Q: Lion Electric LEV) share price is down considerably (almost order of magnitude lower) over the past few years. I thought Amazon was a private investor in LEV (please confirm) LEV has production. Is this a good time to buy LEV for the eventual uptake of EV sales....at least in the commercial vehicle space? Your thoughts and comments greatly appreciated.
5i Research Answer:
We do not see any changes regarding the master purchase agreement that LEV and Amazon struck back in 2020. The original deal was that Amazon ordered up to 2,500 all-electric 8 trucks from Canadian from LEV to be delivered by 2025. In connection with the master purchase agreement, Lion issued 35.4 million warrants to Amazon. The warrants expire after eight years in June 2028. We do not see any other updates regarding Amazon's stake in LEV. We think that there are serious headwinds in the EV market right now due to near-term demand softness and would hold off on buying LEV. With its small size and high debt, and negative momentum and negative cash flow, risks are too high for us.