Lion Electric said Tuesday it will file for creditor protection after defaulting on its debt. The move, an attempt by the company to avoid bankruptcy, signals that it may now have to sell itself to survive.

It’s a major blow to one of Canada’s few homegrown automakers that has been at the forefront of the EV transition. Lion had a Dec. 16 deadline to find money for its lenders, who can now request immediate repayment, the company said. 

Trading of the company’s shares on the Toronto Stock Exchange and the New York Stock Exchange are halted indefinitely. 

The Quebec-based firm is now in talks with lenders to provide a financial lifeline that would help sustain it through the Companies’ Creditors Arrangement Act proceedings and restructuring as it looks for a potential buyer for its business. 

Lion went public during the boom of special-purpose acquisition company (SPAC) stocks, a Wall Street fad that exposed many EV startups to public markets right before a downturn in the industry.

The company has struggled to make ends meet as subsidy programs for buses failed to pay out in a timely manner and new truck orders from Amazon dwindled. Lion has laid off hundreds of workers, sold a major facility, and has reportedly held talks with Quebec-based real estate firm Groupe Mach as it has tried to stay afloat.  

Lion’s potential sale, which would require a sizable buyer that could theoretically take it out of Canadian hands, is another black mark for Quebec’s EV ecosystem after Northvolt filed for U.S. bankruptcy protection a little over three weeks ago. 

Like Northvolt, Lion had been offered federal and provincial subsidies. The company was awarded a combined $100 million from the federal government and Investissement Quebec, although it has received just $30 million of the federal funding so far. 

The Caisse de dépôt placement du Québec, which has invested $15 million in Lion since 2022, is one of the lenders that Lion is staving off as it defaults. Analysts have noted that possibilities may be dwindling for further U.S. subsidies after the changeover of the U.S. administration in January.