to focus on the electric vehicles? If there had been an Olympic Games in Japan this summer, promotion of a Hydrogen Society would have been one of the host nation’s themes. Is Hydrogen a viable alternative for the truck market?

Marc Bédard: Hydrogen has been around for many years, there were people making a living from hydrogen 25 years ago. I was talking to one of those experts in hydrogen last week, and he was saying that hydrogen has been the energy of the future and it will always be! It is very challenging to have a good distribution network and a good TCO (“total cost of ownership”) with hydrogen vehicles.

I don't know where this is going to lead us, but I can tell you the reason we've decided not to go with hydrogen at Lion. We've decided to go with the urban usage of the trucks and buses, and this represents a lot of trucks and buses being sold in North America every year. Obviously, right now, electric is not a good fit if you want to do long distance, and this is why some companies are investing into the hydrogen network right now.

My opinion is that within the next 5-7 years—as the technology evolves to solid-state batteries and become a lot lighter and more dense—we will not need hydrogen to do the long-range that we need in the truck industry. For all those reasons, we've decided not to use hydrogen and strictly focus on electric.

Last year, the California Energy Commission awarded Lion a contract for the state school bus replacement program. How opportune was this grant, and how sane was the CEC review process?

Marc Bédard The process was great in two folds. The first fold was a technical one—you had to score at least 60 percent to go to the second phase—and the second fold was the business proposal. That took away anybody who's just going to EV because all of a sudden there was money available. Electric vehicles is something that you have to work on and invest a lot of time, resources, and money over the years.

The way the CEC did its solicitation was great because they took out all of the OEMs that aren't serious about EVs. Generally speaking, there were only two OEMs that made it to the next phase, and then it was the lowest bidder. The lowest bidding rule is something that was great years ago, but for a society that wants to go into innovation, it could be pretty weak because then you'll buy the cheapest product regardless of where and how it's being manufactured.

Elaborate on the investments in manufacturing Lion has made in California to date and as a result of being awarded the CEC grant?

Marc Bédard: We do have an experience center in Sacramento and we've been operating it for years, and we just opened one in LA as well. An experience center is a service center, a hub for the salespeople, and also a place for training purposes.

We are thinking about opening another one in Fresno during the next year or so. We will be deploying a lot of school EVs in California and we feel that we will have a lot of success there, and so those three experience centers are just the beginning of what we're doing.

We're also investing a lot into our people. We have technical and local salespeople on site. We have over 15 to 20 people who we have hired so far, and this is only the beginning.

Lastly, Lion Electric's vehicle components are reportedly designed, manufactured, and assembled in-house. How then, has Lion been impacted by COVID-19's disruption to your manufacturing processes, as well as to the market demand for vehicles?

Marc Bédard: All of our sales so far have been with school districts, and they're all closed. We are very thankful to the agencies because we went to them and asked about delivering the buses. We started to do some virtual deliveries in Quebec and California.

Basically, school districts are currently accepting the buses and they will start to use them as soon as possible. The buses are being delivered with all the safety processes that need to be put in place. We went through those few months of nightmares, so right now Lion is doing very well and we are 100 percent back to manufacturing buses and trucks.

We have seen a little bit of a setback in California with COVID-19, though we feel it's only a matter of time before it goes back. This is what the people want, and this is what we've been seeing as well. COVID, from a financial standpoint, has been hurting everyone, but from a point of values, there has never been an interest so strong as there is right now.

A lot of people are writing to us saying, "we've never seen the sky so blue, nature is so beautiful." Our customers are starting with those good values, and now when they see that they have a thorough cost of ownership with the trucks and school buses—and adding the subsidies on top of that—the TCO (total cost of ownership) is doing great.

Let's just think about the refuse trucks. We're putting the electric refuse trucks to market right now, and we got a sale with Waste Connections. We meet a lot of those giants in the refuse world, and they want to go electric. Not only is it a good thing for society, but for businesses as well because their TCO is great.

Nate Baguio: Initially, with the stay-at-home orders and shutdowns, it was particularly difficult. We did have to close the factory for a period of time, but we are open again with new processes in place to keep our employees and customers safe. Also, it's really slowed the process for the end-users who've already purchased a bus and need infrastructure installed.

With the emergence of COVID, the importance for clean air has become more evident as a key symptom of the virus is its attack on the respiratory system. Zero emission vehicles do not contribute to those health issues like you see with diesel particulate. It matters to the speed at which we recover from this crisis.

Also, there is the recovery from an economic standpoint. You had mentioned the Advanced Clean Truck Rule passed by CARB last week. It will be the jobs of the future that have longevity that will lead the way. The ACT rule will inspire more sustainable, clean energy industries to come to the state. The transportation industry is a key part of battling climate change and supporting California’s clean air goals. California is emerging as a vehicle manufacturing state, especially in the electric vehicle space. Companies like Lion want to come here and build where there is demand, resources and continuing deployments. More and more this vision of the future is coming to fruition in the State of California.

The Advanced Clean Truck Rule is not unique. There were regulations implemented that have similar requirements for transit fleets, airport shuttle fleets. Also, it was announced that 15 other states will follow suit with similar laws as ACT. The electric vehicle industry will be a key part of our overall recovery in the years to come. 

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