Good morning, ladies and gentlemen. Welcome to Lion Electric Second Quarter 2022 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference call is being recorded.

I would now like to turn the call over to Isabelle Adjahi, Vice President, Investor Relations and Sustainable Development. Please go ahead, Ms. Adjahi..

Good morning, everyone. Welcome to Lion’s second quarter 2022 results conference call. [Foreign Language] Today, I’m here with Marc Bedard, our CEO-Founder, and Nicolas Brunet, our EVP and CFO. Please note that our discussion will include estimates and other forward-looking information, which our actual results could differ from in the future.

We invite you to review the cautionary language in this morning’s earnings release and in our MD&A regarding the various factors, assumptions and risks that could cause our actual results to differ. With that, let me turn it over to Marc to begin.

Marc?.

Thank you, Isabelle, and good morning, everyone. We are very proud of our results in the second quarter of this year, both in terms of vehicle deliveries and in the execution of our growth initiatives.

As we navigate through those challenging times, we relentlessly focus our strategic activities on accelerating return on investment with the ultimate goal of increasing deliveries to our customers, while at the same time, increasing our manufacturing capacity at a pace consistent with the EV market adoption.

To do that, we leverage both the strength of our Lion ecosystem and experience we have accumulated over 14 years of operations. This enables us to ensure that our investments are aligned with the underlying fundamentals impacting our industry and operations, as well as our liquidity profile.

Today, in addition to discussing our Q2 2022 operational and financial performance, we will explain the actions we will implement to support our growth strategy and accelerate return on investment. There are three key elements for today’s call. First as supply chain continues to improve. So does the pace of our vehicle deliveries.

We delivered the highest quarterly number of vehicles ever, with 105 deliveries in Q2. This is the result of a more stable manufacturing rhythm, where we see continued growth in the number of finished vehicles being produced. And we expect our manufacturing operations to continue to improve in the upcoming quarters.

Second, our Joliet plant and our battery factory are advancing as per schedule. And we remain on track to start manufacturing U.S. build vehicles and Lion batteries by the end of the year.

That being said, with a view to focus in our strategic activities to accelerate return on investment and optimally manage our capital resources, we decided to adjust the cadence of our capital spend for the Joliet Facility.

Our goal being to align CapEx with projected deliveries, we will reduce 2022 spend to focus on reaching commercial production for the electric bus production lines in Joliet. Third, with many long time expected EV programs in both the U.S.

and Canada now being deployed or to be deployed in the near future, we expect global demand to significantly accelerate and are more than ever ready to support customers in their transition to EV. We will elaborate on each element during the call. Let’s begin with vehicle deliveries.

We delivered 105 vehicles in Q2, the highest number ever for a quarter. This represents an increase of 72% compared to 61 vehicles in Q2 of 2021. Also a growing number of our customers in Q2 dealt with Lion Capital to secure financing solutions, making it easier for them to access financing solutions, tailored to the EV product on a timely basis.

Let me now provide an update on our supply chain for both critical and non-critical components.

The challenges experienced over the past year are decreasing, even if they’re not yet fully reverted to pre-pandemic levels, as we remain extremely vigilant and to avoid any disruption in distilled fragile environment, we continue to proactively seek new alternate suppliers.

Specifically, we have increased the number of suppliers from which we source raw materials and components by more than 15% over the last 12 months.

One of the biggest hurdles we are nevertheless currently facing is the upwards inflation pressure for some of our commodities and for transportation cost, which had and is expected to continue to have a negative impact on our product cost.

To that end, we have begun rolling out near-term price increases in certain markets to preserve our unit level gross margins. On the battery front, we have over 3,000 packs in inventory and we expect to continue to receive additional packs until the end of the year, thus ensuring a smooth transition to our own battery pack production in 2023.

Let me now discuss our U.S. factory and our battery plant and our priorities for the foreseeable future.

Like most companies, we spent the last few months navigating through the current challenging economy environment, and I’ve decided to put additional focus on what will generate revenue in the short-term with a goal to accelerate return on investment and optimally manage our capital resources.

The concrete actions we are putting in place are the following. We adjusted the plan cadence of our capital spend at Joliet Facility to align it further with projected deliveries and therefore decided to initially focus exclusively on bus production.

Trucks will continue to be manufactured in Canada in the near-term where we have ample capacity to meet near-term demand. As a result, the installation of some of the equipment and other capital expenditures at the Joliet Facility has been pushed beyond 2022.

This includes equipment aimed at supporting truck production or further increasing bus capacity towards full scale production. Specifically, we are reducing the amount of total CapEx expected to be insured for the full year in the Joliet plant in 2022 by $35 million from $115 million to $80 million.

While the estimated cost to build out the Joliet facility to its full capacity remains at $150 million, the timing of the fill build out will be continuously reassessed. The same line of start, staffing of the Joliet plant is being adjusted to align our focus on short-term production needs.

Most of the management and back office employees have been hired. And on the manufacturing front, we will hire the number of employees required to begin our bus production ramp up towards the end of 2022. We will then scale the account over time based on demand for our vehicles.

With respect to the Lion Campus, with a view to better leverage our available space and maximize cost efficiency in this environment of very expensive and rare square footage renting cost.

We have decided to use a portion of the Innovation Center that was initially planned for engineering offices for warehousing capabilities on the temporary basis starting early next year.

A portion of the Innovation Center will still be used as planned for test and certification of our vehicles and batteries as well as for vehicle prototype production.

While there are no changes to the expected CapEx of approximately $100 million to be incurred in total in 2022 for the Lion Campus, we will hear again focus on the battery plant, which will have a significant impact on our short-term revenue and accelerate return on investment.

The timing of the full build out of the Innovation Center will therefore be continuously reassessed. I will now discuss the advancement of each plant in detail, starting with our U.S. manufacturing plant in Joliet.

A construction work is progressing well during Q2, we continue to install school bus assembly stations and manufacture Lion C units for the purpose of working station set up and employee training. We expect the installation of school bus production stations to be substantially completed near the end of the year.

And we remain on track to start the commercial production of buses also by the end of the year. This will enable us to meet the demand for our electric school buses coming in part from the $5 billion EPA program.

Let me stress that while our current focus is on ramping up near-term production in a capital efficient manner, our long-term expected annual capacity in Joliet remains unchanged at 20,000 vehicles per year. Now turning to the Lion Campus. During the quarter, we substantially completed the shell of the battery plant building.

We expect the interior work to be largely completed by the end of Q3 and production of battery packs to begin towards the end of the year. For the Innovation Center building foundation work has been completed and the steel structure has advanced to approximately 90% completion.

In parallel, testing of both our battery packs and assembly line are progressing as planned. We continue to produce additional prototype battery packs at JR Automation’s facility in Troy, Michigan, where the prototype line has been in operation.

The battery packs are currently undergoing testing and certification, and we expect the certification of facts, factory acceptance of production equipment at JR Automation facility, as well as production of our battery packs at the Lion factory to be completed by the end of this year. Now turning to orders.

Our PO book amounts to $590 million consisting of 286 trucks and 2,071 buses for a total of 2,357 vehicles substantially all of them being conditional on the grant of subsidies and incentives.

Long awaited subsidies, which are finally being launched on both sides of the border should accelerate the transition to EV and we believe that this momentum will positively impact our book.

On that note, we are pleased to announce that our order book includes a first order for four Lion ambulances, a vehicle we developed in partnership with Demers and for which we see great potential.

With respect to electric buses, we are seeing more and more interest from Canadian customers as reflected by recent orders, including several repeat orders during Q2. The Canadian ZETF program continues to generate increased interest from large school bus fleet owners.

As a reminder, under this program, the federal government is dedicating CAD2.75 billion to support public transit and school bus electrification.

Most recently on the truck side, the Canadian federal government announced the launch of the incentives for median and heavy duty zero emission vehicles program dedicating CAD547.5 million over the next four years. The objective of this program is to promote the adoption of median and heavy duty zero emission vehicles.

Under this program, electric truck buyers can receive up to $150,000 in subsidy per electric truck. Even more interesting is that this funding can be combined with provincial incentives.

As an example by stacking both the federal and provincial incentives such as Quebec’s Ecocamionnage program, alliance its truck is eligible for subsidies of up to $244,000, which has a material positive impact on the TCO. Since funds, mainly trucks have benefited from this program and we continue to increase interest from customers.

In the U.S., the $500 million first phase of the announced $5 billion EPA program open in May translating into unprecedented customer interest and dialogue. We are confident that the positive impact of this program will materialize on the order book.

Once orders can formally be placed by the operators in school districts starting next October, as per the program roll out procedures. In the meantime, many U.S. customers are putting orders on old awaiting final grant allocations.

As a reminder, this program will award up to $375,000 per zero emission school bus in priority districts, while other school districts can receive up to $250,000 per school bus. As further rules of this program, infrastructure installation and vehicle delivery must take place no later than October 2024.

We believe that we are ideally positioned to serve eligible customers, given our leadership in the industry, our Lion ecosystem, our close relationships with the largest operators in school districts and of course our upcoming Joliet plant, where we will manufacture Made in America electric vehicles.

Still in the U.S., we were also pleased to see that the Inflation Reduction Act is on its path to passage in the next couple of weeks. This legislation once voted will significantly increase federal funding to clean OEMs and it will represent the single biggest climate investment in U.S. history.

The act currently includes over $60 billion to increase domestic production of clean energy and transportation technologies, and $1 billion specifically for clean heavy duty vehicles, including school buses and garbage trucks.

Last, on the Lion Energy front, our order book consists of 226 charging stations, representing a total order of value of approximately $3 million. Our order book has also been impacted by the postponement of commercial production and delivery of some of our models, mostly the Lion8 and LionD models.

This resulted in some POs being canceled due to funding being expired and in the removal by us of certain orders from our order book. Given that the postponement might create uncertainty relating to the payment of subsidies. That said, we are in dialogue with customers and agencies to find alternative arrangements to be able to preserve those orders.

Let me finish by providing an update on our vehicle rollout. As we look back into the last few months, supply chain challenges, but pressure both on manufacturing and development activities.

We achieved some important milestones this quarter in the development of new models, including the first prototype units of the Lion8 school bus, the LionD school bus, the Lion8 Bucket trucks, and the Lion8 Tractor truck.

Despite this important progress, supply chain challenges and delays ensure that the test centers impacted our commercialization timeline, mostly for the Lion8 and the LionD models. And to a lesser extent, for certain other platforms that will be commercialized in the first half of next year, instead than by the end of this year.

This is further detail in our MD&A. With respect to the Lion team, our headcount now amounts to approximately 1,300 employees, including more than 200 engineering and R&D professionals. Recently hires include Sydney Dunn as Vice President, Truck Sales for the U.S. market and Dominik Beckman as Vice President of Marketing and Communication for the U.S.

as well. Sydney brings 20 years of sales and operations leadership experience to Lion, including at ElectraMeccanica and General Motors. While Dominik joins us from Hino Trucks, a Toyota Group Company. Before turning it on to Nicolas, I would also like to officially welcome Ms. Latasha Akoma and Mr.

Dane Parker, who recently joined Lion’s boards of directors. Latasha is the Operating Partner at GenNx360 Capital Partner. She previously held several executive leadership positions at Harley-Davidson and Chrysler. As for Dane, he was Chief Sustainability Officer and Vice President, Sustainable Workplaces at General Motors.

He also have several leadership positions at Dell and Intel Corporation. They both have been appointed to the board as independent directors, and we look forward to working with them. Nicolas will now further discuss our financial performance and our expected spending for the remainder of 2022..

Thank you, Marc. We posted record deliveries and revenues in the history of our company in the second quarter of 2022. Not only did we post growth as compared to last year, but we also posted sequential growth in deliveries for the third straight quarter.

In Q2, we delivered 90 buses and 15 trucks for a total of 105 vehicles translating into revenues of $29.5 million for the quarter. Of these units, 91 were in Canada and the remaining 14 in the U.S. This compares to 61 units in Q2 2021 and to 84 units in Q1 2022.

The average selling price of these vehicles was slightly higher than in Q1, which is mostly a reflection of the unit. Despite setting a new quarterly record this quarter, we believe the number of units delivered still could be significantly below what we can achieve with our current resources and manufacturing ramp up investments.

We posted negative gross margins of $3.5 million, reflecting increased fixed manufacturing and storage costs.

The positive impact of increased sales volume was mainly offset by increased fixed manufacturing and inventory management system costs related to the ramp up of production capacity for future quarters and the impact of continuing global supply chain challenges.

Continuing with administrative expenses, they amounted to $11.7 million, including $2.6 million in non-cash share-based compensation. If we exclude share-based compensation, this represented an increase of $4 million as compared to the $5.2 million in Q2 2021, and a more modest $0.9 million increase as compared to Q1 2022.

The increase mostly results from additional expenses in the context of the expansion of the Lion’s head office capability, as well as professional fees related to supply chain and strategic project optimization initiatives. Selling expenses amounted to $6.7 million, including $0.8 million in non-cash share-based compensation.

If we exclude share-based compensation, this represented an increase of $2.6 million as compared to the $3.3 million in Q2 2021, and a $1.5 million increase as compared to Q1 2022.

The increase as compared to last year was primarily due to Lion expanding its salesforce in anticipation of the ramp up of production capacity and an increase in expenses because of the opening and operations of new Experience Centers.

During Q2, we recorded a $2.1 million gain related to the balance sheet removal of the financial viability related to previously acquired dealership rights that we had acquired from a private party and for which all payments expired on May 7, 2022.

We maintained all dealership rights associated with this acquisition, but we will not have to incur any related cost in the future. Now turning to adjusted EBITDA. It was negative $14.4 million for Q2. Adjusted EBITDA for the quarter was mostly impacted by gross margin and to a lesser extent by sequential increase in SG&A.

Let me now spend a few minutes on our expected capital expenses. As previously mentioned, we believe our balance sheet provides us with runway and flexibility as we continue to focus on achieving our growth project and ramping up our production.

We remain very focused on the prudent management of our cash resources and thus implementing actions to support our growth strategy and accelerate return on investment. This would positively impact our CapEx.

First for the Joliet Facility, we expect to incur total CapEx of $80 million in 2022, a $35 million reduction versus the $150 million previously disclosed. As of June 30, 2022, we had incurred CapEx of approximately $36 million in the plant [ph] for 2022, including approximately $22 million during the second quarter.

As Marc mentioned, this investment is expected to bring us to commercial production of school buses in Joliet by the end of 2022. For the Lion campus, we continue to expect to incur approximately $100 million of total CapEx in 2022 of which approximately $39 million has been incurred this year as of June 30.

Again, this amount is expected to lead us to production of battery packs by the end of the year. While total cost estimates for the full build out of the Joliet Facility and Lion campus remain unchanged.

The timing of the full build out of the facility and the related capital spend will be dependent upon prevailing economic condition, the demand environment for the company’s product and the company’s growth and liquidity profile.

Depending on our liquidity profile, we expect to further review the cadence of our investments and to take additional measures to optimize our required production capacity in light of projected delivery and to monitor our liquidity. Let me now turn to our balance sheet and liquidity profile.

Our cash position amounted to $83 million as of June 30, 2022. We also have access to committed revolving credit facility of up to $200 million subject to a borrowing base, which was estimated to translate into a total availability of approximately $75 million as of June 3.

Last, we have access to support from the Canadian Federal and Quebec government of up to approximately 100 million Canadian dollars in connection with the build out of the Lion campus. As of June 30th, $3.7 million was drawn on the provincial loan. We expect to perform our first draw on the federal loan during the third quarter.

As of today, we estimate that approximately $40 million of the CapEx to be incurred in 2022 on the Lion campus will be funded through this government support subject to the related claim process and timing. At the end of the quarter, our debt amounted to approximately $14 million, which includes the first provincial loan draw that I just mentioned.

Despite our current runway and liquidity, we expect to seize opportunities that may become available to raise additional capital. This could be performed over time through the $125 million at the money equity program, which we established late in Q2 and for which no amounts have been raised yet, or to other financing transactions.

With that, I will pass it back to Marc for concluding remarks..

Thanks, Nicolas. Before we open the lines for questions, let me conclude by stressing that we are pleased with the momentum we built over the past months. And we aim to further accelerate our growth in terms of vehicle deliveries and manufacturing vehicle output.

We are focused to accelerate return on investment, while reducing 2022 CapEx and protecting liquidity without compromising our long-term growth. The EV incentives have reached an unprecedented level with the recent announcements in the U.S. and Canada.

And as we play an integral role in helping our customers meet their GHG reduction targets and their overall GHG emissions, we believe more than ever before that we are exceptionally positioned to capture our share of the medium and heavy duty EV market much faster than most of the other OEMs. Thank you, everyone..

Operator, we will now open the lines for questions. I just want to ask you to limit to two the number of questions asked to allow other participants to ask their question. You can of course go back into queue if you have any follow-up question..

[Operator Instructions] Our first question comes from Mike Shlisky from D.A. Davidson. Mike, please go ahead..

Good morning and thank you. I wanted to start off by touching on the battery plan and the strategy for batteries going forward. You had announced a battery supply agreement with another – with an outside provider.

I think it was last year a provider is not about to be acquired and it’s about to exit some of their Lion contracts which I presumably would include yours. You do have your facility opening soon, which is great. But other companies that are using that other supplier have announced that they want to still have a dual source battery strategy.

Maybe discuss what the acquisition of this third-party supplier means to Lion and kind of your plan.

Does it make sense, given supply chain to have a very robust multiple battery supplier strategy going forward?.

Yes. Good morning. Good morning, Mike. This is Marc. Yes, so we feel more than ever before that the strategy put in place in the last few years is the right one. We’ve been talking about vertical integration. We’ve been talking about cost savings and we feel that everything we’ve been doing is exactly what needed to get done.

So you alluded to this agreement with the third party. So as you know this agreement is public. It is public. It has been publicly disclosed in the last few years. So just a reminder, it’s a long-term agreement that we’ve entered into in 2021. It’s a five-year agreement.

And as they were saying back then they are expecting to generate of $234 million of revenue over five years. And you probably remember also that this agreement, I mean is for the supply of those batteries for the Lion8 Tractor model. So this is one thing I just wanted to make sure it’s well understood.

Speaking of our battery factory, it’s doing very well. You probably remember at scale. We will have a five gigawatt hour manufacturing capacity. This is going very well. The first battery pack will be manufactured this year. And we’re talking about battery packs for the trucks mostly to start with.

So again, no delay we are on – we are absolutely on schedule..

Okay. Okay. I also wanted to ask about the cadence of production going forward here. Now, I know you don’t give guidance typically. But we are entering a bit of a tricky point in Lion’s history as the new facility is open and we have the supply chain issues.

Could you at least confirm with us or let us know whether you feel like you’ll have a little bit better production in Q3 versus Q2, and then Q4 versus Q3.

I mean, are you on the output trajectory here?.

Yes, no. Mike, you remember in Q1, we had 84 deliveries, 105 this quarter. So obviously it’s going the right way. There has been some supply chain challenges and those supply chain challenges I mean will remain. That being said, I mean, we are – the pace of our manufacturing is getting better and better. I was just saying it earlier this morning.

We have a better rhythm in everything we’re doing. So in a nutshell, I mean, supply chain is while everything takes a little bit longer with the supplier.

So what used to take a couple of months is now many, many times, like we do have like four months, five months of delay when receiving those parts, and now it’s being considered into the supply, the procurement at clients. So all in all, I mean, it’s going well, still challenging. And but we expect that the next quarters will keep increasing.

So you are right. We are not providing guidance, but we see growth in manufacturing and we see growth in deliveries as well..

Thank you. That’s great color. I’ll pass it along..

Thank you, Mike..

The next question comes from Craig Irwin of ROTH Capital Partners. Craig, please go ahead..

Hi. Good morning. Thanks for taking my question. So the notable improvement in gross margin performance this quarter, it’s nice with the increased volumes, obviously better coverage of overhead.

But can you maybe help us unpack what the additional expense burden is that you’re carrying? I know you could have made these vehicles without building out your new facilities.

And if we were to maybe just look at the historical performance where you have had margins in the 30s, how do you feel about the natural margins on these products or I guess the variable margins excluding these additional expenses that you’re incurring for growth?.

Yes. Hey, Craig, Nic here. The gross margin was negative $3.5 million this quarter. So obviously, very much impacted by our expenditures towards growth.

Ultimately, what’s really – I think you’re banging on what’s impacting gross margins is that investment in scaling up our production and ultimately our delivery, a good example of this is we’re incurring storage and the transportation costs for the inventory that could be spread across much more production, right, as we’re ramping up.

And we incur the totality of those costs. And so ultimately it’s a matter of fixed cost absorption. When you look at the results isolated in one quarter where we take a lot of comfort, of course is in, what I like to call the unit level economics or unit level margin. We have a – what we believe is a very healthy margin over the bill of material.

And when we look at a production rate, that’s more reflective of certainly increased usage of the capacity of our plant, we feel that it’s a model that scales really well. You will also have picked up in Marc’s remarks that we’ve roll – we’ve started rolling out this quarter, some price increases, which will help as well.

That’s a matter of protecting ourselves in the current inflationary environment, but I won’t give specific figures, but ultimately it’s all about fixed cost absorption for the immediate quarter. And looking at long-term, just having unit level margins that we can scale very well..

Excellent. Thank you for that. So as a follow up, you’re very clear about the healthy margin over the bill of materials. That’s what we would expect if we look sort of at the historic performance, the way you set up the company. So your major competitor in electric school buses has made commitments, fixed price commitments underwater, right.

They’ve had let say 25% pricing and they still don’t have a clear line of sight on making profit on the buses that they’re selling today. They have to deliver buses where they wrap them in dollar bills.

On the bill of materials, can you just remind us how you price your buses and whether or not you see this 25% price increase from your major competitor as an opportunity or if you’re likely to be a lot more metered in the way you approach things, given your long-term commitment to customers?.

Yes. That’s a good question, Craig. The order book that we have is on a fixed price basis. So any price adjustments that we make going forward would be for new orders. That said, when I talk about the unit level economics working well, it certainly applies to the upcoming deliveries in the order book.

And so yes, we view price increases from competitors, certainly as an opportunity for us. At the same time, we aim and we are able to believe, be very nimble in how we tackle price increases. We have a direct sales force, which – so obviously much easier to roll those through, but they would be for post what’s in the order book today..

Hey, Craig, maybe – this is Marc, maybe just one additional comment on your question. I think we are seeing the benefit that the vertical integration we’ve been doing for all of those years. We’ve been talking about this for years and we’ve been doing it and we’ve been building the foundation for many, many years.

We see the benefit of what we’re doing. We believe we can be the lowest cost manufacturer. And it seems that what’s happening in the market right now is proving that we’re doing the right thing. And also I think the focus on EV makes a huge difference. I mean, this is what we’re doing. We are an EV business.

We’re not selling everything, C&G, propane, diesel, EV, like some other companies are doing. So when you’re focus on something, you usually get better and this is what we are doing. And also, I think our customers, you see the benefit of the Lion ecosystem. So they’re buying a bus, they want to make sure it’s going to be delivered on a timely basis.

They want to make sure they will be getting the charging stations as well at a fair price installed at the right location, obviously at the right time. And this is exactly what we can offer. So it’s not only like buying a vehicle, it’s buying the old Lion experience. And I think it makes a huge difference..

Thank you for that. And congratulations on the delivery traction, it’s impressive progress..

Thank you, Craig..

The next question comes from Rupert Merer from National Bank. Rupert, please go ahead..

Hi. Good morning, everyone. With the….

Good morning, Rupert..

With the reduced CapEx – good morning with the reduced CapEx in Joliet.

What are you giving up in terms of capacity initially? And maybe can you talk to us about what you expect your production capacity to be at the end of the year and how quickly can you ramp up production?.

Yes, so Rupert, with respect to Joliet basically, we’re focused on delivering our order book. And the order book is very much – well, we have more school buses right now than we have trucks and we are building the truck pipeline and the truck order book. While we do that, we do have truck capacity in Montreal, significant truck capacity in Montreal.

Decision we’ve made is to what comes on CapEx in Joliet to focus on electric school buses, meaning all the models of electric school buses that Type C, the Type D, that Type A as well. And also the Lion M, which is the [indiscernible] and in the shuttle bus as well. So that’s basically what Joliet will be doing at the beginning.

So again to remain very focused and to deliver made in America buses for our U.S. customers. So very exciting and we will start by the end of this year. I mean we – the first school buses will be manufactured in Joliet. This is great. And the Lion was not so good.

For the second part of your question was that about the Joliet factory, the manufacturing capacity, was that what the battery factory?.

Yes. With the Joliet factory. So if we think about the numbers, you’ve given us for the Quebec production facility historically, you’ve talked about maybe 800 unit per year capacity that you’re ramping up to.

Is there an equivalent number how we should be thinking about Joliet with the new CapEx plan? What’s the – how much capacity are you building with the new CapEx plan?.

Yes. No. Sure. The – so the good news Rupert that there’s nothing has changed with respect to the at full scale, we are going to be at 20,000 units. So it’s a mix of trucks and buses, but we want to make sure, like, we’re cash conscious. We want make sure also that we’re ramping up manufacturing capacity opposing to the order book.

So right now, the order book we have and the order book we are expecting will not be impacted. So there will be no delays in delivering our vehicles because of the CapEx push that we are doing. So we have all the capacity we need in Joliet to manufacture everything.

So we’re not getting into all the specifics of the number of units we deliver or we can deliver, but we do have the capacity to deliver the – on the order book that we’re expecting..

Okay, great. Thanks. And then on the capital needs, I know you talked about this little in your prepared comments. So wondering if you can get a little more color on liquidity, what we should anticipate as far as a debt draw down goes over the next few quarters, and maybe any plans you may have to access the ATM..

Yes. I’ll take this one, Rupert. Look, as you saw in the prepared – you heard rather in the prepared remarks, we’re taking action that that’s focused on liquidity. Of course, that includes the reduction in the 2022 CapEx that we just talked about.

And the – obviously the same mindset will apply going forward by [indiscernible] match spend with expected demand and to spend where we get sort of immediate return if you will or near-term return I should say. In terms of liquidity profile, we continue to provide this with flexibility. We have the $83 million of cash on hand as of today.

We have a committed $200 million revolving facility that is borrowing based, I guess and that does today $75 million of that could be issuance – could be borrowed right away to figure that we expect will continue to increase over time.

And then in terms of the government loans recall, we have the $80 million government loans for the project here in Quebec for the campus. And we expect that as we with the spend that we’re going to do this year, $40 million of that will be unlocked if you will subject to the – obviously the process and the timing to claim that money.

We – with all that said, and even with that flexibility with we explained this morning is that we’d look to see opportunities to raise additional capital. This can be done through the $125 million ATM that, that we put in place and for which remains on path as of today.

And ultimately, the timing and the quantum of any raise will be dependent on market conditions and the opportunities we see is that that’s really how we’re thinking about it as of today..

Excellent. Thanks for the color..

Thank you..

The next question comes from Michael Glen of Raymond James. Michael, please go ahead..

Hey, just a couple questions. On the truck program in Canada.

Does that program have a made in Canada stipulation within it?.

Good morning, Michael. No, it doesn’t..

Okay.

And then just in terms of the capital needs, can you indicate what your working capital is expected to look like through the back half of the year?.

Not in great detail, Michael, but when you think about it, we’re going to continue. We plan to continue to ramp up obviously our production and our deliveries, that the objectives. And we want to make sure that we’re well stocked for batteries. So we plan to continue to invest in working capital in the coming quarters..

Okay. And the inventory investment that you’ve been making so far year-to-date, we should expect that to continue around same levels..

Well, yes, I mean, given that we’re – we want to make sure we’re well stocked in batteries and in the current supply chain environment part of the strategy to be very well inventorized. We – yes, we do – when I speak of the working capital, it’s mostly from an inventory standpoint that we expect to use cash flow you want..

Okay. Thank you..

Thank you, Michael..

Thank you, Michael..

[Operator Instructions] The next question comes from Mark Neville from Scotiabank. Mark, please go ahead..

Hey, good morning..

Good morning, Mark..

Just first on the Joliet, in terms of the equipment that you deferred, is there a certain time where you need to make a decision on whether or not you’re going to accept that equipment?.

Yes. We are – basically, this is – with respect to the truck, mostly the truck equipment Mark. So we have a lot of time in front of us. So relationship with the – with our suppliers is great, but yes, there’s a timeline at which we need to make decisions at some point, obviously if we want those equipment to be installed in Joliet yet..

Okay.

And is that sort of near-term or is it 2023? And just trying to get a sense for one sort of something like that would need to be made?.

Yes, we’re good to adapt. I mean, with the increase in the order book. So right now, as I was saying earlier, I mean, we have – we do have a lot of capacity in the Montreal factory for trucks and well, the goal is to install those truck equipment as soon as needed in Joliet.

So we’re pretty well prepared and we have a lot of truck experts as well to take care of that. But we just want to make sure that, we are following the – basically the ramp up of the order book, but yes, it could be done on a near-term basis. Yes..

Okay. Understood. And just in terms of the Lion Campus is, I want to make sure I’m understanding this correctly. So you’re still going sort of full steam ahead on the battery assembly capacity. We’re not really clear sort of what you’re deferring in terms of the full build out, as you can maybe just clarify with all that things..

Sure. Yes. So Mark, there’s two buildings at the Lion Campus. The first one is the battery factory. The battery factory is key and everything we’re doing part of the – our vertical integration strategy. This is where we are saving cost, we’re controlling old battery technology. So this is amazing.

Glad, we made the decision years ago to do that, because there is no way we will be able to manufacture those toward the end of the year, if we will not have made that decision years ago. So battery factory, we are going full steam into this, first batteries before the end of the year. So this is amazing.

So basically, we’re pushing out a little bit, with respect to the innovation center. So the innovation center, you probably remember, this is where – it’s basically the –for our engineering resources. So right now we have many hubs for the engineering resources and a lot of them are working from Saint-Jerome.

So it’s really a place where all of them or almost all of them will be together. We do have a test center as well. And we do add a track where we can test our vehicle. So basically, the track is there, I mean, and it’s all ours, so it doesn’t change anything. With respect to the testing that we will be doing, we will still be doing that.

So basically all these testing, it’s great. We will also be building the prototypes in this place as it was planned. So basically, everything that will – we will basically get a return on investment on a short-term, medium-term basis, we’re still doing it. But we’ve decided basically to use the engineering offices for warehouse capacity.

I mean, right now the square footage everywhere is going to the roof, as you probably know, and it’s very close to our operations. So we’ve decided on a short term basis to use it as a warehouse – for warehouse capacity. So that’s really a change we’re doing.

And obviously, we are able to push some CapEx because of that and this CapEx was mostly a little bit for some equipment, but mostly for the building of the engineering offices..

Okay. Understood. Maybe just one last question, just for Nick. In terms of the revolver, just curious the – my understandings was that you had full access to it, and just in terms of the incremental $125 million, just how you get access to that..

It really is a – what I’d say a traditional borrowing based ADL facility. So it’s a matter of margining on the receivables and the inventory. And so how we get access to it is as we continue to scale up have more receivables, have more inventory is, yes, the way works..

Okay.

But was there a change or was it always sort of – was it always like that?.

It’s always been a boring base, Mark, as mentioned in the past….

Yes. Okay. Got it. Thanks..

Thank you..

We have no further questions. So hand back to the management team for any concluding remarks..

Well, thanks, everyone for joining the call today. We really look forward to continuing the discussion with you and feel free to contact us for any follow-up questions you may have. On this, you have a nice day..

Thank you..

This concludes today’s call. Thank you very much for your attendance. You now disconnect..