MONTREAL — Lion Electric was meant to play a key part in Amazon’s carbon-free future. In 2020, the “everything store,” having just enacted its pledge to be net zero by 2040, agreed to purchase as many as 2,500 of Lion’s trucks by 2025. 

Four years on, and the Lion Electric hype party is over. Amazon has since acquired 10 of the company’s trucks. Lion’s stocks go for less than a buck these days, a shadow of the nearly $25 they once commanded. The company has cut its workforce, negotiated high-interest loans and raised the possibility of selling assets in order to remain solvent.

Lion’s troubles are indicative of a larger malaise afflicting Quebec’s electric vehicle pipeline, from the mining of minerals to the making of batteries to the manufacture of rolling stock designed to wean us off fossil fuels. Expectations, forged in the giddy pre-COVID-19 years of cheap money and unbridled optimism, have met with harsh economic realities. After years of hype, Quebec’s battery sector is in the midst of a hangover. 

Nowhere is this more obvious than on a 171-hectare field about 30 kilometres southeast of Montreal. Cleared of trees–and pesky environmentalists–earlier this year, the site is the home to Northvolt’s gigafactory, set to pump out lithium car batteries beginning in 2026. Yet it remains largely barren, in large part because Sweden’s Northvolt is in the midst of a potentially calamitous cash crunch that threatens its very future.

Northvolt’s troubles are myriad. The company, which came into existence in 2016 on a cascade of hype, has struggled to meet expectations and deadlines. In June, BMW cancelled a $2-billion battery-cell contract. Northvolt co-founder Harald Mix has ponied up fresh capital to sustain the company. Few others, least of all BMW and the Swedish government, have so far been willing to follow suit. There is the nagging existential question of whether new technology will render Northvolt’s lithium-based battery obsolete. As a relative newcomer, Northvolt has always had a practical problem: selling European batteries in a Chinese-dominated market.

None of these are Quebec’s fault, but it is very much Quebec’s problem. Northvolt’s strategic review has resulted in a 20 per cent trim of its workforce in Sweden and an 18-month delay in construction of its Quebec factory, in which the province has committed $710 million. The slowdown comes as EV demand in North America and Europe has slackened. Quebec politicians, smelling blood in the lithium slurry, have pounced. Premier François Legault “has played poker with the money of Quebecers, and now he seems like he might be losing the game,” said Gabriel Nadeau-Dubois of the left-wing Québec solidaire.

It’s tempting to default to cynicism, as Nadeau-Dubois and others have clearly done, just as it’s easy to dismiss the likes of Lion and Northvolt (as well as the dearly departed Taiga Motors) as expensive hubris—another example of the tech sector trying to save the world, often on the government’s dime. But remember this: it has been a mere 14 years since the introduction of the first mass-produced EV, the Nissan Leaf. The world is still very much in the early, wild-west stages of battery-powered vehicles, complete with gold-rush booms and, inevitably, equally spectacular busts.

Consider history, as well. The early years of the automobile industry are riddled with bankruptcies, false starts, supply gluts and demand collapses. Still, the automobile prevailed, if only because companies became adept at making cars affordable and safe enough to satisfy the average consumer palette. 

We are in the midst of a near-identical process with EVs. Prices, though still generally higher than their gas-guzzling equivalents, have dropped considerably over the last five years. 

In Canada, the combination of declining interest rates, an expanding charging network and a cocktail of government subsidies, will translate into a demand rebound in three years, said François Boutin-Dufresne, managing partner at Montreal-based sustainability investor Nordis Capital.

The hype cycle surrounding the sector has been damaging to Lion Electric, company vice-president Patrick Gervais told me, if only because it created unrealistic expectations. Because Lion has had to make adjustments, there is a prevailing sense that the company is a failure. Yet in the space of three years, despite the progressively worse headlines, Lion has nonetheless built a battery manufacturing facility in Quebec and a vehicle manufacturing plant in the U.S. “Tesla almost went bankrupt,” Gervais told me. “People forget about this.” He couldn’t talk about Amazon, except to say the partnership is ongoing and Lion is still very much part of Amazon’s carbon-free future, recent reports of its imminent demise notwithstanding. 

In any case, Quebec as a whole is well placed for the rebound, whenever it should occur. I recently spoke with Karim Zaghib, considered one of the godfathers of the province’s battery sector. His frustration with the abiding pessimism was palpable. But he is bullish, even excited, about the battery sector’s long-term future. 

Quebec’s EV-related products, he pointed out, necessarily use renewable energy and unforced labour. The same certainly can’t be said for China. The Canadian province is one of the few jurisdictions in the world to have nearly all the necessary critical minerals buried within its borders. Quebec’s gargantuan postwar hydroelectric project was a boon for the province—and Zaghib believes mineral mining and EV-battery production and recycling could give it a similar boost.

It might sound like more hype, but Zaghib has a point. Hydroelectric power had plenty of naysayers back in the day, and yet here we are. It’s not going to be easy, and casualties will abound. But hangovers are temporary. Progress isn’t. 

Martin Patriquin is The Logic’s Quebec correspondent. He joined in 2019 after 10 years as Quebec bureau chief for Maclean’s. A National Magazine Award and SABEW winner, he has written for The New York Times, The Guardian, The Walrus, Vice, BuzzFeed and The Globe and Mail, among others. He is also a panelist on CBC’s “Power & Politics.”