40-F

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 40-F

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒	ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023		Commission file number 001-40387

THE LION ELECTRIC COMPANY

(Exact name of Registrant as specified in its charter)

Quebec	3711	Not Applicable
(Province or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

921 chemin de la Rivière-du-Nord

Saint-Jerome (Quebec) J7Y 5G2

Tel: (450) 432-5466

(Address and telephone number of Registrant’s principal executive offices)

CorpoMax Inc.

2915 Ogletown Rd., Suite 2999

Newark, Delaware 19713

(302) 266-8200

(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)

Copy to:

Dominique Perron

Chief Legal Officer and Corporate Secretary

The Lion Electric Company

921 chemin de la Rivière-du-Nord

Saint-Jerome (Quebec) J7Y 5G2

Tel: (450) 432-5466

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares	LEV	New York Stock Exchange
Warrants	LEV.WS	New York Stock Exchange
Common Share Purchase Warrant	LEV.WS.A	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

For annual reports, indicate by check mark the information filed with this Form:

☒ Annual information form ☒ Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

The Registrant had 226,184,932 common shares issued and outstanding as of December 31, 2023

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

Emerging growth company. ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the Registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the Registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

EXPLANATORY NOTE

The Lion Electric Company (“Lion”, “we”, “our”, “us”, the "Company”) is a Canadian issuer that is permitted, under the multijurisdictional disclosure system (the “MJDS”) adopted in the United States by the U.S. Securities and Exchange Commission (the “Commission”), to file its Annual Report on Form 40-F (the “Annual Report”) pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act and Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”). Equity securities of the Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3 thereunder. The Company’s common shares are listed on the New York Stock Exchange (the “NYSE”) and the Toronto Stock Exchange under the trading symbol “LEV”.

All amounts presented are in United States dollars unless otherwise indicated. The exchange rate of Canadian dollars into United States dollars, on December 29, 2023, based upon historical rates published by the Bank of Canada, was US$1.00 = C$1.32.

In this Annual Report, references to “Lion”, “we”, “our”, “us”, the "Company” or similar terms refer to The Lion Electric Company and our subsidiaries, on a consolidated basis.

FORWARD LOOKING STATEMENTS

This Annual Report and the documents filed as Exhibits hereto contain “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities legislation and within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act (collectively, “forward-looking statements”). Any statements contained in this Annual Report and the documents filed as Exhibits hereto that are not statements of historical fact, including statements about Lion’s beliefs and expectations, are forward-looking statements and should be evaluated as such.

The Company’s actual future results may be materially different from any future results expressed or implied by these forward-looking statements.

The forward-looking statements represent the Company’s views as of the date they are made. The Company anticipates that subsequent events and developments may cause these views to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company has no current intention of doing so except to the extent required by applicable law. Therefore, these forward-looking statements do not represent the Company’s views as of any date other than the date they are made.

See Lion’s annual information form for the year ended December 31, 2023, attached as Exhibit 99.1 to this Annual Report (the “Lion 2023 AIF”), under the heading “Cautionary Note Regarding Forward-Looking Statements” and Lion’s management’s discussion and analysis for the year ended December 31, 2023, attached as Exhibit 99.2 to this Annual Report (the “Lion 2023 MD&A”), under the heading “Caution Regarding Forward-Looking Statements,” for a discussion of forward-looking statements.

DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES

The Company is permitted, under the MJDS, to prepare this report in accordance with Canadian disclosure requirements, which are different from those of the United States. The Company prepares its consolidated financial statements, which are filed as Exhibit 99.3 to this Annual Report, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and which are not comparable to financial statements of United States companies.

CONTROLS AND PROCEDURES

A. Disclosure Controls and Procedures

The information provided in the section entitled “Evaluation of Disclosure Controls and Procedures” under the heading “Internal Control over Financial Reporting” contained in the Lion 2023 MD&A is incorporated by reference herein.

B. Management’s Annual Report on Internal Controls over Financial Reporting

The information provided in the section entitled “Management’s Assessment on Internal Control over Financial Reporting” under the heading “Internal Control over Financial Reporting” contained in the Lion 2023 MD&A is incorporated by reference herein.

In accordance with the Jumpstart Our Business Startups Act (the "JOBS Act") enacted on April 5, 2012, the Company qualifies as an "emerging growth company" ("EGC"), which entitles the Company to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs. Specifically, the JOBS Act defers the requirement to have the Company's independent auditor assess the Company's internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act. As such, the Company is exempted from the requirement to include an auditor attestation report in this Annual Report for so long as the Company remains an EGC, which may be for as long as five years following its initial registration in the United States.

C. Changes in Internal Controls over Financial Reporting

The information provided in the section entitled “Changes in Internal Control over Financial Reporting” under the heading “Internal Control over Financial Reporting” contained in the Lion 2023 MD&A is incorporated by reference herein.

NOTICES PURSUANT TO REGULATION BTR

The Company was not required by Rule 104 of Regulation BTR to send any notices to any of its directors or executive officers during the fiscal year ended December 31, 2023.

AUDIT COMMITTEE AND AUDIT COMMITTEE FINANCIAL EXPERT

A. Identification of Audit Committee

The Company’s board of directors (the “Board”) has a separately designated standing audit committee (the “Audit Committee”) established in accordance with Section 3(a)(58)(A) of the Exchange Act that satisfies the requirements of Rule 10A-3 of the Exchange Act. The Company’s Audit Committee is composed of three directors, namely Michel Ringuet, Latasha Akoma and Ann L. Payne, all of whom, in the opinion of the Board, are financially literate and meet the independence requirements under the listing standards of the NYSE and under Rule 10A-3 of the Exchange Act.

B. Audit Committee Financial Expert

The Company’s Board has determined that it has at least one ''audit committee financial expert'' serving on its Audit Committee. The Board has determined that each of Michel Ringuet, Latasha Akoma and Ann L. Payne is an “audit committee financial expert,” as that term is defined in the Form 40-F, and is independent within the meaning of applicable Commission regulations and the listing standards of the NYSE.

The Commission has indicated that the designation of a person as an ''audit committee financial expert'' does not make such person an “expert” for any purpose, including, without limitation, for purposes of Section 11 of the Securities Act, impose on such person any duties, obligations or liability that are greater than the duties, obligations or liability imposed on such person as a member of the Audit Committee and the Board in the absence of such designation and does not affect the duties, obligations or liability of any other member of the Audit Committee or Board.

CODE OF ETHICS

The Board has adopted a written code of conduct and ethics (the “Code of Ethics”) applicable to all directors, officers and employees of the Company, including, without limitation, to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. This Code of Ethics is intended to qualify as a “code of ethics” within the meaning of the applicable rules of the Commission. The Code of Ethics, as amended, is available on the Company’s website at ir.thelionelectric.com under "Governance Documents". Except for the Code of Ethics, and notwithstanding any reference to the Company’s website or other websites in this Annual Report or in the documents incorporated by reference herein or attached as Exhibits hereto, no information contained on the Company’s website or any other site shall be incorporated by reference in this Annual Report or in the documents incorporated by reference herein or attached as Exhibits hereto.

No substantive amendments to the Code of Ethics were adopted during the year ended December 31, 2023. No "waiver" or "implicit waiver," as such terms are defined in Note 6 to General Instruction B(9) of Form 40-F, was granted relating to any provision of the Code of Ethics during the year ended December 31, 2023.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

A. Principal Accountant Fees

Raymond Chabot Grant Thornton LLP (“RCGT”) acted as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2022 and 2023. See the information provided in the section entitled “External Auditor Service Fees” under the heading “Audit Committee Information” contained in the Lion 2023 AIF, which information is incorporated by reference herein, for the total amount billed to the Company by RCGT for certain services rendered to the Company during the last two fiscal years, by category of service (for audit fees, audit related fees, tax fees and all other fees).

B. Pre-Approval Policies and Procedures

See the information provided in the section entitled “Pre-Approval Policies and Procedures” under the heading “Audit Committee Information” contained in the Lion 2023 AIF, which information is incorporated by reference herein, for the Audit Committee’s pre-approval policies and procedures.

The amount of audit-related fees, tax fees and all other fees billed to the Company by RCGT for certain services rendered to the Company during the last two fiscal years are set forth in the section entitled “External Auditor Service Fees” under the heading “Audit Committee Information” contained in the Lion 2023 AIF. All such fees have been pre-approved by the Audit Committee and therefore none of the services in consideration of which such fees were charged were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(c) of Rule 2-01 of Regulation S-X.

The percentage of hours expended on RCGT’s engagement to audit the Company’s financial statements for the year ended December 31, 2023 that were attributed to work performed by persons other than RCGT’s full-time, permanent employees does not exceed 50 percent.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

Information regarding our material cash requirements from known contractual and other obligations is included in the section entitled “Maturity analysis of contractual obligations” under the heading “Liquidity and Capital Resources” contained in the Lion 2023 MD&A.

MINE SAFETY DISCLOSURE

Not Applicable.

CORPORATE GOVERNANCE

The NYSE Listed Company Manual includes certain accommodations in the corporate governance requirements that allow foreign private issuers, such as Lion, to follow “home country” corporate governance practices in lieu of the otherwise applicable corporate governance standards of the NYSE. The application of such exceptions requires that Lion disclose any significant ways in which its corporate governance practices differ from the NYSE Listed Company Manual that it does not follow. From time to time, Lion intends to follow Canadian corporate governance practices, including with respect to certain independence criteria as well as the composition of Board committees. As of the date hereof, Lion follows Canadian corporate governance practices in respect of the requirement under the NYSE Listed Company Manual that a compensation committee be comprised solely of independent directors, and the requirement under the NYSE Listed Company Manual that director nominees be selected or recommended for selection by a nominations committee comprised solely of independent directors.

If at any time Lion ceases to be a foreign private issuer, Lion will take all action necessary to comply with the Commission and NYSE rules, including by having compensation and nominating committees that are comprised solely of independent directors, subject to a permitted “phase-in” period.

The NYSE Listed Company Manual generally requires that a listed company’s by-laws provide for a quorum for any meeting of the holders of the company’s voting shares that is sufficiently high to ensure a representative vote. Pursuant to the NYSE Listed Company Manual, Lion, as a foreign private issuer, has elected to comply with practices that are permitted under Canadian securities laws in lieu of the provisions of NYSE. Lion’s by-laws provide that a quorum of shareholders shall be at least two holders present in person or represented by proxy who, together, hold not less than 25% of the votes attaching to Lion’s outstanding shares entitled to be voted at the meeting. Lion may in the future decide to rely upon other foreign private issuer exemptions with respect to other NYSE Listed Company Manual rules. Following Lion’s home country governance practices, as opposed to the requirements that would otherwise apply to a company listed on the NYSE, may provide less protection than is accorded to investors under the NYSE Listed Company Manual rules applicable to U.S. domestic issuers.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION

Not applicable.

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

A. Undertaking

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

B. Consent to Service of Process

The Registrant has previously filed a Form F-X in connection with the class of securities in relation to which the obligation to file this report arises.

Any change to the name or address of the agent for service of process of the Registrant shall be communicated promptly to the Commission by an amendment to the Form F-X referencing the file number of the Registrant.

EXHIBIT INDEX

This Annual Report on Form 40-F and Exhibits 99.1, 99.2 and 99.3 included with this report are hereby incorporated by reference as exhibits to the registrant’s Registration Statement on Form F-10 (File No. 333-265627), as amended and supplemented and to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.

Exhibit Number	Description of Exhibit
99.1	Annual Information Form for the year ended December 31, 2023
99.2	Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2023
99.3	Audited Consolidated Financial Statements for year ended December 31, 2023
99.4	Certification of Chief Executive Officer
99.5	Certification of Chief Financial Officer
99.6	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.7	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.8	Consent of Raymond Chabot Grant Thornton LLP
99.9	Clawback Policy
101	Interactive Data File (formatted as Inline XBRL)
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereto duly authorized.

	THE LION ELECTRIC COMPANY
Date: February 29, 2024	By:	/s/ Dominique Perron
	Name:	Dominique Perron
	Title:	Chief Legal Officer and Corporate Secretary

EX-99.1

Table of Contents

1.0Explanatory Notes	1
2.0    Cautionary Note Regarding Forward-Looking Statements	1
3.0    Market and Industry Data	3
4.0    Corporate Structure	4
5.0    General Development of the Business	5
6.0    Business of the Company	9
7.0    Description of Capital Structure	22
8.0    Dividends	26
9.0    Description of Material Indebtedness	26
10.0    Market for Securities	30
11.0 Directors and Officers	32
12.0    Audit Committee Information	38
13.0    Legal Proceedings and Regulatory Actions	40
14.0 Interest of Management and Others in Material Transactions	41
15.0    Transfer Agent and Registrar	42
16.0 Material Contracts	42
17.0    Interest of Experts	45
18.0    Certain United States Federal Income Tax Considerations	45
19.0    Additional Information	49

1.0Explanatory Notes

Unless otherwise noted or the context otherwise requires, the information provided in this annual information form (the “Annual Information Form”) is stated as at February 29, 2024, the date of this Annual Information Form, and references to “Lion”, “we”, “our”, “us”, “the Company” or similar terms refer to The Lion Electric Company and its subsidiaries, on a consolidated basis.

All amounts presented are in United States dollars unless otherwise indicated.

The Company has one reportable operating segment, the manufacturing and sales of electric vehicles in Canada and in the United States.

Certain figures, such as interest rates and other percentages included in this Annual Information Form, have been rounded for ease of presentation. Percentage figures included in this Annual Information Form have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Annual Information Form may vary slightly from those obtained by performing the same calculations using the figures in the Company’s audited condensed consolidated financial statements for the year ended December 31, 2023 or in the associated text. Certain other amounts that appear in this Annual Information Form may similarly not sum due to rounding.

All references to “fiscal 2023” are to the Company’s fiscal year ended December 31, 2023, to “fiscal 2022” are to the Company’s fiscal year ended December 31, 2022 and to “fiscal 2021” are to the Company’s fiscal year ended December 31, 2021.

2.0Cautionary Note Regarding Forward-Looking Statements

This Annual Information Form contains “forward-looking information” and “forward-looking statements” within the meaning of applicable securities laws and within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”). Any statements contained in this Annual Information Form that are not statements of historical fact, including statements about Lion’s beliefs and expectations, are forward-looking statements and should be evaluated as such.

Forward-looking statements may be identified by the use of words such as “believe,” “may,” “will,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “could,” “plan,” “project,” “potential,” “seem,” “seek,” “future,” “target” or other similar expressions and any other statements that predict or indicate future events or trends or that are not statements of historical matters, although not all forward-looking statements may contain such identifying words. These forward-looking statements include statements regarding the Company’s order book and the Company’s ability to convert it into actual sales, the expected production capacity of the Company’s manufacturing facilities in Saint-Jerome and the United States and the Company’s battery manufacturing plant (the “Battery Plant”) and innovation center in Quebec (the “Innovation Center” and collectively with the Battery Plant, the “Lion Campus”), the certification of the Lion heavy duty (HD) battery packs, the sourcing of lithium-ion battery cells, the Company’s future growth and long-term strategy, the Company’s liquidity and capital requirements and management’s forecasts related thereto, ongoing litigation proceedings, the Company’s expected product pipeline, the implementation by the Company of measures aimed at reducing its vehicle and battery development costs and its inventory levels (including the Company’s fiscal 2024 objectives related thereto), and the development and timing of commercial production of certain platforms and models. Such forward-looking statements are based on a number of estimates and assumptions that Lion believes are reasonable when made, including that Lion will be able to retain and hire key personnel and maintain relationships with customers, suppliers and other business partners, that Lion will continue to operate its business in the normal course, that Lion will be able to implement its growth strategy, that Lion will be able to successfully and timely ramp-up manufacturing capacity at its Saint-Jerome facility, its U.S. manufacturing facility and at the Battery Plant and Innovation Center as required in the future, that Lion will not suffer any supply chain challenges or any material disruption in the supply of raw materials on competitive terms, that Lion will be able to maintain its competitive position, that Lion will continue to

1 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

improve its operational, financial and other internal controls and systems to manage its growth and size, that Lion will be able to benefit, either directly or indirectly (including through applications made by the Company and/or its clients), from governmental programs, subsidies and incentives, that Lion will not incur any material obligations with respect to product warranty claims or product recalls, and that Lion will be able to secure additional funding through equity or debt financing on terms acceptable to Lion and in the amounts needed if and when required in the future. Such estimates and assumptions are made by Lion in light of the experience of management and their perception of historical trends, current conditions and expected future developments, as well as other factors believed to be appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Lion believes that these risks and uncertainties include the following:

•any adverse changes in U.S. or Canadian general economic, business, market, financial, political or legal conditions, including as a consequence of the ongoing uncertainties relating to inflation and interest rates;

•any unavailability, reduction, discriminatory application, delay in processing or elimination of governmental programs, subsidies or incentives due to policy changes, government regulations or decisions or otherwise;

•any inability to ramp-up the production of Lion's products and meet project construction and other project milestones and timelines;

•any inability to meet the expectations of the Company's customers in terms of products, specifications, and services;

•any inability to successfully and economically manufacture and distribute its vehicles at scale;

•any inability to raise additional funds to meet its capital requirements and pursue its growth strategy when and in the amounts needed, if any;

•any inability to execute the Company's growth strategy;

•any escalation, deterioration and adverse effects of current military conflicts, which may affect economic and global financial markets and exacerbate ongoing economic challenges;

•any unfavorable fluctuations and volatility in the availability or price of raw materials included in components used to manufacture the Company's products, including battery cells, modules and packs;

•the reliance on key suppliers and any inability to maintain an uninterrupted supply of raw materials;

•any inability to reduce total cost of ownership of electric vehicles sold by the Company over time;

•the reliance on key management and any inability to attract and/or retain key personnel;

•labor shortages (including as a result of employee departures, turnover, and demands for higher wages) which may force the Company to operate at reduced capacity, to lower its production and delivery rates or lower its growth plans, and could pose additional challenges related to employee compensation;

•any inability to maintain the Company's competitive position;

•any inability to reduce the Company's costs of supply over time;

2 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

•any inability to maintain and enhance the Company's reputation and brand;

•any significant product repair and/or replacement due to product warranty claims or product recalls;

•any failure of information technology systems or any cybersecurity and data privacy breaches or incidents;

•any inability to secure adequate insurance coverage or a potential increase in insurance costs;

•natural disasters, epidemic or pandemic outbreaks, boycotts and geo-political events such as civil unrest, acts of terrorism, the current ongoing military conflicts or similar disruptions;

•any event or circumstance, including the materialization of any of the foregoing risks and uncertainties, resulting in the Company's inability to convert its order book into actual sales; and

•the outcome of any legal proceedings in which the Company is or may be involved from time to time.

These and other risks and uncertainties related to the business of Lion are described in greater detail in section 23.0 of the Company’s fiscal 2023 management discussion and analysis (“MD&A”) entitled “Risk Factors.” Many of these risks are beyond Lion’s management’s ability to control or predict. All forward-looking statements attributable to Lion or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained herein and the risk factors identified in the Company’s fiscal 2023 MD&A and in other documents filed with the applicable Canadian regulatory securities authorities and the U.S. Securities and Exchange Commission (the “SEC”) which are available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.

Because of these risks, uncertainties and assumptions, readers should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. Except as required under applicable securities laws, Lion undertakes no obligation, and expressly disclaims any duty, to update, revise or review any forward-looking information, whether as a result of new information, future events or otherwise.

3.0Market and Industry Data

Industry and market data presented in this Annual Information Form was obtained from third-party sources and industry reports, and from publications, websites and other publicly available information, as well as industry and other data prepared by the Company or on their behalf on the basis of the Company’s knowledge of the markets in which it operates, including information provided by suppliers, partners, customers and other industry participants.

The Company believes that the market and economic data presented in this Annual Information Form is accurate and, with respect to data prepared by the Company or on their behalf, that the Company’s estimates and assumptions, as applicable, are currently appropriate and reasonable, but there can be no assurance as to the accuracy or completeness thereof. The accuracy and completeness of the market and economic data presented in this Annual Information Form are not guaranteed. The Company makes no representation or warranty, express or implied, as to the accuracy of such data. The Company’s management estimates are based on internal research, their knowledge of the relevant market and industry and extrapolations from third-party sources. While the Company is not aware of any misstatements regarding the industry and market data presented in this Annual Information Form, such data involve risks and uncertainties and are subject to change based on various factors, including those factors discussed under the section entitled “Cautionary Note Regarding Forward-Looking Statements.” The Company has no intention and undertakes no obligation to update or revise any such information or data, whether as a result of new information, future events or otherwise, except as required by law.

3 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

4.0Corporate Structure

4.1Incorporation and Other Information

The Company was incorporated under the Business Corporations Act (Quebec) (“QBCA”) on July 28, 2008 under the name “Lion Buses Inc.” Over the years, the Company’s articles were amended in order to, among other things, amend the terms and conditions of Lion’s share capital in connection with investments made by investors, including the investment made by Power Energy Corporation (“Power Energy” or “PEC”), a wholly-owned subsidiary of Power Sustainable Capital Inc., in October 2017, which resulted in Lion’s authorized share capital being amended to provide for only one class of common shares. On November 24, 2020, Lion filed articles of amendment to change its name to The Lion Electric Company.

On May 6, 2021, in connection with closing of the Company’s business combination and plan of reorganization (the “Business Combination”), which resulted in a wholly-owned subsidiary of Lion merging with Northern Genesis Acquisition Corp. (“NGA”), a publicly traded special purpose acquisition company, the Company’s articles of incorporation were amended and restated (the “Articles”), the Company adopted new by-laws and the Company completed a share split of 1:4.1289. On May 7, 2021, the common shares of the Company (the “Common Shares”) began trading on the New York Stock Exchange (“NYSE”) and the Toronto Stock Exchange (“TSX”) under the ticker symbol “LEV.”

The Company’s head and registered office is located at 921 chemin de la Riviere-du-Nord, Saint-Jerome, Quebec, Canada J7Y 5G2, and its telephone number is (450) 432-5466.

4.2Intercorporate Relationships

The following organization chart indicates the inter-corporate relationships of the Company and its material subsidiary entities together with the jurisdiction of formation or incorporation of the various entities as at the date hereof:

Certain subsidiaries of the Company, each of which represented not more than 10% of the consolidated assets and not more than 10% of the consolidated revenue of the Company, and all of which, in the aggregate, represented not more than 20% of the total consolidated assets and the total consolidated revenue of the Company as at the date hereof, have been omitted.

4 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

5.0General Development of the Business

5.1Fiscal 2023 Developments

Operational Highlight - Production Capacity

Over the course of the year, the Company has continued its investments in its manufacturing facilities such that, as of the date hereof, the Company has the infrastructure in place, including in terms of production lines and equipment, to achieve a production capacity of up to 2,500 vehicles and 2,500 buses at its manufacturing facility located in Saint-Jerome, Quebec, Canada, and its manufacturing facility located in Joliet, Illinois, United States (the “Joliet Facility”), respectively. The Company’s Battery Plant and Innovation Center in Mirabel, Quebec, currently has the infrastructure in place, including the production line and equipment, to achieve a production capacity of up to 1.7 GWh on an annual basis. See section 8.0 of the Company’s fiscal 2023 MD&A entitled “Operational Highlights” and section 6.10 of this Annual Information Form entitled “Property, Plants and Equipment” for more information related to the Company’s production capacity.

Final Certification of LionBattery MD Battery Pack

On December 7, 2023, the Company announced the successful final certification of its medium duty (MD) battery pack, the LionBattery MD, a lithium-ion battery pack specifically designed for the Company's medium duty trucks and school buses. The Company, in collaboration with third-party testing partners, conducted stringent testing to fulfill the certification requirements. The LionBattery MD pack is certified to meet the rigorous criteria and safety regulations in the automotive industry. See “Lion Campus” in section 8.0 of the Company’s fiscal 2023 MD&A entitled “Operational Highlights.”

Lion5 Truck Commercial Production

During the quarter ended December 31, 2023, the Company initiated the commercial production of Lion5 units which are mounted with Lion medium duty (MD) battery packs.

Delay of Commercial Production of LionA and LionM

On November 7, 2023, the Company announced its decision to indefinitely delay the start of commercial production of the LionA all-electric mini school bus, which was designed for school transportation and to accommodate passengers with special needs, with a capacity of up to 24 passengers. Such decision will also delay the production of the LionM model, an all-electric minibus designed to be used for paratransit or as a standard shuttle bus, and which leverages the same platform as the LionA. The decision was made to prioritize the commercial production of Lion's other products (including the Lion8T) and the integration of Lion batteries to Lion's existing vehicles.

Executive Changes

On September 11, 2023, the Company announced that Nicolas Brunet had been appointed as President of the Company and that M. Brunet would work alongside Marc Bedard, CEO-Founder, on the elaboration and execution of all strategic aspects of the business, with a focus on accelerating sales across the United States and Canada, and oversee all commercial operations. Prior to that, M. Brunet served as Executive Vice President and Chief Financial Officer since December 2019. Richard Coulombe, who had been serving as Senior Vice President, Strategic Initiatives since November 2021, took over the role of Chief Financial Officer.

Financing Transactions for Aggregate Gross Proceeds of $142 million

On July 19, 2023, the Company closed financing transactions (the “2023 Financing”), resulting in aggregate gross proceeds to the Company of approximately $142 million. The financing consisted in (i) the issuance by way of private placement to a group of subscribers comprised of Investissement Québec, Fonds de solidarité des travailleurs du Québec (F.T.Q.) and Fondaction of 13% senior unsecured debentures that are convertible in accordance with the terms thereof into Common Shares at a

5 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

conversion price of $2.58 (the “2023 Convertible Debentures”), for aggregate gross proceeds to the Company of approximately $74 million, (ii) the issuance by way of private placement to a group of subscribers led by Mach Group and the Mirella & Lino Saputo Foundation of 11% senior secured non-convertible debentures (the “2023 Non-Convertible Debentures”), for aggregate gross proceeds to the Company of C$90 million, and (iii) the issuance by way of private placement to the holders of non-convertible debentures of a number of common share purchase warrants (the “2023 Warrants”) entitling them to purchase in accordance with the terms thereof a total of 22,500,000 Common Shares at an exercise price of C$2.81 per share.

In connection with the 2023 Financing, the Company amended (i) the credit agreement it had previously entered into with a syndicate of lenders represented by National Bank of Canada, as administrative agent and collateral agent, on August 11, 2021, as amended on January 25, 2022 (the “Revolving Credit Agreement”), and (ii) the interest-bearing secured loan agreement it had previously entered into with Investissement Quebec on July 1, 2021, relating to the construction of the Lion Campus (the “IQ Loan”). See “Credit Agreement with Banking Syndicate” and “Financing Agreement with Investissement Quebec” under section 9 of this Annual Information Form entitled “Description of Material Indebtedness.”

Inauguration of Joliet Manufacturing Facility

On July 21, 2023, the Company officially inaugurated its Joliet Facility. See section 8.0 of the Company’s fiscal 2023 MD&A entitled “Operational Highlights” for more information related to the Joliet Facility.

Inauguration of the Battery Plant

On April 17, 2023, the Company officially inaugurated its Battery Plant located in Mirabel, Quebec. See section 8.0 of the Company’s fiscal 2023 MD&A entitled “Operational Highlights” for more information related to the Battery Plant.

5.2Fiscal 2022 Developments

Production of First Lithium-ion Battery Pack

In December 2022, following the completion of the transfer of a first portion of the Company’s battery assembly line from JR Automation’s facility in Troy, Michigan (where the Company had previously produced and tested prototype battery packs) to the Lion Campus, the Company completed production of its first lithium-ion battery pack at the Lion Campus. See “Lion Campus” in section 8.0 of the Company’s fiscal 2023 MD&A entitled “Operational Highlights.”

Assembly and Delivery of First Zero-Emission LionC School Bus from Joliet Facility

On November 2, 2022, following the installation of school bus production stations at its Joliet Facility, the Company completed the assembly of its first zero-emission LionC school bus at its Joliet Facility. Further, on December 19, 2022, the Company completed the delivery of its first LionC bus funded by the U.S. Environmental Protection Agency’s(the “EPA”) Clean School Bus Program to Mount Desert Island Regional School System in Bar Harbor, Maine. Mount Desert received a U.S. manufactured Lion bus built at the Company’s Joliet Facility. See “Joliet Facility” in section 8.0 of the Company’s fiscal 2023 MD&A entitled “Operational Highlights.”

December 2022 Units Offering

On December 16, 2022, the Company closed a public offering (the “December 2022 Offering”) of units in the United States and Canada, pursuant to which the Company issued 19,685,040 units (the “Units”), at a price of $2.54 per Unit. Each Unit consisted of one Common Share and one common share purchase warrant (each, a “2022 Warrant”). Each whole 2022 Warrant entitles the holder thereof to acquire one Common Share at an exercise price of $2.80 per share for a period of five years ending on December 15, 2027, subject to adjustment in certain customary events. On January 17, 2023, the Company announced the full exercise and closing of the underwriters’ over-allotment option, which resulted in the Company issuing and selling to the underwriters an additional 2,952,755 Units at a price of $2.54 per Unit. The

6 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

December 2022 Offering resulted in aggregate gross proceeds to the Company of approximately $57.5 million before underwriting commissions and offering costs.

Multi-Year Cell Supply Agreement

On November 22, 2022, the Company entered into a four-year supply agreement for the supply of lithium-ion battery cells (the “Cell Supply Agreement”) pursuant to which the supplier thereunder has committed to supply, and the Company has committed to purchase, on a non-exclusive basis, lithium-ion battery cells to be used for the manufacturing of batteries for electric vehicles. See “Maturity analysis of contractual obligations” under section 16.0 of the Company’s fiscal 2023 MD&A entitled “Liquidity and Capital Resources” and section 23.0 of the Company’s fiscal 2023 MD&A entitled “Risk Factors.”

Finalta-CDPQ Loan Agreement

On November 8, 2022, the Company entered into a loan agreement (the “Finalta-CDPQ Loan Agreement”) with Finalta Capital Fund, L.P. (“Finalta”), as lender and administrative agent, and Caisse de dépôt et placement du Quebec (through one of its subsidiaries), as lender, to finance certain refundable tax credits and grants under government programs. The Finalta-CDPQ Loan Agreement provides for a loan facility of up to a principal amount of C$30 million ($22.2 million), and bears interest at the rate of 10.95% per annum. See “Loan Agreement with Finalta-CDPQ” under section 9 of this Annual Information Form entitled “Description of Material Indebtedness.”

Filing of Base Shelf Prospectus and Establishment of ATM Program

On June 17, 2022, the Company filed a final short form base shelf prospectus in all provinces and territories of Canada allowing the Company to offer, issue and sell, from time to time, common shares, preferred shares, debt securities, warrants, subscription receipts, and units comprised of one or more of any of the other securities described in the prospectus, or any combination of such securities, for up to an aggregate offering price of $350 million (or its equivalent in Canadian dollars or any other currencies), in one or more transactions during the 25-month period that the prospectus remains effective. In connection therewith, the Company filed a registration statement on Form F-10 with the SEC.

On the same date, the Company established an “at-the-market” equity program (“ATM Program”) that allowed the Company to issue and sell, from time to time in Canada and the United States through a syndicate of agents, newly issued Common Shares, for an aggregate offering amount of up to $125 million (or the Canadian dollar equivalent), at the Company’s discretion. During the year ended December 31, 2023, the Company issued 4,894,060 Common Shares pursuant to the ATM Program for aggregate gross proceeds of $9.4 million. The Company terminated the ATM Program in connection with the closing of the 2023 Financing.

First ESG Report

In May 2022, Lion released its first annual Environmental, Social and Governance (“ESG”) report, a document that provides an overview of the Company’s priorities, as it advances the management of its ESG risks and opportunities. The report contains disclosures recommended in the Industrial Machinery & Goods and Automobiles standards developed by the Sustainability Accounting Standards Board (SASB) and the recommendations by the Task Force on Climate-related Financial Disclosures (TCFD).

Board Changes

During the second quarter of 2022, Ms. Latasha Akoma and Mr. Dane L. Parker were appointed to the Board of Directors of Lion as independent Directors. Ms. Akoma is Operating Partner at GenNx360 Capital Partner, and Mr. Parker is Retired Chief Sustainability Officer and Vice President, Sustainable Workplaces at General Motors. During the first quarter of 2022, Mr. Christopher Jarratt resigned from the Board of Directors of Lion.

7 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

First Amendment to Credit Agreement with Banking Syndicate

On January 25, 2022, the Company amended the Revolving Credit Agreement, in order to, among other things, increase the maximum principal amount available thereunder. See “Credit Agreement with Banking Syndicate” under section 9 of this Annual Information Form entitled “Description of Material Indebtedness.”

5.3Fiscal 2021 Developments

Credit Agreement with Banking Syndicate

On August 11, 2021, the Company entered into the Revolving Credit Agreement with a syndicate of lenders represented by National Bank of Canada, as administrative agent and collateral agent, and including Bank of Montreal and Federation des Caisses Desjardins du Quebec, which provides for a revolving credit facility available for use to finance working capital and for other general corporate purposes. See “Credit Agreement with Banking Syndicate” under section 9 of this Annual Information Form entitled “Description of Material Indebtedness.”

Financing Agreements with Strategic Innovation Fund (SIF) of the Government of Canada and Investissement Quebec

On August 19, 2021, the Company entered into an unsecured non-interest bearing loan agreement with the Strategic Innovation Fund (SIF) of the Government of Canada relating to the construction of the Lion Campus and which provides for financing of up to C$49,950,000, of which up to 30% of the amount disbursed may be forgiven subject to the satisfaction of certain criteria tied to the Company and to the operations of the battery manufacturing plant and innovation center facilities. See “Financing Agreement with Strategic Innovation Fund (SIF) of the Government of Canada” under section 9 of this Annual Information Form entitled “Description of Material Indebtedness.”

On July 1, 2021, the Company entered into the IQ Loan relating to the construction of the Lion Campus and which provides for financing of up to C$50,000,000. See “Financing Agreement with Investissement Quebec” under section 9 of this Annual Information Form entitled “Description of Material Indebtedness.”

Selection of Joliet Facility and Lion Campus

On June 3, 2021, the Company announced that its upcoming battery manufacturing plant and innovation center would be located at the YMX International Aerocity of Mirabel, Quebec. On May 7, 2021, the Company announced that that it had selected Joliet, Illinois for the construction of its U.S. manufacturing facility. See section 8.0 of the Company’s fiscal 2023 MD&A entitled “Operational Highlights.”

Finalta Loan Agreement

On May 6, 2021, Lion entered into a new loan agreement with Finalta amending and restating in their entirety the two loan agreements that had previously been entered into with Finalta, as lender, to finance certain refundable tax credits and grants under government programs. Amounts outstanding under the May 2021 loan agreement, which provided for a combined loan facility of up to a principal amount of approximately C$13.5 million, were repaid in November 2022 using a portion of the advances made under the Finalta-CDPQ Loan Agreement.

Closing of the Business Combination and PIPE Financing

On May 6, 2021, the Company successfully completed its Business Combination and its concurrent private placement of 20,040,200 Common Shares (the “PIPE Financing”), which were initially announced on November 30, 2020. At closing of the Business Combination, each outstanding share of NGA’s common stock held by an NGA stockholder was exchanged on a one-for-one basis for one newly issued Common Share, and each outstanding warrant to purchase common stock of NGA was converted into a warrant to acquire one Common Share (each, a “Business Combination Warrant”). Following the closing of the Business Combination and the PIPE Financing, the Common Shares began trading on the

8 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

TSX and on the NYSE under the new symbol “LEV”, and the Business Combination Warrants began trading on the TSX under the new symbol “LEV.WT” and on the NYSE under the new symbol “LEV WS.” See section 7 of this Annual Information Form entitled “Description of Capital Structure.”

Board Changes

In the third quarter of fiscal 2021, Mr. Lorenzo Roccia, Chair of Transatlantic Holdings, an international financial holding company, was appointed to the Board of Directors of Lion as an independent Director. In the third quarter of fiscal 2021, Mr. Ian Robertson resigned from the Board of Directors of Lion.

6.0Business of the Company

6.1Overview

Lion’s business focuses on the design, development, manufacturing, and distribution of all-electric medium- and heavy-duty urban vehicles (“EV”). Each Lion vehicle is purpose-built for electric and entirely designed and assembled in-house, with its own chassis, truck cabin or bus body, proprietary battery technology with modular energy capacity and Lion software integration. Lion’s vehicles are assembled without relying on traditional combustion-engine vehicle retrofitting or third-party integrators. For certain specialized truck applications, Lion has also established partnerships and other relationships with third-party suppliers to enable it to offer to its clients a variety of vehicle configurations, upfit equipment options and applications which range from classic boxes for box trucks to other specialized applications such as all-electric ambulances and utility trucks.

Lion has more than 13 years of focused all-electric vehicle research and development (“R&D”), manufacturing and commercialization experience. Lion’s vehicles and technology benefit from over 22 million miles (over 36 million kilometers) driven by more than 1,850of its purpose-built all-electric vehicles that are on the road today, in real-life operating conditions.

Up until fiscal 2023, Lion was solely relying on third-party battery suppliers to source battery cells, modules and packs that it was integrating in its vehicles. In connection with the establishment of its manufacturing operations at the Battery Plant, Lion now manufactures its own battery modules and packs that integrate 21700 cylindrical battery cells sourced from third-party suppliers. While Lion intends to continue in certain instances to rely on third-party suppliers for battery packs, it expects to increase optimization for product design, cost and production efficiency over time by producing battery packs in-house.

Lion achieved successful certification of the LionBattery MD, a lithium-ion battery pack specifically designed for the Company's medium duty trucks and school buses, in December 2023. The certification process for Lion's heavy duty (HD) battery pack is progressing and the Company expects final certification to occur near the middle of fiscal 2024. The Battery Plant currently has the infrastructure in place, including the production line and equipment, to achieve a production capacity of up to 1.7 GWh on an annual basis.

Lion’s medium and heavy-duty EVs are specifically designed to address the needs of the sub-250 mile (or 400-km) mid-range urban market, which is generally viewed as well suited for electrification given vehicles are typically driven over a relatively modest distance and return to base at the end of every workday. Mid-range EV applications require less battery capacity, generally resulting in a lower vehicle cost, allowing for a suitable payload, and avoiding the need for an extensive charging station network alongside vehicle routes, all of which are viewed as contributing to a suitable use case and provide the potential for favorable economics when compared to incumbent diesel solutions.

Lion complements its product offering with various services available on-site at Lion’s Experience Centers, including sales support, full-service training, charging infrastructure assistance and maintenance support. See “The Lion Ecosystem” below.

9 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

6.2Products and Solutions

Urban Trucks

Current Line-Up

Lion’s current line-up of purpose-built all-electric trucks can be divided into four main platforms, based on gross vehicle weight rating (GVWR). For each platform, Lion offers several range options with a view to meet customers’ needs and facilitate route planning.

			t	Tractor
	Lion5	Lion6	Lion8	Lion8T
GVWR(1)	Up to 22,470 lb	Up to 26,000 lb	Up to 60,000 lb	Up to 110,000 lb
Estimated Power and Battery Capacity	Power: Up to 335 HP Battery: Up to 210 kWh	Power: Up to 335 HP Battery: Up to 252 kWh	Power: Up to 470 HP Battery: Up to 252 kWh	Power: Up to 670 HP Battery: Up to 630 kWh
Commercial Production	✓	✓	✓	× (Expected near the middle of fiscal 2024)(2)
Deliveries Made to Date	✓	✓	✓	×
(1) Gross vehicle weight rating, which refers to the maximum weight a vehicle is designed to carry including the net weight of the vehicle with accessories, plus the weight of passengers, fuel and cargo. (2) The Company has substantially completed the development phase for the Lion8T. Commercial production, which is expected near the middle of fiscal 2024, remains subject to finalization of key certifications, including with respect to the Lion heavy duty (HD) battery packs, and commencement of vehicle production on the assembly line. Timing of commercial production for the Lion8T may be subject to change or delays. See section 2 of this Annual Information Form entitled “Cautionary Note Regarding Forward-Looking Statements” and section 23.0 of the Company’s MD&A entitled “Risk Factors.”

The Lion5, Lion6 and Lion8 are all-electric medium- and heavy-duty straight trucks designed to cover a multitude of applications, including the transportation of goods and merchandise (namely through a box, refrigerated box, stake bed or other equipment), as well as for other applications such as ambulance, utility maintenance, through upfit equipment options and applications provided and integrated by third parties. The Lion8 Tractor is an all-electric heavy-duty tractor truck designed to haul semi-trailers and containers.

Specialized Applications and Product Pipeline

Lion’s truck chassis and cabins have been developed to allow the integration of multiple mechanic and electric components and equipment, thereby enabling the design of various specialized trucks. While Lion focuses on the manufacturing of chassis and cabins and does not manufacture such mechanic and electric components and equipment necessary for the final assembly of such specialized trucks, it has established partnerships and other relationships with third-party suppliers to enable it to offer to its clients a variety of vehicle configurations, upfit equipment options and applications which range from classic boxes for box trucks to other specialized applications such as all-electric ambulances, and various utility trucks. Depending on the circumstances, Lion either integrates specialized components and equipment sourced from third-party suppliers or partners and delivers a fully assembled vehicle to its customers, or it sells a truck comprised of a chassis and cabin to its customers which, in turn, coordinate directly with Lion’s suppliers and partners.

Some of the vehicle configurations and upfit equipment options can include dry box, refrigerated and aluminum stake body options provided through partnerships and other contractual relationships with

10 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

upfitters including Fourgons Transit, Morgan Truck Body, Thermo King, Knapheide and CM Truck Beds. In October 2021, Lion entered into a partnership with Demers Ambulances, a leading North American manufacturer of ambulances, for an all-electric and purpose-built ambulance model which will use the Lion 5 chassis and for which the final assembly of the ambulance upfit will be carried out by Demers Ambulances. The Lion Ambulance will be powered by Lion’s MD battery packs. Commercial production of the Lion5 configuration for the Lion Ambulance has already begun and initial deliveries are expected to take place in Q1 2024.

Buses

Lion’s current line-up of all-electric buses consists of Type C and Type D school buses. Lion buses are fully assembled by Lion, with a dedicated purpose-built chassis and body manufactured and assembled by Lion. Lion also incorporates its proprietary battery technology and software into all of its buses. For each model, Lion offers several range options with a view to meet customers’ needs and facilitate school bus route planning.

	LionC	LionD
Estimated Power and Battery Capacity	Power: 250 kW – 335 HP Battery Capacity: Up to 210 kWh	Power: 250 kW - 335HP Battery Capacity: Up to 210 kWh
Commercial Production	✓	✓
Deliveries Made to Date	✓	✓

The LionC consists of a single-speed electric powertrain school bus with a capacity of up to 72 passengers for which the body is installed upon a flat-back cowl chassis and includes a hood and complete front fender. The LionD is a “transit-style” flat-nose school bus with a capacity of up to 83 passengers.

11 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

The Lion Ecosystem

Lion has developed an ecosystem to assist fleet operators with key aspects of fleet electrification, including vehicle selection, purchase and adoption. Through its sales and other teams, Lion can assist its customers with selecting and deploying charging infrastructure, guiding customers through flexible financings solutions, identifying and executing applicable governmental grants, assess energy requirements, providing maintenance and telematics solutions and EV education and training, all of which are designed to facilitate EV transition for Lion’s customers.

1 - LionEnergy

Lion provides charging infrastructure solutions through LionEnergy, Lion’s division that assists customers with selecting, purchasing, project managing and deploying charging infrastructure ahead of vehicle delivery and which generates revenues through the resale of charging stations from global charging infrastructure manufacturers as well as project management and consulting services.

2 - LionCapital Solutions

Through arrangements with third-party financing providers and its division LionCapital Solutions, Lion makes available to its customers financing alternatives specifically designed for Lion school buses, Lion trucks and related charging infrastructure, including loans, sale and leasing financing options as well as other financing solutions relating to the monetization of carbon credits. LionCapital Solutions allows the integration of tailored and competitive financing solutions into Lion’s fleet electrification package, with a view to maximize access to funding through third-party financing providers for Lion’s clients by, among other things, eliminating or reducing upfront capital requirements and simplifying the financing process. The activities of LionCapital Solutions do not generate a significant source of financing income for the Company.

In connection therewith, Lion has entered and may in the future enter into agreements with third parties to provide financing solutions to Lion school bus and truck customers in the United States and Canada through LionCapital Solutions’ vehicle financing program. In certain instances, the third-party financing provider may retain ownership or a collateral interest over the vehicles being financed until payment is completed by Lion’s customer, and Lion has in certain instances undertaken remarketing obligations pursuant to which Lion may be required to assist the third-party financing providers into the sale or re-lease of any vehicles that should come in such financing source’s possession as a result of a customer

12 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

defaulting under any applicable financing arrangement. See section 23.0 of the Company’s fiscal 2023 MD&A entitled “Risk Factors.”

3 - LionGrants

Lion has put in place a dedicated grants assistance team responsible for assisting customers in identifying and applying for grant and subsidy funding opportunities. Lion’s grants assistance team has established lines of communication with various governmental bodies providing grants and subsidies, including the EPA, the California Energy Commission, the California Air Resources Board, Infrastructure Canada and the Ministry of Transport of Quebec, to support its customers in making sure that they benefit from all programs available in their respective jurisdictions. See section 6.9 of this Annual Information Form entitled “Subsidies and Funding Opportunities.”

4 - LionAssistance

LionAssistance consists of a team of professional technicians that offer on-site customer service with the objective of ensuring a smooth transition to electric and maximizing vehicle operation and performance. In addition to providing first line preventive maintenance, diagnostic and troubleshooting services, LionAssistance’s team of professionals offer training programs for end users’ drivers and operational teams. In February 2022, Lion entered into an agreement with Cox Automotive Mobility giving Lion customers access to Cox Automotive Mobility’s 25 maintenance service centers in the United States, expanding coverage of the LionAssistance team and providing more options for convenient, on demand support.

5 - LionBeat

LionBeat is a dedicated EV telematics software solution offered as an aftermarket support solution for Lion vehicles. LionBeat can gather data such as greenhouse gas emissions savings, real-time GPS tracking, speed, odometer readings, charging status, average energy usage, energy usage history, and other relevant maintenance and tracking statistics. Lion also uses data obtained through telematic software solutions to inform product development and assist with service calls.

6 – Direct Sales Approach

Lion’s sales model is generally based on direct-to-customer sales tailored for EVs, with a specialized team focused on EV dedicated to facilitating customers’ EV transition journey.

7 – LionAcademy

From the onset, Lion aims to understand customers’ requirements and help them identify the suitable EV for their needs. Through its LionAcademy offering, during the vehicle selection process, Lion performs analysis of typical customer routes, payload requirements, and ancillary energy consumption to help the customer determine its specific energy requirements. Customers can also visit the Lion factory or one of Lion’s Experience Centers to test drive the product identified in the vehicle selection process.

Warranty

Lion provides a limited warranty against defects for its products, including battery modules and packs, which requires it to repair or replace defective products during the applicable warranty period at no cost to the consumer. Warranty coverage is generally aligned with industry practices and is aligned with coverage provided by the original manufacturer of the applicable component included in Lion’s vehicles, provided that Lion offers extended warranty periods which can be purchased by customers. Warranty period can range from one year to several years depending on various circumstances, including clients and type of component. See section 23.0of the Company’s fiscal 2023 MD&A entitled “Risk Factors.”

13 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

6.3Principal Markets

Lion’s products are available for purchase in Canada and in the United States. For the year ended December 31, 2023, 65% of Lion’s revenues were generated by sales in Canada and 35% of the revenues were generated by sales in the United States. Lion’s products are distributed by truck and railin Canada and the United States, either directly to Lion’s customers or to the third-party upfitters Lion partners with.

6.4Marketing Channels

Lion has adopted a sales model that is generally based on direct-to-customer sales tailored for EVs, thereby generally avoiding reliance on third-party dealerships. Lion operates under such model for three key reasons: (i) traditional dealerships are generally not trained to sell and demonstrate EVs and do not have the required resources to do so; (ii) traditional dealerships typically generate a sizeable portion of their overall revenues through service and maintenance and, considering that EVs generally require less service and maintenance than incumbent diesel solutions, traditional dealerships may have less incentives to sell EVs; and (iii) paying third-party dealership margins would make EVs less cost competitive for prospective customers. That said, certain U.S. states have laws that impose or may be interpreted to impose limitations on this direct-to-consumer sales model for manufacturers such that Lion has in certain instances entered into distribution agreements with a select group of third-party dealers to abide by local laws and regulations in certain U.S. states requiring medium and heavy-duty vehicles to be sold through dealerships. In a limited number of instances, Lion may also selectively partner with third-party dealers even when not required by law to do so. See section 23.0of the Company’s fiscal 2023 MD&A entitled “Risk Factors.”

Lion utilizes strategic marketing to accelerate sales opportunities and build brand awareness. Lion’s current marketing programs primarily target commercial fleet operators and governmental agencies, and include conferences and industry events that Lion participates in or sponsors and exhibits at, press releases, email campaigns, digital advertising, cooperative marketing effects and communications regarding Lion’s differentiated selling points and product features through marketing collateral such as its website, presentation slides, social media, webinars and videos.

As part of its go-to-market strategy, Lion assists its customers through the EV transition journey in all critical aspects of vehicle selection, financing, purchasing and adoption, including EV education and training, and identification and seeking of any applicable governmental grants, energy requirements, charging infrastructure, maintenance, and advanced telematics solutions. To enhance customer experience and help drive repeat purchases, Lion leverages its growing network of experience centers, which are dedicated spaces where prospective customers, policymakers and other transportation industry stakeholders can familiarize themselves with Lion’s EVs, learn about their specifications and advantages, obtain sales support and meet sales representatives, discuss grant and subsidy assistance, obtain charging infrastructure assistance, receive vehicle training, maintenance support and have existing vehicles serviced. Services available on-site at Lion’s experience centers include product demonstrations and sales support, full-service training, charging infrastructure assistance and maintenance support. Lion has experience centers strategically located in key markets in the United States and Canada. Lion currently has 12 experience centers strategically located in key markets.

6.5Intellectual Property

Lion relies on trade secret protection, trademarks, copyrights and contractual restrictions to protect its intellectual property and other proprietary rights. As a matter of course, Lion does not employ a strategy that is focused on the active registration (including through patent application) of intellectual property rights. Lion relies on a number of other measures to protect its intellectual property and other confidential information, including technical data. For instance, Lion takes steps designated to ensure that proprietary technology incorporated in its vehicle systems is difficult to access and/or retrieve, and takes additional steps to mitigate the effect of any such unauthorized access. In addition, Lion enters into confidentiality agreements with suppliers, customers and other third parties with whom it may share information about its

14 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

business and operations, and Lion also requires all of its employees, consultants and other persons who work for it to enter into confidentiality and assignment of intellectual property agreements.

Lion pursues from time to time the registration of domain names, trademarks and service marks in the United States, Canada and in some other locations abroad as it considers necessary. In addition, Lion may in the future file patent applications as it considers appropriate under the circumstances relating to any new technologies that it develops.

Lion cannot be sure that third parties will not independently develop the know-how and trade secrets related to Lion’s proprietary technology, in which case Lion would not be able to prevent such third parties from using such know-how and trade secrets, which may allow competitors to develop similar or better products or manufacturing methods or processes than those offered by Lion. As well, Lion cannot be sure that its own proprietary know-how, trade secrets, copyrights and trademarks do not infringe third-party intellectual property rights. See section 23.0 of the Company’s fiscal 2023 MD&A entitled “Risk Factors.”

6.6Sourcing of Raw Materials

Components in Lion’s vehicles are made of various raw materials, including aluminum, steel, composite, non-ferrous metals (such as copper) and other materials and minerals used to manufacture lithium-ion batteries. The prices for these raw materials fluctuate depending on market conditions and global demand. Lion has, in certain cases, entered into long-term contractual arrangements with suppliers with respect to the supply of certain key components of its vehicles, including lithium-ion batteries and cells. Lion also strives to obtain components from multiple sources whenever possible. However, some of the components used in Lion’s vehicles, including certain key battery system components, are purchased from a single source supplier or limited source suppliers. In such instances, Lion seeks as much as possible to establish alternate supply relationships and obtain or engineer replacement components in order to mitigate supply risk. The Company does not currently hedge its long-term exposure to price fluctuations of raw materials and supplies. See section 23.0 of the Company’s fiscal 2023 MD&A entitled “Risk Factors.”

Prior to the commencement of its manufacturing operations at the Battery Plant, Lion relied only on third-party battery suppliers to source battery cells, modules and packs that it integrated in its vehicles. In connection with the establishment of its manufacturing operations at the Battery Plant, Lion now manufactures its own battery modules and packs that integrate 21700 cylindrical battery cells sourced from third-party suppliers, principally in the short term under the Cell Supply Agreement entered into in November 2022. See “Multi-Year Cell Supply Agreement” under section 5 of this Annual Information Form entitled “General Development of the Business.” While Lion intends to continue in certain instances to rely on third-party suppliers for battery packs, it expects to increase optimization for product design, cost and production efficiency over time by producing battery packs in-house. As previously disclosed, the Company initiated in fiscal 2022 arbitration proceedings with Romeo relating to the multi-year battery pack supply contract entered into with Romeo Systems, Inc. ("Romeo") (who became a subsidiary of Nikola Corporation (''Nikola'')) in November 2020. In light of Romeo’s liquidation proceedings, such arbitration proceedings against Romeo have been terminated during fiscal 2023, and the Company made the decision to mount its Lion8T trucks with the Company’s proprietary battery packs manufactured at the Battery Plant. See section 13 of this Annual Information Form entitled “Legal Proceedings and Regulatory Actions.”

6.7Seasonality

The Company’s sales have historically experienced substantial fluctuations from quarter to quarter, particularly considering that they have been mainly comprised of sales of school buses which are mainly driven by the school calendar. While the Company expects to continue to experience seasonal variations in its sales in the foreseeable future, management believes that the mix of product sales may vary in the future, especially in connection with the Company’s execution of its growth strategy and as sales of trucks become more prevalent and new product features may be introduced. As a result, it is difficult to predict if any historical trends will be reproduced in the future.

15 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

6.8Government Regulation

Vehicle Safety Regulations

The vehicles that Lion manufactures and sells are subject to various and complex safety standards across jurisdictions where Lion operates. In the United States, the National Traffic and Motor Vehicle Safety Act of 1966 (the “Safety Act”) regulates vehicles and vehicle equipment by prohibiting the sale of any new vehicle or equipment that does not conform to applicable vehicle safety standards established by the National Highway Transportation Safety Administration (“NHTSA”). In Canada, the Motor Vehicle Safety Act (the “MVSA”) regulates vehicles, and Transport Canada develops and enforces Motor Vehicle Safety Standards which are generally harmonized with the standards in the United States. Lion is also subject to similar laws and regulations at the U.S. state and Canadian provincial levels in all states and provinces where it sells its vehicles. Meeting or exceeding such safety standards is costly and has continued to evolve alongside developments in technology and safety expectations. Lion continuously evaluates requirements for licenses, approvals, certificates and governmental authorizations with a view to obtain or comply with the various licenses, approvals, certifications and other governmental authorizations necessary to manufacture, sell or service its vehicles in the United States and Canada. Such requirements include rigorous testing and the use of approved materials and equipment. In addition, governmental agencies generally mandate that new all-electric trucks and bus models, and subsequent material changes to those models, be physically tested to meet certain performance standards in order to be eligible to receive governmental funding.

Environment and Other Regulatory Matters

Although Lion’s vehicles qualify as zero emission vehicles (“ZEVs”), they are subject to regulations regarding vehicle emissions. For example, in the United States, every class of heavy-duty engines or vehicles must receive Certificate of Conformity (“COCs”) from the EPA prior to being sold. These COCs must be obtained for each model year of production, and failure to obtain them prior to entering Lion’s vehicles into commerce may result in substantial fines or penalties. In addition, the California Air Resources Board (“CARB”) requires that every model year be zero-emission certified by executive order of the Company. The CARB certification is required to participate in California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (“HVIP”) described below.

In Canada, the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations adopted under the Canadian Environmental Protection Act, 1999, establish Canadian emission standards and test procedures for Canadian manufacturers, distributors and importers of heavy-duty vehicles. These standards and procedures are aligned with the requirements of the United States Code of Federal regulations for on-road heavy-duty vehicles and engines published by the EPA, parts of which are incorporated by reference in the regulations, However, testing and other requirements to demonstrate compliance may vary, adding to the regulatory complexity of Lion’s operations.

The use, storage, transport, and disposal of Lion’s battery packs is subject to extensive regulation. Lithium-ion cells may be regulated as “hazardous” or “dangerous” goods under several regulatory regimes in both the United States and Canada. For example, Lion’s battery packs are subject to testing requirements before they can be transported, and they must be transported in keeping with various conditions which vary by mode of transportation. Lion may also be responsible for the recycling and proper disposal of expended batteries from its vehicles. In addition to the proper handling, recycling, and disposal of expended batteries, Lion’s operations are subject to a wide range of laws and regulations related to the protection of the environment, including those regulating air emissions, discharges to water, waste management, worker health and safety, and environmental cleanup.

6.9Subsidies and Funding Opportunities

With heightened focus on the global environment, various subsidy and financial incentives programs have been introduced by governmental authorities in Canada and the United States in order to promote the adoption of emissions-free vehicles. Demand for Lion’s vehicles is currently highly influenced by such

16 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

federal, state, provincial and local tax credits, rebates, grants and other government programs and incentives that promote the use of battery electric vehicles1. Additionally, demand for Lion’s vehicles is and is expected to become increasingly influenced by laws, rules, regulations and programs that require reductions in carbon emissions, such as the various measures implemented by lawmakers and regulators in the United States and Canada (notably in the State of California and in the Province of Quebec, among others) designed to increase the use of electric and other zero-emission vehicles, including the establishment of firm goals in certain instances for the number of these vehicles operating on state or provincial roads by specified dates and the enactment of various laws and other programs in support of these goals. See section 23.0 of the Company’s fiscal 2023 MD&A entitled “Risk Factors.”

U.S. Subsidies and Incentive Programs

At the U.S. federal level, the Biden administration signed into law the Bipartisan Infrastructure Law which includes a total of $7.5 billion to build out a national electric vehicle charging infrastructure network and under which the EPA launched its Clean School Bus Program (the “EPA Program”) which is expected to provide $5 billion over the five-year period between 2022 and 2026 to replace existing school buses with zero-emission and low-emission models.

In May 2022, the EPA announced the availability of $500 million under the first round of funding of the EPA Program, which amount was subsequently increased to $945 million. On April 25, 2023, the EPA announced the availability of an additional $400 million of grants through a new 2023 grant funding round (the "2023 grant round") under the EPA Program which was more than doubled in January 2024 as further described below, and on September 28, 2023, the EPA announced additional funding of up to $500 million through a rebate round, in respect of which applications are now closed and awards are expected to be announced in April 2024. Please refer to the EPA's website for additional information on the EPA Program: https://www.epa.gov/cleanschoolbus. On January 8, 2024, the EPA announced that it more than doubled the funding amount initially announced for the 2023 grant round, thereby allocating nearly $1 billion to 67 applicants. Based on the EPA, the awards under the 2023 grant round are expected to facilitate the purchase of over 2,700 clean school buses in 280 school districts serving over 7 million students across 37 states. See section 8.0 of the Company’s fiscal 2023 MD&A entitled “Operational Highlights” for more information on the EPA Program.

The Biden administration also signed into law the Inflation Reduction Act of 2022, which includes a program under which purchases of new Class 4-8 electric vehicles may qualify for a commercial clean vehicle credit of up to $40,000 under the Internal Revenue Code (IRC). Lion has been approved by the Internal Revenue Service as a qualified manufacturer for the commercial clean vehicle credit such that Lion’s all-electric trucks sold in the United States starting January 1, 2023 may be eligible for such clean vehicle credit.

U.S. states and Air Quality Districts have also implemented various programs to offset carbon emissions, such as Zero-Emission Vehicle (ZEV) credit trading mechanisms currently adopted by seven U.S. states and New York City’s plan to electrify its school bus fleet by 2035. Additionally, several states and Washington D.C. have signed the Multi-State Medium and Heavy-Duty Zero Emission Vehicle Memorandum of Understanding, committing to implement the Advanced Clean Truck (ACT) rule which has an objective of having 100% of all new medium and heavy-duty vehicle sales be zero-emission by 2050, with an interim target of 30% zero-emission vehicle sales by 2030.

In California, the California Air Resources Board approved in November 2022 the fiscal 2022-2023 Funding Plan for Clean Transportation Incentives, which includes certain policy changes from previous years and an allocation of over $1.7 billion to be administered by the California’s Hybrid and Zero-

1 As further detailed in the Company’s fiscal 2023 MD&A, substantially all sales and deliveries of Lion vehicles are subject to the granting of such subsidies and incentives. To date, the subsidies and incentive programs Lion’s customers have applied for include Transport Quebec’s School Transport Electrification and Eco-Trucking Programs (Programme d’électrification du transport scolaire et Programme Écocamionnage), the Canadian federal government’s Zero-Emission Transit Fund (ZETF) and Incentives for Medium- and Heavy-Duty Zero-Emission Vehicles (iMHZEV) Program, California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP), California Energy Commission – School Bus Replacement Program and the U.S. Environmental Protection Agency Clean School Bus Program. See sections 10.0 and 23.0 of the Company's fiscal 2023 MD&A entitled “Order Book” and “Risk Factors.”

17 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

Emission Truck and Bus Voucher Incentive Project (HVIP). HVIP provides a point-of-sale rebate to organizations that purchase fleets of hybrid and electric trucks and buses. Under the HVIP, at delivery, customers will pay the purchase price of the vehicle minus the voucher amount, and Lion will receive the amount of the voucher directly, subject to and once CARB certification is completed.

Canadian Subsidies and Incentive Programs

In Canada, the Canadian federal government has established the Zero Emission Transit Fund (“ZETF”) through which the Canadian federal government plans on investing C$2.75 billion over five years to support public transit and school bus electrification. December 31, 2025 is the latest date by which claims are required to be made according to the current eligibility criteria of the program, unless otherwise agreed by Infrastructure Canada. Lion and its clients continue to experience delays in the processing of applications filed under the ZETF, and if such delays persist, orders subject to ZETF grants may be cancelled, in whole or in part, or be subject to renegotiation. See sections 10.0 and 23.0 of the Company’s fiscal 2023 MD&A entitled “Order Book” and “Risk Factors.” In addition, the Canada Infrastructure Bank has launched a C$1.5 billion debt funding assistance program to assist public transit and school bus operators in their transition towards electrification.

The Canadian federal government also launched in June 2022 C$547.5 million of funding over four years (or until available funding is exhausted) for the Incentives for Medium- and Heavy-Duty Zero-Emission Vehicles (iMHZEV) Program, which offers Canadian organizations, provinces, territories and municipalities point-of-sale incentives towards the purchase or lease of eligible medium- and heavy-duty zero-emission vehicles and which can be applied in addition to any provincial or territorial incentive.

In Quebec, the provincial government previously announced its Green Economy Plan which includes C$5 billion in funding (including C$246 million towards truck electrification and C$250 million towards school bus electrification) with the objective of electrifying 55% of all transit buses and 65% of all school buses in the province by 2030 as well as the objective of cutting greenhouse gas emissions and banning sales of gasoline-powered consumer and light-duty vehicles by 2035. The Green Economy Plan includes various programs to assist school and transit bus fleets as well as medium and heavy-duty trucks electrification, including Transport Quebec’s School Transport Electrification and Eco-Trucking Programs (Programme d’électrification du transport scolaireet Programme Écocamionnage).

In an effort to phase-out diesel-powered buses, the Quebec provincial government has also banned sales of new diesel-powered school buses in the province. Similar programs have also been established by the British Columbia provincial government called Specialty Use Vehicle Incentive for Utility Vehicles (SUVI) and Commercial Vehicle Pilots Program (CVP).

6.10Property, Plants and Equipment

Lion has one vehicle manufacturing facility in Canada located in Saint-Jerome, Quebec, which is approximately 25 miles (or 40 km) north of Montreal, Quebec. To date, a majority of the vehicles sold by the Company have been produced at its Saint-Jerome facility.

Lion has the Joliet Facility, a manufacturing facility in the United States located in Joliet, Illinois, which is approximately 30 miles (or 45 km) south of Chicago, Illinois and which will support the Company in addressing the increasing demand in the marketplace for “Made in America” zero-emission vehicles.

Lion also has the Lion Campus, which is located at the YMX International Aerocity of Mirabel, Quebec and which consists of the Battery Plant and the Innovation Center. The Innovation Center building is currently being used for various purposes, including as a testing and certification center for vehicles and batteries, a pre-delivery inspection site, a showroom and delivery center, and as warehousing space, in order to leverage space available and optimize operational efficiency.

18 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

Except for the Innovation Center, all of such properties are leased by Lion and Lion does not own any real property.

Facility	Principal Production Activity	Approximate Square Footage	Estimated Current Maximum Annual Capacity(1)	Estimated Maximum Annual Capacity at Full Scale(2)
Saint-Jerome, Qc Canada	Head Office Manufacturing Facility In-house R&D Testing Center Experience Center	200,000	2,500 vehicles	2,500 vehicles
Joliet, IL, United States	Manufacturing Facility	900,000	2,500 vehicles	20,000 vehicles(3)
Mirabel, Qc, Canada	Battery Manufacturing Facility	175,000	1.7 gigawatt hours	5 gigawatt hours(4)

(1) While the Saint-Jerome facility, the Joliet Facility and the Battery Plant currently have infrastructure in place to achieve a production capacity of up to 2,500 vehicles, up to 2,500 buses and up to 1.7 GWh, respectively, on an annual basis, the Company’s operations are currently being conducted on a lower scale and it has limited experience to date in high volume manufacturing. See section 2 of this Annual Information Form entitled “Cautionary Note Regarding Forward-Looking Statements” and section 23.0 of the Company’s fiscal 2023 MD&A entitled “Risk Factors.”

(2) The estimated maximum annual capacity at full scale represents management’s estimates of the projected maximum annual vehicle production capacity at the facility after completion of the production ramp-up and scale-up of manufacturing operations. Management’s expectations with respect to the ramp-up of production and estimated maximum capacity are based on a number of assumptions and may be subject to change, and there is no assurance that the Company’s plan will materialize as expected. See section 2 of this Annual Information Form entitled “Cautionary Note Regarding Forward-Looking Statements” and section 8.0 of the Company’s fiscal 2023 MD&A entitled “Operational Highlights.”

(3) The Joliet Facility currently has the infrastructure in place, including the production line and equipment, to achieve a production capacity of up to 2,500 buses on an annual basis. While the Company initially planned that, at full scale, the production capacity of the Joliet Facility would be principally focused on the production of trucks, as previously disclosed, the Company expects to rely on the truck manufacturing capacity available at its Saint-Jerome manufacturing facility to address current customer demand. See section 8.0 of the Company’s fiscal 2023 MD&A entitled “Operational Highlights” for more information on the Joliet Facility.

(4) See section 8.0 of the Company’s fiscal 2023 MD&A entitled “Operational Highlights” for more information on the Lion Campus.

19 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

Other Facilities

The following table provides a list of the other main facilities currently leased by Lion, together with approximate square footage for each facility:

Facility	Principal Activity	Approximate Square Footage
Montreal, Qc	Engineering R&D Center	5,000
Terrebonne, Qc	Administrative Office Experience Center	45,000
Sainte-Sophie, Qc	Warehouse	5,000
Moncton, N.B.	Experience Center	10,000
Richmond, B.C.	Experience Center	18,000
Auburn, WA	Experience Center	10,000
Sacramento, CA	Experience Center	28,000
Los Angeles, CA	Experience Center	13,000
Jacksonville, FL	Experience Center	10,000
Shakopee, MN	Experience Center	3,280
Richmond, VA	Experience Center	8,000
Milton, VT	Experience Center	17,000
Denver, CO	Experience Center	18,000

6.11Research and Development

Lion’s team of engineers and other R&D professionals conducts development activities from its three R&D centers in Mirabel, Quebec, Saint-Jerome, Quebec, and Montreal, Quebec.

Lion’s R&D is currently focused on enhancing existing vehicles and features and continuing the development of proprietary battery systems and specialized applications that can be integrated into Lion’s vehicles. Lion’s main R&D costs consist of expenditures towards assembly of prototype vehicles, the design, establishment, purchase, and implementation of equipment, as well as costs relating to its R&D professionals performing development activities.

6.12Employees

The Company currently has approximately 1,350 employees in Canada and the United States across all functions, including manufacturing, R&D, sales & marketing, service, and corporate and administrative.

None of Lion’s employees is a party to a collective bargaining agreement or represented by a labour union.

In November 2023, the International Association of Machinists and Aerospace Workers (“IAM”) filed a petition for an election with the National Labor Relations Board (“NLRB”) to represent the Company’s full time and regular part-time production and warehouse employees at the Joliet Facility, with certain exceptions. The United Automobile Aerospace and Agricultural Workers of America (“UAW”) filed a petition to intervene in the election. The election was held on December 21, 2023 and the results have not yet been finalized in light of certain votes being challenged. A hearing with the NLRB was held in February 2024 to resolve certain challenged ballots and a decision from the NLRB is expected in the near future to determine the outcome of the election. In the event neither the IAM nor the “no union” option receive a majority of the ballots cast, the NLRB will conduct a runoff election between the Company and the IAM.

20 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

The UAW ceased to participate in the process considering that it did not receive a sufficient number of votes. See section 23.0 of the Company’s fiscal 2023 MD&A entitled “Risk Factors”.

6.13Customers

Lion’s vehicles target a wide array of customers including third-party school bus operators, school districts, carriers, consumer goods companies, waste management operators, manufacturers, utilities as well as governmental agencies. Lion is focusing its sales efforts towards medium to large fleet owners via its direct-to-customer sales model.

The customer breakdown for school buses varies across jurisdictions in the United States and Canada but consists mainly of school bus operators and school districts.

6.14Competition

Lion competes in the medium and heavy-duty urban vehicle market, ranging from commercial trucks to buses. The North American medium and heavy-duty urban truck market is highly competitive today and Lion expects it will become even more so in the future. Lion’s competition for their trucks comes from manufacturers of purpose-built all-electric vehicles such as Nikola, BYD, and Xos, manufacturers of hybrid/retrofit EVs such as Workhorse, and manufacturers of trucks with internal combustion engines powered by diesel fuel. Lion cannot assure that customers will choose its vehicles over those of its competitors’ diesel-powered trucks. North American school bus market is mainly concentrated in the hands of three incumbent automotive original equipment manufacturers (“OEMs”) selling both diesel school buses as well as electric school buses: Blue Bird Corporation, Thomas Built Buses (Daimler), and IC Bus (Navistar International, subsidiary of Traton). In addition to the incumbent diesel school bus OEMs, a few early-stage EV OEMs have entered in competition with Lion such as Green Power Motor, which offers purpose-built electric Type D school buses. See section 23.0 of the Company’s fiscal 2023 MD&A entitled “Risk Factors”.

Lion’s management believes the primary competitive factors in both the truck and bus industries include

•total cost of ownership (“TCO”), which is impacted by, among other things, pricing of electric vehicles, available subsidies and incentives, energy costs and maintenance and repair costs over the useful life of a vehicle;

•vehicle range and payload capacity;

•quality and reliability;

•safety;

•customer experience;

•technological innovation and charging expertise; and

•compliance with environmental regulation.

Lion’s management believes that Lion’s truck TCO is favorable to comparable diesel vehicles today in most use cases. Over time, the TCO advantage of electric trucks is expected to further increase as electric vehicle prices reduce, which will in turn further improve the economic benefit and rationale for fleet owners and operators to purchase Lion’s all-electric vehicles. In the school bus market, the lower annual mileage of individual units typically makes it more difficult for the lower energy and maintenance costs to significantly offset the currently higher upfront costs of electric vehicles over incumbent diesel units. As such, at the current time, governmental subsidies and incentives are often required for electric buses to be competitive over diesel units from a pure TCO point of view in this category. Over time, as the cost of the vehicles decreases as a result of, among other things, reduction in battery costs from increased vertical integration in manufacturing of battery systems, increased purchasing power with suppliers through larger volume commitments, increased manufacturing capacity utilization and fixed cost

21 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

absorption, and other productivity gains, the TCO for electric buses is expected to become favorable even in the absence of governmental subsidies and incentives. See section 23.0 of the Company’s fiscal 2023 MD&A entitled “Risk Factors.”

6.15Risk Factors

The Company’s risk factors are discussed starting on page 49 of the Company’s fiscal 2023 MD&A and are incorporated by reference in this document. The Company’s fiscal 2023 MD&A is available on the Company’s website, on SEDAR+ (www.sedarplus.ca) and on EDGAR (www.sec.gov). These risks may not be the only risks the Company faces. Other risks of which management is not aware or which are currently deemed to be immaterial may arise and have a material adverse impact on the Company, its business, results from operations or financial condition.

7.0Description of Capital Structure

The Company’s authorized share capital consists of (i) an unlimited number of Common Shares and (ii) an unlimited number of preferred shares (the “Preferred Shares”), issuable in one or more series. As at February 28, 2024, there were 226,215,913 Common Shares issued and outstanding, and no preferred shares were issued and outstanding. The Company also has four series of warrants to purchase Common Shares outstanding as further described in section 7.3.

The summary below of the rights, privileges, restrictions and conditions attaching to the shares of the Company is subject to, should be read in conjunction with, and is qualified by reference to, the Company’s articles and by-laws, available on the Company’s website at www.thelionelectric.com under the “Investors” section.

7.1Common Shares

Voting Rights

Holders of Common Shares are entitled to one vote for each share held at any meeting of the shareholders of the Company, other than meetings at which only the holders of a particular class or series of shares are entitled to vote due to provisions of the QBCA or the specific attributes of such class or series.

Dividends

Subject to the prior rights of the holders of any Preferred Shares as to dividends, the holders of Common Shares are entitled to receive dividends as and when declared by the Board of Directors out of the funds that are available for the payment of dividends.

Liquidation

Subject to the prior payment to the holders of Preferred Shares, in the event of the Company’s voluntary or involuntary liquidation, dissolution or winding-up or other distribution of the Company’s property and assets among its shareholders for the purposes of winding up the Company’s affairs, the holders of Common Shares are entitled to share pro rata in the distribution of the balance of the Company’s remaining property and assets.

Rights and Preferences

The holders of Common Shares have no preemptive, conversion rights or other subscription rights attaching to the Common Shares. There are no redemption or sinking fund provisions applicable to Common Shares. There is no provision in the Articles requiring the holders of Common Shares to contribute additional capital or permitting or restricting the issuance of additional securities or any other material restrictions. The rights, preferences and privileges of the holders of Common Shares are subject to and may be adversely affected by, the rights of the holders of any series of Preferred Shares that the Company’s Board may designate in the future.

22 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

7.2Preferred Shares

Pursuant to the Articles, the Company’s Board is authorized to issue, without shareholder approval, an unlimited number of Preferred Shares, issuable in one or more series, and, subject to the provisions of the QBCA, having such designations, rights, privileges, restrictions and conditions, as the Company’s Board may determine, and such rights and privileges, including, without limitation, any right to receive dividends (which may be cumulative, non-cumulative or partially cumulative and variable or fixed), the rate or rates, amount or method or methods of calculation of preferential dividends and whether such rate or rates, amount or method or methods of calculation shall be subject to change or adjustment in the future, the currency or currencies of payment, the date or dates and place or places of payment thereof and the date or dates from which such preferential dividends shall accrue, the rights of redemption (if any) and the redemption price and other terms and conditions of redemption, the rights of retraction (if any) and the prices and other terms and conditions of any rights of retraction and whether any additional rights of retraction may be provided to such holders in the future, the voting rights and the conversion or exchange rights (if any) and any sinking fund, purchase fund or other provisions attaching thereto, as the Company’s Board may determine, and such rights and privileges may be superior to those of the Common Shares. Except as otherwise provided by law or in accordance with any voting rights which may from time to time be attached to any series of Preferred Shares, the holder of Preferred Shares as a class are not entitled as such to receive notice of, to attend or to vote at any meeting of the shareholders of the Company.

7.3Warrants to Acquire Common Shares

2023 Warrants

On July 19, 2023, the Company completed the private placement of the 2023 Warrants in connection with the closing of the 2023 Financing. Each whole 2023 Warrant entitles the holder thereof to acquire one Common Share at an exercise price of C$2.81 per Common Share for a period of five years ending July 19, 2028, subject to adjustments in certain customary events. The 2023 Warrants provide for adjustment in the number of Common Shares issuable upon the exercise of the 2023 Warrants and/or the exercise price per Common Share upon the occurrence of certain events.

Upon a change of control of the Company, the Company will have the right to redeem and cancel all of the outstanding 2023 Warrants for a cash purchase price based on the remaining term of the 2023 Warrants and the value of the consideration offered or payable per Common Share in the transaction constituting the change of control (the “Redemption Price”). In addition, upon a change of control of the Company resulting in (or which is reasonably anticipated to result in) the Common Shares ceasing to be listed on a stock exchange, the holders of 2023 Warrants may require the Company to redeem and cancel all 2023 Warrants at the Redemption Price subject to and on the date such transaction resulting in a change of control is completed.

As of February 28, 2024, 22,500,000 2023 Warrants were issued and outstanding.

23 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

2022 Warrants

On December 16, 2022, the Company entered into a warrant indenture (the “2022 Warrant Indenture”) with TSX Trust Company, as warrant agent (the “Warrant Agent”), in connection with closing of the December 2022 Offering. The 2022 Warrant Indenture governs the 2022 Warrants. Each whole 2022 Warrant entitles the holder thereof to acquire one Common Share at an exercise price of $2.80 per Common Share for a period of five years ending December 15, 2027, subject to adjustment in certain customary events. The 2022 Warrant Indenture provides that, subject to compliance with applicable securities legislation and approval of applicable regulatory authorities, the Company is entitled to purchase in the market, by private contract or otherwise, all or any of the 2022 Warrants then outstanding, and any 2022 Warrants so purchased will be cancelled. The 2022 Warrant Indenture provides for adjustment in the number of Common Shares issuable upon the exercise of the 2022 Warrants and/or the exercise price per Common Share upon the occurrence of certain events.

The 2022 Warrants are trading on the NYSE under the symbol “LEV WSA” and on the TSX under the symbol “LEV.WT.A.” As of February 28, 2024, 22,637,795 2022 Warrants were issued and outstanding.

Business Combination Warrants

Upon completion of the Business Combination, 27,111,741 warrants to purchase shares of NGA’s common stock were converted into an equivalent number of warrants to acquire Common Share (each, a “Business Combination Warrant”), 15,972,672 of which were public Business Combination Warrants and 11,139,069 of which were private Business Combination Warrants. The Business Combination Warrants are governed by a warrant agreement dated August 7, 2020 (the “Business Combination Warrant Agreement”), which agreement was assumed by the Company pursuant to a warrant assignment and assumption agreement dated May 6, 2021, between the Company, NGA, American Stock Transfer & Trust Company, LLC, and Continental Stock Transfer & Trust (the “Business Combination Warrant Assignment Agreement”).

Each Business Combination Warrant entitles the holder to acquire one Common Share at an exercise price of $11.50 per Common Share until May 6, 2026, subject to adjustment in certain customary events.

The public Business Combination Warrants may be redeemed by the Company in whole at a price of $0.01 per public Business Combination Warrant, provided that the last reported sales price of the Common Shares equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period commencing once the public Business Combination Warrants become exercisable and ending on the third trading day prior to the date on which the Company gives proper notice of such redemption.

Each private Business Combination Warrant may be exercised on a cashless basis and may not be redeemed by the Company for so long as it is held by Northern Genesis Sponsor LLC or any of its permitted transferees. Once transferred to any person that is not Northern Genesis Sponsor LLC or any of its permitted transferees, a private Business Combination Warrant becomes treated as a public Business Combination Warrant.

The Business Combination Warrants are trading on the NYSE under the symbol “LEV WS” and on the TSX under the symbol “LEV.WT.” As of February 28, 2024, 27,111,323 Business Combination Warrants were issued and outstanding.

Specified Customer Warrant

In connection with entering into the MPA, Lion issued on July 1, 2020 a warrant to purchase Common Shares (the “Specified Customer Warrant”) to Amazon.com NV Investment Holdings LLC (the “Specified Warrantholder”) which vests, subject to the terms and conditions contained therein, based on the aggregate amount of spending by the Specified Customer and its affiliates on Lion products or services. At the election of the Specified Warrantholder, any vested portion of the Specified Customer Warrant can be exercised either on a cash basis by the payment of the applicable exercise price or on a net issuance basis based on the in-the-money value of the Specified Customer Warrant. The exercise

24 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

price of the Specified Customer Warrant corresponds to $5.66 per Common Share and the Specified Customer Warrant will be, if and when fully vested, exercisable for 35,350,003 Common Shares upon an exercise on a cash basis. Full vesting of the Specified Customer Warrant requires spending of at least $1.2 billion on Lion products or services over the term of the Specified Customer Warrant, subject to partial or full accelerated vesting upon the occurrence of certain events, including a change of control of Lion (as such term is defined in the Specified Customer Warrant) or a termination of the MPA by the Specified Customer for cause. Pursuant to the Specified Customer Warrant, if Lion or its shareholders propose to initiate a process to explore, or to accept any offer or enter into negotiations with respect to, a change of control of Lion (as defined in the Specified Customer Warrant), Lion must provide written notice thereof to the Specified Warrantholder prior to entering into any definitive agreement or binding letter of intent with respect to any such proposed transaction, and the Specified Warrantholder has the right to enter into non-exclusive, good faith negotiations with Lion and its shareholders in respect of any such proposed transaction.

As of February 28, 2024, (i) the vested portion of the Specified Customer Warrant was exercisable for a number of Common Shares representing approximately 2.3% of all Common Shares issued and outstanding on a partially-diluted basis. The Specified Customer Warrant has a term expiring on July 1, 2028 and the Specified Warrantholder has customary registration and information rights.

The description of the 2022 Warrants, the Business Combination Warrants and the Specified Customer Warrant is only a summary of the material features of the 2022 Warrants, the Business Combination Warrants and the Specified Customer Warrant. This summary should be read in conjunction with, and is qualified in its entirety by reference to, the 2022 Warrant Indenture, the Business Combination Warrant Agreement and Specified Customer Warrant, which are available on the Company’s profiles on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov.

7.4Convertible Debentures

2023 Convertible Debentures

The 2023 Convertible Debentures bear interest at the rate of 13% per annum, compounded monthly on the last day of each month. Prior to any accrual date, the Company has the right, at its discretion, to make an election to pay interest accrued on the principal for the applicable month in cash (in which case any interest so paid shall not be compounded).

The 2023 Convertible Debentures will mature on July 19, 2028 and are convertible at the holders’ option into Common Shares at a conversion price of $2.58 per Common Share. The conversion price is subject to customary adjustments, including for share splits or consolidation, share dividends, rights offerings, asset or other distributions and above market repurchases of shares (including above market exchanges or tender offers), in each case in compliance with the rules and requirements of the TSX relating to anti-dilution mechanisms.

The 2023 Convertible Debentures contain customary covenants and events of default for an instrument of its nature, including covenants relating to compliance with the financial ratios and negative covenants included in the Revolving Credit Agreement (provided (i) that any amendment to the financial ratios to which the lenders under the Revolving Credit Agreement consent will automatically be incorporated in the 2023 Convertible Debentures, and (ii) that a default shall only occur under the 2023 Convertible Debentures if a financial ratio default occurs and is continuing on the date that is fifteen business days following the delivery of the Company's financial statements evidencing such event of default, and only if the lenders under the Revolving Credit Agreement have not waived or tolerated such event of default before the expiry of this fifteen business day period). The 2023 Convertible Debentures also include certain covenants relating to maintaining the current headquarters, employees and facilities of the Company in the province of Quebec and certain covenants limiting the incurrence of capital expenditures over the term of the 2023 Convertible Debentures, including limits on capital expenditures towards increasing production capacity at the Company’s manufacturing facilities beyond certain capacity as well as limits on the incurrence of maintenance and other capital expenditures.

25 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

The 2023 Convertible Debentures contain customary events of default for an instrument of its nature, including, among other things, the occurrence of an event of default under any other debt of the Company with a principal amount exceeding $15,000,000 if such default results in the acceleration of the amounts owed thereunder. Upon the occurrence of an event of default under the 2023 Convertible Debentures or, if later, at the expiry of any agreed-upon period for curing an event of default, as the case may be, holders of 2023 Convertible Debentures will have the right, upon giving written notice to the Company, to (i) require the Company to redeem all of their 2023 Convertible Debentures, or (ii) require that the principal amount of the 2023 Convertible Debentures, plus any accrued, compounded and unpaid interest, be converted into Common Shares, with the number of Common Shares issuable upon such conversion being subject to a grid-based “make-whole” adjustment as set forth below.

Upon the occurrence of a “fundamental change”, including a change of control of the Company or the Company failing to comply with the covenants to maintain the current headquarters, employees and facilities of the Company in the province of Quebec, holders of 2023 Convertible Debentures will either (i) convert all of their 2023 Convertible Debentures, with the number of Common Shares issuable upon such conversion being subject to a grid-based “make-whole” adjustment, or (ii) require the Company to repurchase for cash all of their 2023 Convertible Debentures at a repurchase price equal to 150% of the principal amount and the accrued, compounded and unpaid interest.

In the event holders of 2023 Convertible Debentures elect to convert their 2023 Convertible Debentures upon a fundamental change or an event of default, the number of Common Shares issuable upon such conversion will be subject to a grid-based “make-whole” adjustment pursuant to which the conversion rate determining the number of Common Shares issuable will be increased by a number of Additional Shares, (i) in the case of a conversion in connection with a fundamental change, based on a reference price on the date on which the fundamental change occurs or becomes effective, or (ii) in the case of a conversion following an event of default, based on a reference price on the date on which the holder exercises its conversion right.

8.0Dividends

The Company has never declared or paid any dividends on its Common Shares, and the Company anticipates reinvesting earnings to finance its business and its growth strategy, and does not anticipate declaring any cash dividends to holders of Common Shares in the foreseeable future.

The payment of future dividends, if any, will be reviewed periodically by Lion’s Board of Directors and will depend upon, among other things, conditions then existing including earnings, financial conditions, cash on hand, financial requirements to fund the Company’s commercial activities, contractual restrictions (including under the Revolving Credit Agreement), development and growth, and other factors that the Company’s Board may consider appropriate in the circumstances. See “Credit Agreement with Banking Syndicate” under section 9 entitled “Description of Material Indebtedness” of this Annual Information Form.

9.0Description of Material Indebtedness

Credit Agreement with Banking Syndicate

Lion is a party to the Revolving Credit Agreement which was entered into on August 11, 2021 with a syndicate of lenders represented by National Bank of Canada, as administrative agent and collateral agent, and including Bank of Montreal and Federation des Caisses Desjardins du Quebec, as amended on January 25, 2022, to increase the maximum principal amount that may become available from time to time under the revolving credit facility, subject to the borrowing base and compliance with the covenants contained under the Revolving Credit Agreement, from $100,000,000 to $200,000,000. The Revolving Credit Agreement was further amended on July 19, 2023 (the "July 2023 Amendment") to permit the incurrence of the 2023 Financing, extend the maturity of the Revolving Credit Agreement by one year to

26 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

August 11, 2025, and provide for an availability block and the establishment of an interest reserve account.

The credit facility under the Revolving Credit Agreement is available for use to finance working capital and for other general corporate purposes, and available to be drawn subject to a borrowing base comprised of eligible accounts (including insured or investment grade accounts) and eligible inventory, in each case, subject to customary eligibility and exclusionary criteria, advance rates and reserves.

The credit facility under the Revolving Credit Agreement currently bears interest at a floating rate by reference to the Canadian prime rate or pursuant to banker’s acceptance based on the CDOR rate, if in Canadian dollars, or the U.S. base rate or Term Secured Overnight Financing Rate (SOFR), if in U.S. dollars, as applicable, plus the relevant applicable margin. The Revolving Credit Agreement matures on August 11, 2025. The obligations under the Revolving Credit Agreement are secured by a first priority security interest, hypothec and lien on substantially all of Lion’s and certain of its subsidiaries’ movable property and assets (subject to certain exceptions and limitations). The Revolving Credit Agreement includes certain customary affirmative covenants, restrictions and negative covenants on Lion’s and its subsidiaries’ activities, subject to certain exceptions, baskets and thresholds. The Revolving Credit Agreement also provides for customary events of default, in each case, subject to customary grace periods, baskets and materiality thresholds. Finally, the Revolving Credit Agreement also requires Lion to maintain certain financial ratios and namely, an all times tangible net worth test and a springing fixed charge coverage ratio based on a minimum availability test which may, from time to time, impact the maximum amount available under the revolving credit facility. Further, in accordance with the July 2023 Amendment, the amount available under the revolving credit facility provided under the Revolving Credit Agreement is subject to an availability block of C$10,000,000 which, upon availability dropping below 30% and so long as no default then exist or would result therefrom, may become available and be drawn to fund an interest reserve account to be made subject to the control of the administrative agent and collateral agent under the Revolving Credit Agreement. Such interest reserve account amounts can be used to pay interest under the Non-Convertible Debentures if no default or event of default shall have occurred and be continuing or shall result therefrom.

This description of the Revolving Credit Agreement is only a summary of the material features of the Revolving Credit Agreement. This summary should be read in conjunction with, and is qualified in its entirety by reference to, the Revolving Credit Agreement, which is available on the Company’s profiles on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov.

27 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

Financing Agreement with Investissement Quebec

On July 1, 2021, the Company entered into the IQ Loan with Investissement Quebec relating to the construction of the Lion Campus. The IQ Loan provides for financing of up to C$50,000,000. On July 19, 2023, in connection with the 2023 Debenture Financing, the IQ Loan was amended (the “IQ Loan 2023 Amendment”) to allow holders of the Non-Convertible Debentures to benefit from a second-priority hypothec on substantially all movable/personal property of the Company, subject to certain exceptions in regards to excluded assets, and a first-rank hypothec on each of the immovable/real rights related to the Company’s Innovation Center facility located in Mirabel, Quebec and battery factory equipment financed by Investissement Quebec.

As part of the IQ Loan 2023 Amendment, the potential forgiveness of up to 30% of the IQ Loan subject to certain criteria tied to the Company and to the operations of the facilities, including the creation and maintenance of workforce and certain minimum spending related to R&D activities was replaced with certain financial penalties of up to C$3,000,000 and/or C$15,000,000 for the Company, pro-rated based on the proportion of criteria achieved and the borrowing amount relative to the C$50,000,000 maximum. Funds will be provided to the Company by way of reimbursement of a predetermined percentage of qualified expenditures incurred by the Company, such that the ultimate amount to be received by the Company from Investissement Quebec is dependent upon qualified expenditures being made by the Company in connection with the Lion Campus. The Company will conduct work, incur expenses and fund all costs from its own capital resources, and then submit claims to Investissement Quebec for reimbursement of a predetermined percentage of eligible qualified expenditures up to C$50,000,000. Disbursement by Investissement Quebec is conditional upon, among other things, the Company’s compliance with certain affirmative and negative covenants as set out in the IQ Loan, including covenants relating to Company’s creation and maintenance of workforce, operations and R&D activities.

The IQ Loan bears interest at a fixed rate of 4.41%, and will be repayable over a ten-year term, beginning in June 2027. The IQ Loan contains certain affirmative and negative covenants, including covenants relating to the Company’s workforce, operations and R&D activities and to the location of its head office in the Province of Quebec, as well as certain financial covenants. Following the IQ Loan 2023 Amendment and the purchase of the equipment used in the battery factory of the Company, the obligations under the IQ Loan are secured by a second-priority hypothec on the Company's immovable (real) property rights related to the Innovation Center facility located on the Lion Campus and the equipment used in connection with the battery factory of the Company, and a hypothec on substantially all of the Company’s other movable property and assets (subject to certain exceptions and limitations in regards to excluded assets) ranking after those securing the Revolving Credit Agreement, the Non-Convertible Debentures and the Finalta-CDPQ Loan Agreement.

In connection with the IQ Loan, the Company has undertaken in favour of Investissement Quebec to: (i) maintain its head office and principal decision making center in the Province of Quebec until the earlier of (a) the date on which Investissement Quebec ceases to hold at least 50% of the Common Shares it held as of closing of the Business Combination (including, for greater certainty, the Common Shares acquired in the PIPE Financing and any shares which Investissement Quebec may acquire from time to time through a treasury issuance of Lion), and (b) the date on which, at any time after May 6, 2026, Lion’s Board determines, in good faith, that maintaining Lion’s head office or its principal decision making center in the Province of Quebec would be incompatible with the exercise of its fiduciary duties under applicable laws; (ii) build and operate its first battery manufacturing and development plant in the Province of Quebec; and (iii) invest in its Quebec-based production capacity such that it can satisfy demand originating from Canadian-based clients through its Quebec plant(s).

Financing Agreement with Strategic Innovation Fund (SIF) of the Government of Canada

On August 19, 2021, the Company entered into an unsecured non-interest bearing loan agreement with the Strategic Innovation Fund of the Government of Canada relating to the construction of the Lion Campus (the “SIF Loan”). The SIF Loan provides for financing of up to C$49,950,000, of which up to 30% is expected to be forgiven subject to certain criteria tied to the Company and to the operations of the

28 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

facilities, including the creation and maintenance of workforce and certain minimum spending related to R&D activities. Funds will be provided to the Company by way of reimbursement of a predetermined percentage of qualified expenditures incurred by the Company, such that the ultimate amount to be received by the Company from the SIF is dependent upon qualified expenditures being made by the Company in connection with the Lion Campus. The Company will conduct work, incur expenses and fund all costs from its own capital resources, and then submit claims to the SIF for reimbursement of a predetermined percentage of eligible qualified expenditures up to C$49,950,000. Disbursement by the SIF is conditional upon, among other things, the Company’s compliance with certain affirmative and negative covenants as set out in the SIF Loan, including covenants relating to Company’s creation and maintenance of workforce, operations and R&D activities. The SIF Loan is repayable over a 15-year term beginning in April 2026.

In connection with the SIF Loan, the Company has committed in favour of the Strategic Innovation Fund of the Government of Canada to maintain its headquarters and St-Jerome vehicle production facility and its battery assembly facility in the Province of Quebec, create and maintain a certain number of jobs in Canada, and make a minimum amount of research and development expenditures in Canada.

Loan Agreement with Finalta-CDPQ

On November 8, 2022, Lion entered into the Finalta-CDPQ Loan Agreement with Finalta, as lender and administrative agent, and Caisse de dépôt et placement du Quebec (through one of its subsidiaries), as lender, to finance certain refundable tax credits and grants under government programs. The Finalta-CDPQ Loan Agreement provides for a loan facility of up to a principal amount of C$30 million and bears interest at the rate of 10.95% per annum. The obligations thereunder are secured by a first priority security interest, hypothec and lien in certain tax credits and government grants and a subordinate security interest, hypothec and lien in substantially all other movable property and assets. The Finalta-CDPQ Loan Agreement matures on November 6, 2024. The Finalta-CDPQ Loan Agreement includes certain customary restrictions and negative covenants on Lion’s and its subsidiaries’ activities, subject to certain exceptions, baskets, and thresholds. The Finalta-CDPQ Loan Agreement also provides for customary events of default, in each case, subject to customary grace periods, baskets and materiality thresholds. Upon the occurrence and during the continuance of an event of default, the lenders would be entitled to demand the immediate repayment of all amounts owing to them under the Finalta-CDPQ Loan Agreement and/or the lenders may exercise their other rights, remedies and/or recourses.

2023 Convertible Debenture

On July 19, 2023, as part of the 2023 Financing, the Company issued by way of private placement to a group of subscribers comprised of Investissement Québec, Fonds de solidarité des travailleurs du Québec (F.T.Q.) and Fondaction the 2023 Convertible Debentures, for aggregate gross proceeds to the Company of approximately $74 million. The 2023 Convertible Debentures bear interest at the rate of 13% per annum, compounded monthly on the last day of each month. Prior to any accrual date, the Company has the right, at its discretion, to make an election to pay interest accrued on the principal for the applicable month in cash (in which case any interest so paid shall not be compounded). The 2023 Convertible Debentures will mature on July 19, 2028 and are convertible at the holders’ option into Common Shares at a conversion price of $2.58 per Common Share. See “2023 Convertible Debentures” under section 7 of this Annual Information Form entitled “Description of Capital Structure.”

2023 Non-Convertible Debenture

On July 19, 2023, as part of the 2023 Financing, the Company issued by way of private placement to a group of subscribers led by Mach Group and the Mirella & Lino Saputo Foundation the 2023 Non-Convertible Debentures for aggregate gross proceeds to the Company of C$90 million. The 2023 Non-Convertible Debentures bear interest at the rate of 11% per annum and are payable in cash quarterly. The 2023 Non-Convertible Debentures will mature on July 19, 2028. The Company will have the right, at any time after January 19, 2024, upon 30-day notice, to redeem all or part of the principal amount thereunder, without penalty, at a price equal to one hundred per cent (100%) of the principal amount so redeemed,

29 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

plus accrued and unpaid interest on the principal amount so repaid, accruing to the date of such redemption.

The 2023 Non-Convertible Debentures contain customary covenants for an instrument of its nature, including covenants relating to compliance with the financial ratios and negative covenants included in the Revolving Credit Agreement (provided (i) that any amendment to the financial ratios to which the lenders under the Revolving Credit Agreement consent will automatically be incorporated in the 2023 Non-Convertible Debentures, and (ii) that a default shall only occur under the 2023 Non-Convertible Debentures if a financial ratio default occurs and is continuing on the date that is fifteen business days following the delivery of the Company's financial statements evidencing such event of default, and only if the lenders under the Revolving Credit Agreement have not waived or tolerated such event of default before the expiry of this fifteen business day period), in addition to certain covenants relating to maintaining the current headquarters, employees and facilities of the Company in the province of Quebec.

The 2023 Non-Convertible Debentures contain customary events of default for an instrument of its nature, including, among other things, (i) the occurrence of an event of default under the Revolving Credit Agreement if such default results in the acceleration of the payments owed thereunder and (ii) the occurrence of an event of default under any other debt instrument of the Company with a principal amount exceeding $15,000,000 if such default permits the acceleration of the payment of such debt.

The Non-Convertible Debentures constitute senior secured obligations of the Company and are secured by a hypothec and other liens on substantially all of the Company’s and certain of its subsidiaries’ movable/personal property as well as on the immovable/real rights related to the Company’s innovation center facility located in Mirabel, Quebec and guaranteed by such subsidiaries.

10.0Market for Securities

10.1Trading Price and Volume

Common Shares

The Common Shares are listed for trading on the NYSE and the TSX under the ticker symbol “LEV.” The following table shows the monthly range of high and low prices per share at the close of market on the TSX and on the NYSE for fiscal 2023. The table also shows the total monthly volumes and average daily volumes traded on the TSX and on the NYSE for fiscal 2023.

	TSX			NYSE
	High C$	Low C$	Volume		High $	Low $	Volume
2023
January	C$3.73	C$2.72	15,553,059		$2.79	$2.02	28,231,610
February	C$3.80	C$2.96	8,793,661		$2.85	$2.20	14,471,610
March	C$3.25	C$2.32	8,892,394		$2.39	$1.70	21,715,498
April	C$3.45	C$2.25	8,803,984		$2.58	$1.68	18,369,842
May	C$3.23	C$2.48	6,562,504		$2.42	$1.82	14,685,245
June	C$3.02	C$2.40	7,065,956		$2.27	$1.82	14,685,245
July	C$3.53	C$2.53	14,159,746		$2.68	$1.88	23,214,959
August	C$3.53	C$2.64	10,451,454		$2.66	$1.95	18,685,407
September	C$3.08	C$2.52	4,975,244		$2.27	$1.86	11,564,574
October	C$2.71	C$2.12	3,917,150		$2.00	$1.53	12,394,108
November	C$2.58	C$2.05	6,455,434		$1.88	$1.50	11,247,420
December	C$2.60	C$2.14	5,694,941		$1.94	$1.58	10,150,920

30 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

Business Combination Warrants

The Business Combination Warrants are listed on the NYSE under the symbol “LEV WS” and on the TSX under the symbol “LEV.WT.” The following table shows the monthly range of high and low prices per warrant at the close of market on the TSX and on the NYSE for fiscal 2023. The table also shows the total monthly volumes and average daily volumes traded on the TSX and on the NYSE for fiscal 2023.

	TSX			NYSE
	High C$	Low C$	Volume		High $	Low $	Volume
2023
January	C$0.70	C$0.41	365,304		$0.51	$0.30	1,668,707
February	C$0.49	C$0.32	115,049		$0.40	$0.21	1,540,239
March	C$0.44	C$0.29	91,587		$0.34	$0.20	1,604,871
April	C$0.33	C$0.15	1,321,805		$0.26	$0.11	2,594,251
May	C$0.34	C$0.25	102,050		$0.26	$0.16	1,706,121
June	C$0.32	C$0.20	128,435		$0.24	$0.16	771,930
July	C$0.41	C$0.20	82,500		$0.32	$0.16	1,220,049
August	C$0.34	C$0.22	98,296		$0.28	$0.15	725,783
September	C$0.26	C$0.16	89,900		$0.19	$0.12	1,567,752
October	C$0.21	C$0.07	104,142		$0.16	$0.08	627,321
November	C$0.19	C$0.09	104,548		$0.15	$0.06	1,011,285
December	C$0.12	C$0.06	195,932		$0.11	$0.04	1,452,960

2022 Warrants

The 2022 Warrants are listed on the NYSE under the symbol “LEV.WSA” and on the TSX under the symbol “LEV.WT.A.” The following table shows the monthly range of high and low prices per warrant at the close of market on the TSX and on the NYSE for fiscal 2023. The table also shows the total monthly volumes and average daily volumes traded on the TSX and on the NYSE for fiscal 2023.

	TSX			NYSE
	High C$	Low C$	Volume		High $	Low $	Volume
2023
January	C$1.66	C$0.83	277,100		$1.10	$0.61	1,303,690
February	C$1.51	C$1.00	70,215		$1.08	$0.74	414,362
March	C$1.09	C$0.65	244,105		$0.84	$0.50	376,735
April	C$1.09	C$0.73	34,500		$0.85	$0.52	173,746
May	C$0.97	C$0.60	89,500		$0.77	$0.43	413,036
June	C$0.82	C$0.51	172,497		$0.61	$0.42	82,378
July	C$1.03	C$0.62	112,300		$0.87	$0.48	379,115
August	C$1.13	C$0.65	58,400		$0.81	$0.49	152,616
September	C$0.95	C$0.63	19,200		$0.69	$0.45	99,391
October	C$0.72	C$0.60	17,400		$0.57	$0.41	38,197
November	C$0.72	C$0.59	18,500		$0.55	$0.39	48,316
December	C$0.59	C$0.45	43,375		$0.46	$0.31	358,126

31 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

10.2Prior Sales

The 2023 Convertible Debentures and the 2023 Warrants are not listed or quoted on any marketplace.

On July 19, 2023, the Company issued 13% senior unsecured debentures maturing on July 19, 2028 and that are convertible in accordance with the terms thereof into Common Shares at a conversion price of $2.58. Also on July 19, 2023, the Company issued 22,500,000 Common Shares purchase warrants entitling the holders of the 2023 Non-Convertible Debentures to purchase, in accordance with the terms thereof, a total of 22,500,000 Common Shares at an exercise price of C$2.81 per share for a period of five years ending July 19, 2028. See “General Development of the Business - Financing Transactions for Aggregate Gross Proceeds of $142 million” under section 5 of this Annual Information Form entitled “General Development of the Business” and section 7 of this Annual Information Form entitled “Description of Capital Structure”.

11.0Directors and Officers

11.1Directors and Executive Officers

The following table sets out, as at the date hereof, certain information relating to each director of the Company, including their name, province or state and country of residence, and position(s) with the Company. Directors are elected annually and, unless re-elected, retire from office at the end of the next annual meeting of shareholders.

Name	Province or State and Country of Residence	Position(s) with the Company	Independent
Latasha Akoma	Florida, United States	Director	Yes
Sheila C. Bair	Maryland, United States	Director	Yes
Marc Bedard	Quebec, Canada	CEO-Founder and Director	No
Pierre Larochelle	Quebec, Canada	Director and Chairman of the Board	No
Dane L. Parker	Texas, United States	Director	Yes
Ann L. Payne	Florida, United States	Director	Yes
Pierre-Olivier Perras	Quebec, Canada	Director	No
Michel Ringuet	Quebec, Canada	Lead Director	Yes
Lorenzo Roccia	Italy	Director	Yes
Pierre Wilkie	Quebec, Canada	Director	Yes

The Company’s Board has three standing committees: the Audit Committee, the Human Resources and Compensation Committee, and the Nominating and Corporate Governance Committee. Each of the committees operates under its own written charter adopted by the Company’s Board, each of which is available on Lion’s website.

The following table sets out, as at the date hereof, the composition of the committees of the Board of Directors.

Human Resources and Compensation Committee	Nominating and Corporate Governance Committee	Audit Committee
Sheila C. Bair	Sheila C. Bair (Chair)	Latasha Akoma
Dane L. Parker	Dane L. Parker	Ann L. Payne
Pierre-Olivier Perras	Ann L. Payne	Michel Ringuet (Chair)
Pierre Wilkie (Chair)	Pierre-Olivier Perras
	Lorenzo Roccia

32 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

The following table sets out, as at the date hereof, certain information relating to each executive officer of the Company, including their name, province or state and country of residence, and position(s) with the Company.

Name	Province or State and Country of Residence	Position(s) with the Company	Executive Officer Since
Marc Bedard	Quebec, Canada	CEO-Founder and Director	2008
Nicolas Brunet	Quebec, Canada	President(1)	2019
Richard Coulombe	Quebec, Canada	Chief Financial Officer	2023
Dominique Perron	Quebec, Canada	Chief Legal Officer and Corporate Secretary	2023
Nathalie Giroux	Quebec, Canada	Chief People Officer	2021
Yannick Poulin	Quebec, Canada	Chief Operating Officer	2016
(1)  Mr. Brunet was appointed as President of the Company effective as of September 11, 2023. Prior to that, Nicolas served as Executive Vice President and Chief Financial Officer since December 2019.

As a group, the directors and executive officers of the Company beneficially owned, or controlled or directed, directly or indirectly, a total of 27,363,965 Common Shares2, representing approximately 12.1% of the Common Shares outstanding, on a non-diluted basis, as at- December 31, 2023.

11.2Biographies

The following are brief profiles of the directors and executive officers of the Company, including a description of each individual’s principal occupation within the past five years.

Non-Executive Directors

Latasha Akoma

Latasha Akoma has served as a member of Lion’s Board since 2022. Ms. Akoma is Operating Partner at GenNx360 Capital Partner, a private equity firm focused on investing in industrial and business services companies in the U.S. middle market. Prior to joining GenNx360 Capital Partner in 2014, she held several executive leadership positions at Harley-Davidson Motor Company, a company she joined in 2009 as the Director of Operations, with responsibility for vehicle assembly and materials management. Prior to that, Ms. Akoma was a Senior Manager of Paint Operations at Chrysler (formerly DaimlerChrysler) where she held a variety of senior leadership positions in operations and general management. Ms. Akoma has over 26 years of managerial experience in all aspects of manufacturing, operations and business strategies. Ms. Akoma holds an MBA from Northwestern’s Kellogg School of Management, an MSc in Engineering Management from the University of Michigan, and a BSc in Mechanical Engineering with a minor in Energy & Robotics from Howard University.

Sheila C. Bair

Sheila C. Bair has served as a member of Lion’s Board since September 2020. She is the chair of the Nominating and Corporate Governance Committee. Ms. Baird is a corporate director. Ms. Bair was President of Washington College from August 2015 to June 2017. Prior to that, she was Senior Advisor to The Pew Charitable Trusts for four years. Ms. Bair was also Senior Advisor to DLA Piper, an international law firm from 2014 to 2015. Ms. Bair was the Chair of the Federal Deposit Insurance Corporation from June 2006 to July 2011. From 2002 to 2006, she was the Dean’s Professor of Financial Regulatory Policy for the Isenberg School of Management at the University of Massachusetts-Amherst. She also served as Assistant Secretary for Financial Institutions at the U.S. Department of the Treasury from 2001 to 2002, Senior Vice President for Government Relations of the New York Stock Exchange from 1995 to 2000,

2 Includes 25,958,653 Common Shares held by 9368-2672 Quebec Inc., a corporation which Marc Bedard has control over, directly and indirectly, of a majority of the voting shares.

33 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

Commissioner of the Commodity Futures Trading Commission from 1991 to 1995, and as counsel to Kansas Republican Senate Majority Leader Bob Dole from 1981 to 1988. She is a frequent commentator and op-ed contributor on financial regulation and the student debt crisis, as well as author of the NY Times Best Seller, Bull by the Horns, her 2012 memoir of the financial crisis. She is also author of Albert Whitman’s Money Tales series for young people. Ms. Bair also serves on the board of directors of Bunge Limited, where she serves on the audit and risk committees. Ms. Bair previously served on the board of director of Thomson Reuters Corporation, where she served as chair of the risk committee, and Host Hotels & Resorts, Inc., where she served on the audit and nominating and corporate governance committees. Ms. Bair holds a bachelor’s degree and law degree from the University of Kansas.

Pierre Larochelle (Chair)

Pierre Larochelle has served as a member of Lion’s Board since October 2017, where he also serves as Chair of the Board. Mr. Larochelle has been an investor and financial advisor for the last 25 years. Since 2022, he is Co-Managing Partner at Idealist Capital. Previously, Mr. Larochelle was President and CEO of Power Energy, a subsidiary of Power Corporation of Canada and Partner, Co-Head of Energy Infrastructure at Power Sustainable Capital Inc., the parent company of Power Energy and a wholly-owned subsidiary of Power Corporation of Canada. Prior to joining Power Corporation of Canada, Mr. Larochelle was President and Chief Executive Officer at Adaltis Inc., a position he held between November 2003 and February 2009. Previously, he also held the positions of Vice-President, Business Development at Picchio Pharma Inc. and Vice-President, Mergers and Acquisitions for Credit Suisse First Boston in London, England. Mr. Larochelle started his career as a lawyer, at the Montreal offices of Ogilvy Renault. Mr. Larochelle also serves on the board of directors of Bellus Health Inc. Mr. Larochelle holds a law degree from Université de Montréal, a master’s degree in international business law from McGill University and an MBA degree from INSEAD in Fontainebleau, France.

Dane L. Parker

Dane L. Parker has served as a member of Lion’s Board since 2022. Mr. Parker is the former Chief Sustainability Officer and Vice President, Sustainable Workplaces at General Motors, where he served in such role from 2015 to 2021. In such a role, Mr. Parker was a leading force behind the company’s plan to become carbon neutral by 2040 and aspiration to have zero-emissions from all new light-duty vehicles by 2035. Mr. Parker also held global responsibilities for facility design, engineering, construction, operations, energy procurement and efficiency, real estate, environmental compliance, as well as workplace strategy. Prior to General Motor, Mr. Parker was Vice President, Global Environment, Health and Safety, Facilities and Real Estate for Dell, Inc. He also spent more than 13 years at Intel Corporation in the Technology and Manufacturing organization in a variety of operational roles, including as Director of Global Environment, Health and Safety. Mr. Parker earned his Bachelor’s in Political Sciences and his Master’s in Business Administration degrees from Brigham Young University.

Ann L. Payne

Ann L. Payne has served as a member of Lion’s Board since 2021. Ms. Payne served as an Audit Partner at PricewaterhouseCoopers LLP (“PwC”), a global accounting firm, from 1993 until her retirement in June 2019 and continued as a consultant until June 2020. At PwC, Ms. Payne provided professional services to domestic and international public and private corporations in the leisure, healthcare, and transportation sectors, led PwC’s first U.S. based audit outsourcing center and provided support services for PwC’s Audit Practice’s National Quality Office. She currently serves as a member of the board of directors of Inspirato Incorporated, a luxury hospitality brand listed on the NASDAQ, where she serves as the Audit Committee Chair and a member of the Nominating and Corporate Governance Committee. Ms. Payne currently holds leadership roles on several non-profit boards. Since September 2020, Ms. Payne has served as Chair of the Foundation Board for St. Thomas Aquinas High School. Since September 1980, Ms. Payne has been involved with and currently serves as the Treasurer and Board Member for Jack & Jill Children’s Center. Since January 1981, Ms. Payne has been a member of the Junior League of Greater Fort Lauderdale where she held numerous positions including President. She is a Certified Public Accountant in the state of Florida and is a member of the American Institute of Certified Public

34 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

Accountants. Ms. Payne holds a B.S., summa cum laude, from Barry University. She also attended Yale University’s Women on Boards Program and earned a Scholar Certificate from the Kellogg School of Management’s Executive Education Program. She earned a CERT - Certificate in Cybersecurity Oversight from Carnegie Mellon University, earned a Certificate from the University of South Florida’s Diversity, Equity, and Inclusion in the Workplace Program, and completed the National Association of Corporate Directors’ Virtual Director Professionalism Program.

Pierre-Olivier Perras

Pierre-Olivier Perras has served as a member of Lion’s Board since January 2021. Since 2019, Mr. Perras serves as President of Power Energy and, since 2020, Mr. Perras serves as Partner, Co-Head of Energy Infrastructure at Power Sustainable Capital Inc. Prior to joining Power Energy, Mr. Perras worked at BMO Capital Markets, for over two decades, where he held various leadership positions in the Investment and Corporate Banking Group, in his last role he was Head of the Power, Utilities and Infrastructure Group, leading an international team across North America and Europe. Prior to joining BMO Capital Markets, Mr. Perras was a senior consultant analyst with an actuarial consultant. As part of his role at Power Energy, Mr. Perras also serves as Chair of the board of directors of Nautilus Solar Energy and sits on the boards of Lumenpulse Inc. and Potentia Renewables Inc. Mr. Perras holds a Master of Business Administration degree from McGill University and a Bachelor of Science in Actuarial Sciences from Laval University. He is a Chartered Financial Analyst (CFA).

Michel Ringuet

Michel Ringuet has served as a member of Lion’s Board since October 2017 and is, since May 2021, the Company’s Lead Director. Mr. Ringuet is also the chair of the Audit Committee. From 2006 to 2016, Mr. Ringuet served as Chief Executive Officer of Master Group Inc., a leader in the distribution of HVAC/R equipment in eastern Canada, where he also served from 1990 to 2006 as Vice-President Finance and Administration. Prior to joining the Master Group, Mr. Ringuet worked in various finance and investment departments at the National Bank of Canada and Bank of Montréal. Mr. Ringuet sits on the board of Lumenpulse Inc., where he previously served on the audit committee while the company was listed on the TSX. Mr. Ringuet holds a bachelor’s degree in administration from Université Laval and an MBA from McGill University.

Lorenzo Roccia

Lorenzo Roccia has served as a member of Lion’s Board since 2021. Mr. Roccia is Chair of Transatlantic Holdings, an international financial holding company with interests in the financial services, logistics, energy, and beer sectors in the United States, Latin America and Europe, since 2009. Additionally, he is a Founder & Chair of Transatlantic Power Holdings and non-executive Director of Skyline Renewables, an independent renewable energy companies in the United States with over 1GW+ of Wind and Solar assets. Mr. Roccia founded Roccia Ventures, L.P. and became a major shareholder and Senior Analyst in the Private Equity Group of Wit Soundview, an internet and technology Investment Bank. Roccia Ventures, L.P. became one of the largest shareholders of the bank along with the Goldman Sachs Group, Draper Fisher Jurvetson and Mitsubishi Corporation. The firm was taken public and subsequently sold to the Charles Schwab Group. Mr. Roccia started his career with Salomon Smith Barney.

Pierre Wilkie

Pierre Wilkie has served as a member of Lion’s Board from 2011 to 2017 and again since May 2019. He is the chair of the Human Resources and Compensation Committee since February 2022. Mr. Wilkie is a serial entrepreneur who has founded or participated in the creation of many enterprises, including in the manufacturing industry. He is currently the co-owner of M.A.C. Métal Architectural Inc. He also serves as the President of Déco Nat Inc. Prior to that, he acted as the co-president of Laboratoire Dr Renaud Inc. Mr. Wilkie holds a bachelor’s degree in Economy and Finance from the École des Hautes Études Commerciales (HEC), Université de Montréal.

35 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

Executive Officers

Marc Bedard (CEO-Founder and Director)

Marc Bedard has served as Lion’s CEO—Founder and as a member of Lion’s Board since Lion’s incorporation in 2008. Prior to founding Lion, Mr. Bedard served as vice-president and chief financial officer of Les Entreprises Barrette Ltée, a leading manufacturer of wood and vinyl products for construction and exterior use in North America, from 2003 to 2007. Previously, Mr. Bedard was a partner at Pricewaterhouse LLP, a national partnership of professional accountants and consultants, from 1996 to 2003. Mr. Bedard is a certified chartered professional accountant and has been a member of the Ordre des comptables professionnels agréées du Quebec since 1987. Mr. Bedard holds a Bachelor of Business Administration from the École des Hautes Études Commerciales (HEC), Université de Montréal.

Nicolas Brunet (President)

Nicolas Brunet is the President of Lion since September 2023. He previously was Executive Vice-President and Chief Financial Officer since 2019. Prior to joining Lion, he was a Managing Director in BMO Capital Markets’ Montréal Investment and Corporate Banking Group, specializing in capital markets advisory and financing solutions. Mr. Brunet held various positions in the field of investment banking from 2004 to 2019, both at BMO Capital Markets and at NM Rothschild & Sons. Since 2022, M. Brunet sits on the Board of the CHU Sainte-Justine Foundation, one of the most important pediatric centers in North America. From 2012 to 2020, he sat on the Board of the Fondation Jeunes en Tête, a non-profit organization focused on the mental well-being of Québec’s youth, and acted as its treasurer from 2015 to 2020. Nicolas holds a Bachelor of Commerce from McGill University.

Richard Coulombe (Chief Financial Officer)

Richard Coulombe is the Chief Financial Officer of Lion since September 2023. He was previously Senior Vice President, Strategic Initiatives since 2021. Prior to joining Lion, Mr. Coulombe held several Senior Executive positions at Alstom, Bombardier Transportation and Pratt & Whitney, where he was involved in all aspects of strategic financial planning, including mergers and acquisitions, auditing and accounting. Mr. Coulombe holds a bachelor's degree in finance from the Université du Québec à Montréal (UQAM).

Nathalie Giroux (Chief People Officer)

Nathalie Giroux is the Chief People Officer of Lion since August 2021. Prior to joining Lion, she served in the same role at Uni-Select, an automotive aftermarket and refinishing specialty company, a company she joined following several years in the aviation industry, having held the position of Vice President of Human Resources, Defense and Security at CAE. Ms. Giroux also previously served in a management role overseeing global rewards at Molson Coors. Her past experience includes membership in several human resources and governance committees in numerous positions, and she has contributed to a number of successful corporate mergers and acquisitions. Mrs. Giroux holds a Bachelor of Science degree with a Minor in Business Studies from Concordia University. She also retains a fellow position at the Canadian Institute of Actuaries and is a Certified Corporate Director, in addition to serving as a Board Member of the Collège André-Grasset Foundation.

Dominique Perron (Chief Legal Officer and Corporate Secretary)

Dominique Perron is the Chief Legal Officer and Corporate Secretary of Lion since June 2023. Prior to joining Lion, Ms. Perron was Vice-President, Legal Affairs at Sagard, a multi-strategy alternative asset management firm, specializing in private equity and venture capital investments. Prior to Sagard, Ms. Perron was a Director, Legal Affairs at PSP Investments, one of Canada’s largest pension investment managers, advising on infrastructure, private equity and real estate transactions. Ms. Perron started her career as an Associate at Stikeman Elliott LLP focusing on mergers and acquisitions, corporate governance and securities law. She serves as a board member of Dress for Success Montreal and previously served as chair and board president for a number of not-for-profit governance, community and

36 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

fundraising initiatives. Ms. Perron holds a Civil Law (LL.L) degree from Laval University and a master’s degree (LL.M) from McGill University. She is also a member of the Quebec bar.

Yannick Poulin (Chief Operating Officer)

Yannick Poulin has served as Lion’s Chief Operating Officer since April 2016. From October 2013 to April 2016, Mr. Poulin held positions of increasing responsibility at Paradox Security Systems, an international security and alarm systems manufacturer and solutions provider, including the position of Chief Operating Officer and Plant General Manager. Previously, Mr. Poulin held various positions related to production and manufacturing at Electrolux, an international home appliance manufacturer. Mr. Poulin holds a Bachelor of Business Administration from the John Molson School of Business, Concordia University.

11.3Cease Trade Orders, Bankruptcies and Securities Penalties or Sanctions

None of the Company’s directors or executive officers is, as at the date of this Annual Information Form, or has been, within the 10 years prior to the date of this Annual Information Form, a director, chief executive officer or chief financial officer of any company (including the Company) that, while such person was acting in that capacity (or after such person ceased to act in that capacity but resulting from an event that occurred while that person was acting in such capacity), was the subject of a cease trade order, an order similar to a cease trade order, or an order that denied the company access to any exemption under securities legislation, in each case, for a period of more than 30 consecutive days.

None of the Company’s directors or executive officers is, as at the date of this Annual Information Form, or has been, within the 10 years prior to the date of this Annual Information Form, a director or executive officer of any company (including the Company), that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or comprise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

None of the Company’s directors or executive officers has, within the 10 years prior to the date of this Annual Information Form, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or comprise with creditors, or had a receiver, receiver manager or trustee appointed to hold its assets.

No director or executive officer of the Company or shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, nor any personal holding company of any such person has (i) been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or (ii) been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

11.4Conflicts of Interest

To the best of the Company’s knowledge, there are no known existing or potential conflicts of interest among the Company and its directors, officers or other members of management as a result of their outside business interests except that certain of the Company’s directors and officers serve as directors and officers of other companies, and therefore it is possible that a conflict may arise between their duties to the Company and their duties as a director or officer of such other companies. See section 11 entitled “Directors and Officers” and section 14 entitled “Interest of Management and Others in Material Transactions.”

11.5Indemnification and Insurance

The Company has implemented a director and officer insurance program and has entered into indemnification agreements with each of its directors and executive officers. The indemnification

37 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

agreements generally require that the Company indemnify and hold the indemnitees harmless to the greatest extent permitted by law for liabilities arising out of the indemnitees’ service to the Company as directors and executive officers, provided that the indemnitees acted honestly and in good faith and in a manner the indemnitees reasonably believed to be in or not opposed to the Company’s best interests and, with respect to criminal and administrative actions or proceedings that are enforced by monetary penalty, the indemnitees had no reasonable grounds to believe that his or her conduct was unlawful. The indemnification agreements also provide for the advancement of defence expenses to the indemnitees by the Company.

12.0Audit Committee Information

12.1Charter of the Audit Committee

The Board of Directors has adopted a written charter (the “Charter of the Audit Committee”) describing the mandate of the audit committee (the “Audit Committee”). The Audit Committee’s responsibilities include:

•appointing, compensating, retaining and overseeing the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services and reviewing and appraising the audit efforts of the Company’s independent accountants;

•pre-approving audit and permissible non-audit services, and the terms of such services, to be provided by the Company’s independent registered public accounting firm;

•establishing procedures for (i) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and (ii) confidential and anonymous submissions by the Company’s employees of concerns regarding questionable accounting or auditing matters;

•engaging independent counsel and other advisers, as necessary and determining funding of various services provided by accountants or advisers retained by the committee;

•reviewing the Company’s financial reporting processes and internal controls;

•establishing, overseeing and dealing with issues related to the Company’s code of ethics for managers and financial officers;

•reviewing and approving related-party transactions or recommending related-party transactions for review by independent members of the Company’s Board; and

•providing an open avenue of communication among the independent accountants, financial and senior management and the Company’s Board.

Additional information relating to the Audit Committee can be found under the Company’s profiles on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov and on the Company’s website at ir.thelionelectric.com. The text of the Charter of the Audit Committee is attached to this Annual Information Form as Appendix A.

12.2Composition of the Audit Committee

The Company’s Audit Committee is composed of three members, namely Michel Ringuet, Latasha Akoma and Ann L. Payne, with Mr. Ringuet serving as chair of the committee. Lion’s Board has determined that all such directors meet the independence requirements under the NYSE Company Manual, National Instrument 52-110 – Audit Committees (“NI 52-110”) and under Rule 10A-3 of the Exchange Act. Lion complies with NI 52-110 by relying on the exemptions for U.S. listed issuers thereunder. Each member of

38 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

the Audit Committee is also financially literate within the meaning of NI 52-110. See section 12.3 of this Annual Information Form entitled “Relevant Education and Experience of the Audit Committee Members.”

a.Relevant Education and Experience of the Audit Committee Members

Each member of the Audit Committee has (i) an understanding of the accounting principles used by the Company to prepare its financial statements, (ii) the ability to assess the general application of such accounting principles in connection with the accounting for estimates, accruals and provisions, (iii) experience in the preparation, audit, analysis or evaluation of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements (or experience in actively supervising individuals engaged in same), and (iv) an understanding of the internal controls and procedures necessary for financial reporting.

The education and experience of each Audit Committee member that is relevant to the performance of his or her responsibilities as an Audit Committee member is as follows:

Name	Relevant Experience
Latasha Akoma Director since 2022	Ms. Akoma is Operating Partner at GenNx360 Capital Partner, a private equity firm focused on investing in industrial and business services companies in the U.S. middle market. Prior to joining GenNx360 Capital Partner, she held several executive leadership positions at Harley-Davidson Motor Company, a company she joined in 2009 as the Director of Operations, with responsibility for vehicle assembly and materials management. Prior to that, Ms. Akoma was a Senior Manager of Paint Operations at Chrysler (formerly DaimlerChrysler) where she held a variety of increasing senior leadership positions in operations and general management. She brings over 26 years of managerial experience in all aspects of manufacturing, operations, and business strategies. Ms. Akoma holds an MBA from Northwestern’s Kellogg School of Management, an MSc in Engineering Management from the University of Michigan, and a BSc in Mechanical Engineering with a minor in Energy & Robotics from Howard University.
Ann L. Payne Director since 2021	Ms. Payne served as an Audit Partner at PricewaterhouseCoopers LLP, a global accounting firm, from 1993 until her retirement in June 2019 and continued as a consultant until June 2020. At PwC, Ms. Payne provided professional services to domestic and international public and private corporations in the leisure, healthcare, and transportation sectors, led PwC’s first U.S. based audit outsourcing center and provided support services for PwC’s Audit Practice’s National Quality Office. She currently serves as a member of the board of directors of Inspirato Incorporated, a luxury hospitality brand listed on the NASDAQ, where she serves as the Audit Committee Chair and a member of the Nominating and Corporate Governance Committee. She is a Certified Public Accountant in the state of Florida and is a member of the American Institute of Certified Public Accountants. Ms. Payne holds a B.S., summa cum laude, from Barry University. She also attended Yale University’s Women on Boards Program and earned a Scholar Certificate from the Kellogg School of Management’s Executive Education Program. She earned a CERT - Certificate in Cybersecurity Oversight from Carnegie Mellon University.
Michel Ringuet Director since 2017	Michel Ringuet has served as a member of Lion’s Board since October 2017 and is, since May 2021, the Company’s Lead Director. From 2006 to 2016, Mr. Ringuet served as Chief Executive Officer of Master Group Inc., a leader in the distribution of HVAC/R equipment in eastern Canada, where he also served from 1990 to 2006 as Vice-President Finance and Administration. Prior to joining the Master Group, Mr. Ringuet worked in various finance and investment departments at the National Bank of Canada and Bank of Montréal. Mr. Ringuet sits on the board of Lumenpulse Inc., where he previously served on the audit committee while the company was listed on the TSX. Mr. Ringuet holds a bachelor’s degree in administration from Université Laval and an MBA from McGill University.

12.4Pre-Approval Policies and Procedures

In accordance with the provisions of the Charter of the Audit Committee, the Audit Committee is responsible for the pre-approval of all and any non-audit services to be provided to the Company or its subsidiary entities by the independent auditor, and any new mandates relating to non-audit services for which approval was not previously provided are confirmed with the Chair of the Audit Committee prior to the independent auditor performing any such services. At least annually, the Audit Committee reviews and confirms the independence of the independent auditor by obtaining statements from the independent auditor on any non-audit services.

39 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

12.5External Auditor Service Fees

The Company’s independent auditors are Raymond Chabot Grant Thornton LLP, located at 600 de la Gauchetiere Street West, Suite 2000, Montreal, Quebec, H3B 4L8.

For fiscal 2023 and fiscal 2022, the Company was billed the following fees by its independent auditor, Raymond Chabot Grant Thornton LLP:

		Fiscal 2023		Fiscal 2022
Audit Fees(1)	C$607,250		C$599,225
Audit Related Fees(2)	C$67,250		C$86,500
Tax Fees(3)	C$96,800		C$99,966
All Other Fees(4)	C$86,500		C$77,000
Total Fees Paid	C$857,800		C$862,691
(1) “Audit Fees” include fees necessary to perform the annual audit or reviews of the consolidated financial statements. This category also includes audit or review fees related to procedures performed in connection with prospectus and registration statement filings. (2) “Audit Related Fees” include fees for assurance and related services by the independent auditor that are reasonably related to the performance of the audit or review of the Company’s financial statements other than those included in “Audit Fees”, such as advisory on accounting and reporting matters. (3) “Tax Fees” include fees for all tax services other than those included in “Audit Fees” and “Audit-Related Fees.” This category includes fees for tax compliance, as well assistance with responding to tax related questions. (4) “All Other Fees” include fees for products and services provided by the independent auditor other than those included above.This category includes fees related to translation services.

13.0Legal Proceedings and Regulatory Actions

From time to time, the Company is involved in legal or regulatory proceedings and claims arising in the ordinary course of business. When required, the Company accrues liabilities when it is probable that future costs will be incurred and such costs can be reasonably estimated. Except as described in this section 13 or elsewhere in this Annual Information Form, the Company is not currently, nor since the beginning of its most recently completed financial year has been, a party to any material litigation or regulatory proceeding and is not aware of any pending or threatened litigation or regulatory proceeding against it that could, if determined adversely to it, have a material adverse effect on its business, results of operations or financial condition.

The Company had initiated in fiscal 2022 arbitration proceedings in order to enforce the terms and conditions of the multi-year battery pack supply contract it had entered into with Romeo (who became a subsidiary of Nikola) in Novembre 2020. On June 30, 2023, Nikola announced the liquidation of Romeo's assets through the transfer of ownership of all of its assets for the benefit of its creditors. In light of such liquidation, the Company decided not to pursue its arbitration proceedings against Romeo, and to only maintain its legal proceedings against Nikola as further described below. Romeo’s failure to comply with its obligations under the multi-year battery pack supply contract resulted in delays in the commencement of the commercial production of the Lion8T, which is now expected to commence near the middle of fiscal 2024, and in the Company deciding to mount its Lion8T trucks with the Company’s proprietary battery packs manufactured at the Battery Plant. See “Products and Solutions” under section 6 of this Annual Information Form entitled “Business of the Company.”

In the context of the above-mentioned matter and the acquisition of Romeo by Nikola in the fourth quarter of fiscal 2022, in the beginning of fiscal 2023, the Company also initiated legal proceedings against Nikola, another manufacturer of electric vehicles which is also relying on battery modules and packs, seeking damages against Nikola on the basis that it intentionally interfered in the Company’s contractual

40 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

relationship with Romeo and in the Company’s business expectancy with respect to its relationship with Romeo. Such legal proceedings are still ongoing.

On November 1, 2023, a putative verified class action complaint (the “Complaint”) was filed in the Delaware Court of Chancery against the pre-Business Combination directors and officers of NGA, now a wholly-owned subsidiary of the Company, and Northern Genesis Sponsor, LLC, the sponsor of NGA’s special purpose acquisition company merger with a wholly-owned subsidiary of the Company in May 2021 (the “Defendants”). The Complaint alleges, among other things, that the director and officer defendants and NGA’s sponsor breached their fiduciary duties in connection with the Business Combination as well as a related claim for unjust enrichment as a result of the challenged Business Combination. The Complaint seeks monetary damages, costs of the action, including plaintiffs’ attorneys’ fees and experts’ fees and expenses, and any other relief the court may deem just and proper. On February 9, 2024, the Defendants filed a motion to dismiss the Complaint, and briefing on the Defendants’ motion to dismiss is scheduled to conclude by March 2024. The Defendants consider the claims raised in the Complaint to be without merit and intend to defend against them vigorously. At this time, it is not possible to estimate potential losses, if any, related to the Complaint.

See section 23.0 of the Company's fiscal 2023 MD&A entitled “Risk Factors.”

14.0Interest of Management and Others in Material Transactions

Except as described in this section 14 or elsewhere in this Annual Information Form, none of (i) the directors or executive officers of the Company, (ii) the shareholders who beneficially own or control or direct, directly or indirectly, more than 10% of the voting shares of the Company, or (iii) any associate or affiliate of the persons referred to in (i) and (ii), has or has had any material interest, direct or indirect, in any transaction within the three most recently completed financial years or during the current financial year that has materially affected or is reasonably expected to materially affect the Company.

December 2022 Units Offering

PEC purchased 9,842,519 Units for an aggregate purchase price of approximately $25 million in connection with the December 2022 Offering.

Nomination Rights Agreement

Pursuant to the Nomination Rights Agreement entered into on May 6, 2021 between the Company, PEC and 9368-2672 Quebec Inc. (“9368-2672”), to the extent that any party and its permitted holders (including its affiliates) collectively hold at least 20% of the outstanding Common Shares (on a non-diluted basis), such party is entitled to designate a number of director nominees, between two and four nominees, equal to the product of (rounding to the nearest whole number) (i) the percentage of the outstanding Common Shares held by it (on a non-diluted basis) multiplied by (ii) the size of Lion’s Board. In addition, 9368-2672 will, for so long as it and its affiliates collectively hold at least 5% of the outstanding Common Shares (on a non-diluted basis), be entitled to designate (i) for so long as Marc Bedard serves as chief executive officer of Lion, one director nominee (in addition to Marc Bedard, who will be appointed to Lion’s Board for so long as he serves as chief executive officer thereof) and (ii) at any other time, Marc Bedard as a director nominee. See “Nomination Rights Agreement” under section 16 of this Annual Information Form entitled “Material Contracts.”

Registration Rights Agreement

Effective as of closing of the Business Combination, Lion entered into the Registration Rights Agreement pursuant to which, subject to the terms and conditions contained therein, each of Power Energy, 9368-2672 and the Specified Warrantholder were granted certain rights with respect to the registration or qualification by prospectus in the United States and/or Canada of the sale of the Common Shares held by them. See “Registration Rights Agreement” under section 16 of this Annual Information Form entitled “Material Contracts.”

41 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

PIPE Financing

In connection with the PIPE Financing, Lion entered into subscription agreement with PEC pursuant to which PEC purchased, subject to the terms and conditions contained therein, a total of 1,662,500 Common Shares for a total purchase price of $16,625,000. In addition, Lion entered into subscription agreements with certain of Lion’s shareholders, directors and/or officers pursuant to which such subscribers purchased, directly or indirectly, subject to the terms and conditions contained therein, Common Shares at a purchase price of $10.00 per share. Such Common Shares were acquired upon the same terms and conditions as the Common Shares acquired by all other subscribers in the PIPE Financing.

15.0Transfer Agent and Registrar

The transfer agent and registrar for the Company’s Common Shares in Canada is TSX Trust Company, at its principal offices in Montreal, Quebec and Toronto, Ontario, and in the United States is Equiniti Trust Company, LLC, at its principal office in New York, NY.

The warrant agent for the Business Combination Warrants is Equiniti Trust Company, LLC, at its principal office in New York, NY.

The warrant agent for the 2022 Warrants is TSX Trust Company, at its principal offices in Montreal, Quebec and Toronto, Ontario.

16.0Material Contracts

The following are the only material contracts, other than those contracts entered into in the ordinary course of business, which the Company has entered into since the beginning of the last financial year ended December 31, 2023, or entered into prior to such date, but which are still in effect.

Each of the summaries below describes certain material provisions of the relevant material contract and is subject to, should be read in conjunction with, and is qualified in its entirety by reference to, the relevant material contract, a copy of which is on the Company’s profiles on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov.

Credit Agreement with Banking Syndicate

Lion is a party to the Revolving Credit Agreement which was entered into on August 11, 2021 with a syndicate of lenders represented by National Bank of Canada, as administrative agent and collateral agent, and including Bank of Montreal and Federation des Caisses Desjardins du Quebec, as amended on January 25, 2022, to increase the maximum principal amount that may become available from time to time under the revolving credit facility, subject to the borrowing base and compliance with the covenants contained under the Revolving Credit Agreement, from $100,000,000 to $200,000,000. The Revolving Credit Agreement was further amended on July 19, 2023 to permit the incurrence of the 2023 Financing, extend the maturity of the Revolving Credit Agreement by one year to August 11, 2025, and provide for an availability block and the establishment of an interest reserve account. The credit facility under the Revolving Credit Agreement is available for use to finance working capital and for other general corporate purposes, and available to be drawn subject to a borrowing base comprised of eligible accounts (including insured or investment grade accounts) and eligible inventory, in each case, subject to customary eligibility and exclusionary criteria, advance rates and reserves. See “Credit Agreement with Banking Syndicate” under section 9 of this Annual Information Form entitled “Description of Material Indebtedness.”

Registration Rights Agreement

On May 6, 2021, Lion entered into a registration rights agreement among the Company, PEC, 9368-2672 and the Specified Warrantholder (the “Registration Right Agreement”), pursuant to which, subject to the terms and conditions contained therein, each of PEC, 9368-2672 and the Specified Warrantholder were granted certain rights with respect to the registration or qualification by prospectus in the United States and/or Canada of the sale of the Common Shares held by them.

42 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

Pursuant to the Registration Rights Agreement, to the extent that any party and its permitted transferees (including its affiliates) hold at least 10% of the outstanding Common Shares on a non-diluted basis and provided such Common Shares are “Registrable Securities” as contemplated by the Registration Rights Agreement, such party is entitled to certain demand registration rights which enable them to require Lion to file a registration statement and/or a Canadian prospectus and otherwise assist with underwritten public offerings of Common Shares under the Securities Act and applicable Canadian securities laws, in accordance with the terms and conditions of the Registration Rights Agreement. Each party is also entitled to certain incidental registration rights in connection with demand registrations initiated by another party to the Registration Rights Agreement, as well as to certain “piggy-back” registration rights in the event that Lion proposes to register securities as part of a public offering. All costs and expenses associated with any demand registration or “piggy-back” registration will be borne by Lion other than underwriting discounts, commissions and transfer taxes, if any, attributable to the sale of Common Shares by the applicable selling shareholder. Lion will also be required to provide indemnification and contribution for the benefit of the other parties to the Registration Rights Agreement and their respective affiliates and representatives in connection with any demand registration or “piggy-back” registration.

Nomination Rights Agreement

On May 6, 2021, Lion entered into a nomination rights agreement among the Company, PEC and 9368-2672 (the “Nomination Rights Agreement”) pursuant to which, subject to the terms and conditions contained therein, each of PEC and 9368-2672 were granted certain rights to nominate members of Lion’s Board (including, in certain cases, members of committees of Lion’s Board) for so long as it holds a requisite percentage of the total voting power of Lion.

Pursuant to the Nomination Rights Agreement, to the extent that any party and its permitted holders (including its affiliates) collectively hold at least 20% of the outstanding Common Shares (on a non-diluted basis), such party is entitled to designate a number of director nominees, between two and four nominees, equal to the product of (rounding to the nearest whole number) (i) the percentage of the outstanding Common Shares held by it (on a non-diluted basis) multiplied by (ii) the size of Lion’s Board. In addition, 9368-2672 will, for so long as it and its affiliates collectively hold at least 5% of the outstanding Common Shares (on a non-diluted basis), be entitled to designate (i) for so long as Marc Bedard serves as chief executive officer of Lion, one director nominee (in addition to Marc Bedard, who will be appointed to Lion’s Board for so long as he serves as chief executive officer thereof) and (ii) at any other time, Marc Bedard as a director nominee.

The nomination rights contained in the Nomination Rights Agreement provide that PEC and 9368-2672, at the relevant time, will cast all votes to which they are entitled to elect directors designated in accordance with the terms and conditions of the Nomination Rights Agreement.

The Nomination Rights Agreement further provides that for so long as PEC has the right to designate a director nominee, it shall have the right to designate one of its director nominees as the Chair of Lion’s Board. In the event that such designated director nominee is not an independent director, the remaining directors will select a lead independent director from amongst the independent directors of Lion’s Board.

The foregoing rights of PEC and 9368-2672 to so designate director nominees will be submitted for approval of Lion’s shareholders at the first annual meeting of the shareholders of Lion to be held following the fifth anniversary of the date of the Nomination Rights Agreement (May 6, 2026), and at every fifth annual meeting of the shareholders of Lion shareholders thereafter. Failing approval by the shareholders of Lion, such nomination rights will become void and shall have no further force or effect.

Business Combination Warrant and Business Combination Warrant Assignment Agreement

Upon completion of the Business Combination, each outstanding warrant to purchase shares of NGA’s common stock was converted into a Business Combination Warrant, with each Business Combination Warrant entitling the holder thereof to acquire one Common Share at a price of $11.50 per share. Pursuant the Warrant Assignment Agreement, on May 6, 2021, NGA assigned to Lion all of NGA’s rights,

43 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

interests and obligations in and under the Business Combination Warrant Agreement, and Lion accepted such assignment and assumed all of NGA’s obligations thereunder. See “Business Combination Warrants” under section 7 entitled “Description of Capital Structure” of this Annual Information Form for a description of the terms of the Business Combination Warrants.

Warrant Indenture governing the 2022 Warrants

On December 16, 2022, the Company entered into the 2022 Warrant Indenture with TSX Trust Company, as warrant agent, in connection with closing of the December 2022 Offering. The 2022 Warrant Indenture governs the 2022 Warrants. Each whole 2022 Warrant entitles the holder thereof to acquire one Common Share at an exercise price of $2.80 per Common Share for a period of five years ending December 15, 2027, subject to adjustment in certain customary events. See “2022 Warrants” under section 7 entitled “Description of Capital Structure” of this Annual Information Form for a description of the terms of the Business Combination Warrants.

Master Purchase Agreement with Amazon Logistics, Inc.

Lion entered into a master purchase agreement effective June 29, 2020 and a work order effective July 6, 2020 with the Specified Customer, being Amazon Logistics, Inc., that sets a framework for the purchase by the Specified Customer of Lion6 and Lion8 Tractor all-electric trucks. Under the MPA, Lion is required to, subject to the terms and conditions set out therein, among other things, reserve the necessary manufacturing capacity to meet forecasted volumes and delivery schedules agreed upon with the Specified Customer in accordance with the terms of the MPA. Pursuant to the MPA, Lion may be required to reserve manufacturing capacity in respect of forecasted volumes representing up to 500 trucks per year from 2021 to 2025 and the greater of 500 trucks per year or 10% of Lion’s manufacturing capacity from 2026 to 2030. In addition, Lion is required to provide ongoing maintenance and training assistance to the Specified Customer under the terms of the MPA. Other than vehicles that are subject to an existing purchase order, the Specified Customer is not required to purchase any specified minimum quantity of vehicles from Lion under the MPA. The MPA will remain in force until December 31, 2025, unless terminated earlier in accordance with its terms. Thereafter, the MPA will be automatically renewed on a month-to-month basis until either party terminates the MPA in accordance with its terms. The Specified Customer may terminate the MPA at any time without cause by providing at least six months’ prior written notice to Lion or upon the occurrence of certain events, including a material breach by Lion of the MPA, certain insolvency events and upon a change of control of Lion (as defined in the Specified Customer Warrant). Under the MPA, except in specific circumstances, the Specified Customer may not cancel any previously submitted and accepted purchase order within three (3) months of a scheduled delivery date, and any cancellation occurring during the period from the date that is six (6) months and the date that is three (3) months prior to a scheduled delivery date triggers the payment of a cancellation fee. Any submitted and accepted purchase order may be cancelled by the Specified Customer without penalty prior to the date that is six (6) months prior to a scheduled delivery date.

Specified Customer Warrant

In connection with entering into the MPA, Lion issued on July 1, 2020 the Specified Customer Warrant to the Specified Warrantholder which vests, subject to the terms and conditions contained therein, based on the aggregate amount of spending by the Specified Customer and its affiliates on Lion products or services. At the election of the Specified Warrantholder, any vested portion of the Specified Customer Warrant can be exercised either on a cash basis by the payment of the applicable exercise price or on a net issuance basis based on the in-the-money value of the Specified Customer Warrant. The exercise price of the Specified Customer Warrant corresponds to $5.66 per Common Share and the Specified Customer Warrant will be, if and when fully vested, exercisable for 35,350,003 Common Shares upon an exercise on a cash basis. Full vesting of the Specified Customer Warrant requires spending of at least $1.2 billion on Lion products or services over the term of the Specified Customer Warrant, subject to partial or full accelerated vesting upon the occurrence of certain events, including a change of control of Lion (as such term is defined in the Specified Customer Warrant) or a termination of the MPA by the Specified Customer for cause. See “Specified Customer Warrant” under section 7 entitled “Description of

44 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

Capital Structure” of this Annual Information Form for a description of the terms of the Specified Customer Warrant.

17.0Interest of Experts

The independent auditors of the Company are Raymond Chabot Grant Thornton LLP, an independent registered public accounting firm, located at 600 de la Gauchetiere Street West, Suite 2000, Montreal, Quebec, H3B 4L8. Raymond Chabot Grant Thornton LLP has confirmed that it is independent of the Company within the meaning of the Code of Ethics of Chartered Professional Accountants (Quebec) and of the U.S. Securities Act of 1933, and the applicable rules and regulations thereunder adopted by the SEC and the Public Company Accounting Oversight Board (United States).

18.0Certain United States Federal Income Tax Considerations

The following is a summary of material U.S. federal income tax considerations that are likely to be relevant to the purchase, ownership and disposition of the Common Shares by a U.S. Holder (as defined below).

This summary is based on provisions of the Internal Revenue Code of 1986 (the “Code”), and regulations, rulings and judicial interpretations thereof, in force as of the date hereof, and the Convention Between the United States of America and Canada with Respect to Taxes on Income and on Capital dated August 16, 1984 (as amended by any subsequent protocols) (the “Treaty”). Those authorities may be changed at any time, perhaps retroactively, so as to result in U.S. federal income tax consequences different from those summarized below.

This summary is not a comprehensive discussion of all of the tax considerations that may be relevant to a particular investor’s decision to purchase, hold, or dispose of Common Shares. In particular, this summary is directed only to U.S. Holders that hold Common Shares as capital assets and does not address particular tax consequences that may be applicable to U.S. Holders who may be subject to special tax rules, such as banks, brokers or dealers in securities or currencies, traders in securities electing to mark to market, financial institutions, life insurance companies, tax-exempt entities, regulated investment companies, entities or arrangements that are treated as partnerships for U.S. federal income tax purposes (or partners therein), holders that own or are treated as owning 10% or more of the Company’s stock by vote or value, persons holding Common Shares as part of a hedging or conversion transaction or a straddle, or persons whose functional currency is not the U.S. dollar. Moreover, this summary does not address state, local or foreign taxes, the U.S. federal estate and gift taxes, or the Medicare contribution tax applicable to net investment income of certain non-corporate U.S. Holders, or alternative minimum tax consequences of acquiring, holding or disposing of Common Shares.

For purposes of this summary, a “U.S. Holder” is a beneficial owner of Common Shares that is for U.S. federal income tax purposes: (i) a citizen or individual resident of the United States; (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) organized under the laws of the United States, any state thereof or the District of Columbia; (iii) an estate whose income is subject to U.S. federal income taxation regardless of its source; or (iv) a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

U.S. Holders should consult their own tax advisors about the consequences of the acquisition, ownership, and disposition of the Common Shares, including the relevance to their particular situations of the considerations discussed below and any consequences arising under foreign, state, local or other tax laws.

45 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

Taxation of Dividends

Subject to the discussion below under “Passive Foreign Investment Company Status,” the gross amount of any distribution of cash or property with respect to Common Shares (including any amount withheld in respect of Canadian taxes) that is paid out of the Company’s current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) will generally be includible in a U.S. Holder’s taxable income as ordinary dividend income on the day on which the U.S. Holder receives the dividend and will not be eligible for the dividends-received deduction allowed to corporations under the Code.

The Company does not expect to maintain calculations of its earnings and profits in accordance with U.S. federal income tax principles. U.S. Holders therefore should expect that distributions generally will be treated as dividends for U.S. federal income tax purposes.

For a U.S. Holder, dividends paid in a currency other than U.S. dollars generally will be includible in income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the day the U.S. Holder receives the dividends. Any gain or loss on a subsequent sale, conversion or other disposition of such non-U.S. currency by such U.S. Holder generally will be treated as ordinary income or loss and generally will be income or loss from sources within the United States.

Subject to certain exceptions for short-term positions, the U.S. dollar amount of dividends received by an individual with respect to the Common Shares will be subject to taxation at a preferential rate if the dividends are “qualified dividend income.” Dividends paid on the Common Shares will be treated as qualified dividend income if:

•the Common Shares are readily tradable on an established securities market in the United States or the Company is eligible for the benefits of a comprehensive tax treaty with the United States that the U.S. Treasury determines is satisfactory for purposes of this provision and that includes an exchange of information program; and

•the Company was not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign investment company (a “PFIC”).

The Common Shares are listed on the New York Stock Exchange, and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. As further discussed below under “— Passive Foreign Investment Company Status”, based on the Company’s financial statements and the Company’s expectations about the nature and amount of its income, assets and activities and the market value of its equity, the Company does not believe that it was a PFIC for its taxable year ending December 31, 2023. U.S. Holders should consult their own tax advisors regarding the availability of the reduced dividend tax rate in light of their own particular circumstances.

Subject to generally applicable limitations and conditions, Canadian dividend withholding tax paid at the appropriate rate applicable to the U.S. Holder may be eligible for a credit against such U.S. Holder’s U.S. federal income tax liability. If the Canadian dividend tax is not a creditable tax for a U.S. Holder or the U.S. Holder does not elect to claim a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year, the U.S. Holder may be able to deduct the Canadian tax in computing such U.S. Holder’s taxable income for U.S. federal income tax purposes. Dividend distributions will constitute “foreign source” income and, for U.S. Holders that elect to claim foreign tax credits, generally will constitute “passive category income” for foreign tax credit purposes.

The availability and calculation of foreign tax credits and deductions for foreign taxes depend on a U.S. Holder’s particular circumstances and involve the application of complex rules to those circumstances. U.S. Holders should consult their own tax advisors regarding the application of these rules to their particular situations.

46 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

Taxation of Dispositions of Common Shares

Upon a sale, exchange or other taxable disposition of the Common Shares, U.S. Holders will realize gain or loss for U.S. federal income tax purposes in an amount equal to the difference between the amount realized on the disposition and the U.S. Holder’s adjusted tax basis in the Common Shares as determined in U.S. dollars. Subject to the discussion below under “– Passive Foreign Investment Company Status,” such gain or loss will be capital gain or loss, and will generally be long-term capital gain or loss if the Common Shares have been held for more than one year. Long-term capital gain realized by a U.S. Holder that is an individual generally is subject to taxation at a preferential rate. The deductibility of capital losses is subject to limitations.

Capital gain or loss recognized by a U.S. Holder on the sale or other disposition of the Common Shares generally will be U.S. source gain or loss for U.S. foreign tax credit purposes. U.S. Holders should consult their own tax advisors regarding the application of the foreign tax credit rules to a sale or other disposition of the Common Shares and any Canadian tax imposed on such sale or disposition.

Passive Foreign Investment Company Status

Special U.S. tax rules apply to non-U.S. companies that are considered to be PFICs. The Company will be classified as a PFIC in a particular taxable year if either

•75 percent or more of its gross income for the taxable year is passive income; or

•the average percentage of the value of its assets that produce or are held for the production of passive income is at least 50 percent.

Based on the Company’s financial statements and the Company’s expectations about the nature and amount of its income, assets and activities and the market value of its equity, the Company does not believe that it was a PFIC for its taxable year ending December 31, 2023. The final determination of whether we may be classified as a PFIC for the current taxable year will not be able to be made until after the end of the year and will depend on all of the relevant facts and circumstances available at that time. No assurance can be given that we will not be a PFIC for the current or any future taxable year.

Although our PFIC status is determined annually, an initial determination that we are a PFIC will generally apply for subsequent years to a U.S. Holder who held Common Shares while the Company was a PFIC, whether or not the Company meets the test for PFIC status in those subsequent years. In the event that the Company is classified as a PFIC in any taxable year that is included in the holding period of a U.S. Holder of Common Shares, and the U.S. Holder did not make a timely mark-to-market election or “qualified electing fund” (“QEF”) election (as described below), such U.S. Holder generally would be subject to adverse tax consequences with respect to (i) any gain realized from the sale or other taxable disposition of Common Shares; and (ii) any “excess distribution” made to the U.S Holder (generally, any distributions to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of Common Shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for the Common Shares).

Under these rules:

•the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the Common Shares;

•the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess distribution, or to the period in the U.S. Holder’s holding period before the first day of our first taxable year in which we are a PFIC, will be taxed as ordinary income;

•the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and

47 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

•an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the U.S. Holder with respect to the tax attributable to each such other taxable year of the U.S. Holder.

Mark-to-Market Election

In general, if the Company is a PFIC and the Common Shares constitute “marketable stock” (which the Company expects to be the case for so long as Common Shares are listed on the NYSE), and such U.S. Holder, at the close of the first taxable year in which it holds (or is deemed to hold) Common Shares, makes a valid mark- to-market election with respect to such shares for such taxable year, such U.S. Holder generally will not be subject to the PFIC rules described above. Instead, in general, the U.S. Holder will include for each of its taxable years as ordinary income the excess, if any, of the fair market value of its Common Shares at the end of such year over its adjusted basis in its Common Shares. These amounts of ordinary income would not be eligible for the reduced tax rates applicable to qualified dividend income or long-term capital gains. The U.S. Holder also will recognize an ordinary loss in respect of the excess, if any, of its adjusted basis of its Common Shares over the fair market value of its Common Shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). A U.S. Holder’s basis in its Common Shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of its Common Shares will be treated as ordinary income. U.S. Holders should consult their tax advisors regarding the availability and tax consequences of a mark-to-market election with respect to their Common Shares under their particular circumstances.

QEF Election

A U.S. Holder generally will not be subject to the PFIC rules described above if such U.S. Holder makes a timely QEF election effective beginning with the first taxable year in the holder’s holding period in which the corporation is a PFIC. However, we currently do not intend to provide U.S. Holders with the information necessary to make a QEF election. U.S. Holders should consult their own tax advisors regarding the rules for making a QEF election.

A U.S. Holder that owns an equity interest in a PFIC must annually file IRS Form 8621. A failure to file one or more of these forms as required may toll the running of the statute of limitations in respect of each of the U.S. Holder’s taxable years for which such form is required to be filed. As a result, the taxable years with respect to which the U.S. Holder fails to file the form may remain open to assessment by the IRS indefinitely, until the form is filed.

The rules dealing with PFICs, the mark-to-market election and the QEF election are very complex and are affected by various factors in addition to those described above. Accordingly, investors should consult their own tax advisors concerning the application of the PFIC rules to Common Shares under their particular circumstances.

Foreign Financial Asset Reporting.

Certain U.S. Holders that own “specified foreign financial assets” with an aggregate value in excess of $50,000 on the last day of the taxable year, or $75,000 at any time during the taxable year, are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by financial institutions. The understatement of income attributable to “specified foreign financial assets” in excess of $5,000 extends the statute of limitations with respect to the tax return to six years after the return was filed.

U.S. Holders who fail to report the required information could be subject to substantial penalties. Prospective investors are encouraged to consult with their own tax advisors regarding the possible application of these rules, including the application of the rules to their particular circumstances.

48 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

Backup Withholding and Information Reporting

Dividends paid on, and proceeds from the sale or other disposition of, the Common Shares to a U.S. Holder generally may be subject to the information reporting requirements of the Code and may be subject to backup withholding unless the U.S. Holder provides an accurate taxpayer identification number and makes any other required certification or otherwise establishes an exemption. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a refund or credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is furnished to the U.S. Internal Revenue Service in a timely manner.

A holder that is not a U.S. Holder may be required to comply with certification and identification procedures in order to establish its exemption from information reporting and backup withholding.

19.0Additional Information

The Company is required under applicable Canadian and U.S. securities laws to file various documents, including financial statements. Financial information is provided in the audited annual consolidated financial statements of the Company for fiscal 2023, together with the notes thereto, the Report of Independent Registered Public Accounting Firm thereon and the related management’s discussion and analysis. Copies of these documents and additional information concerning the Company can be found under the Company’s profiles on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov and on Lion’s website at www.thelionelectric.com under the “Investors” section. Information on the Company’s website does not form part of and is not incorporated by reference in this Annual Information Form.

Copies of the Company’s audited annual consolidated financial statements and management’s discussion and analysis can also be obtained upon request made to the Vice President, Investor Relations and Sustainable Development of the Company, Ms. Isabelle Adjahi, at the head office: 921, chemin de la Rivière du Nord, Saint-Jerome (Quebec), Canada, J7Y 5G2.

Additional information, including, without limitation, directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and securities authorized for issuance under equity compensation plans, will be contained in the Company’s information circular for its annual meeting of shareholders.

49 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

APPENDIX A
CHARTER OF THE AUDIT COMMITTEE

The purpose of this charter (the “Charter”) is to describe the primary duties and responsibilities of the Audit Committee (the “Committee”) of the board of directors (the “Board”) of The Lion Electric Company (the “Company”), as well as some of the policies and procedures that apply to the Committee in discharging its duties and responsibilities.

Certain aspects of the composition and organization of the Committee are prescribed and/or governed by the Business Corporations Act (Quebec), the constating documents of the Company, applicable securities laws and regulations (including stock exchange rules) and applicable agreements, including the nomination rights agreement dated May 6, 2021 (the “Nomination Rights Agreement”).

PURPOSE

The purpose of the Committee is to assist the Board in fulfilling its oversight responsibilities as they relate to:

•the integrity of the Company’s financial reporting and related financial disclosure;

•the implementation of risk management and internal control over financial reporting and disclosure controls and procedures;

•the Company’s compliance with certain legal and regulatory requirements, including, among other things, reviewing reports or other disclosure required by the applicable rules and regulations of the Securities and Exchange Commission or Canadian securities laws to be included in the Company’s periodic reports and filings within the scope of the authority outlined herein;

•the qualifications and independence of the registered public accounting firm or firms engaged as the Company’s independent outside auditors for the purposes of preparing or issuing an audit report or performing audit, review or attest services (the “Auditors”); and

•the performance of the Auditors and any internal audit function;

While the Committee has the duties and responsibilities set forth in this Charter, the role of the Committee is oversight. The members of the Committee are not employees of the Company, and they do not perform, or represent that they perform, the functions of management or the Auditors. The Committee is not responsible for planning or conducting the audit or determining whether the Company’s financial statements are complete and accurate and in accordance with applicable accounting rules, nor for the preparation of periodic reports and establishing and maintaining of appropriate accounting principles and financial reporting policies and satisfactory internal controls over financial reporting. Such activities are the responsibility of the Company’s Auditors and management. The Committee has direct responsibility for the appointment, compensation, oversight and replacement, if necessary, of the Auditors, including the resolution of disagreements between management and the Auditors regarding financial reporting, and any other registered public accounting firm with respect to which the Committee is required to have such responsibility.

The Committee and each of its members shall be entitled to rely on:

•the integrity of those persons and organizations within and outside of the Company from which it receives information;

•the accuracy of the financial and other information provided to the Committee by such persons or organizations absent actual knowledge to the contrary (which shall be promptly reported to the Board); and

•representations made by management as to any audit and non-audit services provided by the Auditors.

A-1 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

COMPOSITION AND QUALIFICATIONS

The members of the Committee, including the member to be acting as Chair, shall be appointed by the Board in accordance with any agreement among shareholders of the Company and the Company, including the Nomination Rights Agreement, and applicable securities laws and regulations (including stock exchange rules). The Committee shall be comprised of such number of directors, in no event less than three, as the Board may from time to time by resolution determine. Committee members may be removed by the Board in its discretion.

The Chair and each member of the Committee shall serve until his or her successor is duly appointed by the Board, or until his or her earlier death, resignation or removal by the Board. Resignation or removal of a Committee member from the Board for any reason shall automatically constitute resignation or removal, as applicable, from the Committee. Vacancies occurring on the Committee shall be filled by the Board.

Unless otherwise permitted by any applicable phase-in rules and exemptions, each member of the Committee shall meet (i) the “independence” and financial literacy requirements of Section 10A-3 of the Securities Exchange Act of 1934, as amended, National Instrument 52-110 – Audit Committees of the Canadian Securities Administrators (“NI 52-110”), any stock exchange on which the Company’s securities are listed,and all other applicable laws and regulations, as applicable to the Committee members and in effect from time to time, when and as required by the SEC, NI 52-110 or the rules of any stock exchange on which the Company’s securities are listed, and (ii) any other qualifications as determined by the Board from time to time. The Committee may avail itself of any phase-in rules or other exemptions available to the Company that are afforded by applicable securities laws and regulations or the rules of any stock exchange on which the Company’s securities are listed.

MEETINGS

A.Frequency

The Chair, in consultation with the other members of the Committee, shall determine the schedule and frequency of meetings of the Committee. Meetings of the Committee shall be held at such times and places as the Chair may determine. To the extent possible, advance notice of each meeting will be given to each member unless all members are present and waive notice, or if those absent waive notice before or after a meeting. Members may attend all meetings of the Committee either in person or by telephone, video or other electronic means.

The Committee shall hold regularly scheduled meetings at least quarterlyand such special meetings as circumstances dictate. The Chair of the Committee, any member of the Committee, the Auditors, the Chairman of the Board, the Chief Executive Officer (“CEO”) or the Chief Financial Officer (“CFO”) may call a special meeting of the Committee at any time by notifying the Company’s corporate secretary, who will notify the members of the Committee.

B.Agenda and Notice

The Chair of the Committee shall establish the meeting dates of the Committee. To the extent possible, in advance of every regular meeting of the Committee, the Chair shall prepare and distribute, or cause to be prepared and distributed, to the members of the Committee and others as deemed appropriate by the Chair, an agenda of matters to be addressed at the meeting together with appropriate briefing materials. The Committee may require senior executives and other employees of the Company to produce such information and reports as the Committee may deem appropriate in order for it to fulfill its duties.

C.Holding and Recording Meetings

Committee meetings may be held in person, by videoconference or other electronic means or telephonically. Action may be taken by the Committee upon the affirmative vote of a majority of the members. The Committee shall keep written minutes of its meetings and submit such minutes to the Board promptly after each meeting. The Committee may also act by written resolutions and, when it does so, those actions will be filed in the minutes of the Committee.

A-2 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

D.Quorum

A majority of the members of the Committee shall constitute a quorum. Any actions taken by the Committee during any period in which one or more members fail for any reason to meet the membership requirements set forth under “Composition and Qualifications” above shall be nonetheless duly authorized actions of the Committee for all corporate purposes.

E.Sub-Committees

Subject to applicable law, the Committee shall have the authority to delegate to any of its members, any sub-committees of the Committee or any other person any of the responsibilities of the full Committee.

F.Executive Sessions

Unless otherwise directed by the Committee, each regularly scheduled meeting will include an executive session of the Committee absent any members of management.

The Committee will also meet periodically in separate executive sessions with each of the CFO or any other executive officer, the principal accounting officer and/or any senior internal auditing executive (or any other personnel responsible for any internal audit function), and the Auditors.

COMPENSATION

The compensation of Committee members shall be determined by the Board.

RESPONSIBILITIES AND POWERS OF THE COMMITTEE

A.System of Financial Controls

The Committee shall:

•review the adequacy and effectiveness of the Company’s internal control and management information systems through discussions with senior executives of the Company and the Auditors relating to the maintenance of (i) necessary books, records and accounts in sufficient detail to accurately and fairly reflect the Company’s transactions, (ii) effective internal control over financial reporting; and (iii) adequate processes for assessing the risk of material misstatements in the financial statements and for detecting control weaknesses or fraud;

•as applicable from time to time, the Committee shall assess any requirements or changes with respect to the establishment or operations of an internal audit function having regard to the size and stage of development of the Company at any particular time;

•satisfy itself, through discussions with senior executives of the Company that the adequacy of internal controls, systems and procedures has been periodically assessed in accordance with regulatory requirements and recommendations;

•oversee the work of any internal audit function, including organization, operations and independence;

•review and discuss the Company’s major financial risk exposures and the steps taken to monitor and control such exposures, including the use of any financial derivatives and hedging activities, as applicable;

•review and make recommendations to the Board regarding the adequacy of the Company’s risk management policies and procedures with regard to identification of the Company’s principal risks and implementation of appropriate systems and controls to manage such risks including an assessment of the adequacy of insurance coverage maintained by the Company;

A-3 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

•review material related party transactions other than those delegated to a special committee or independent committee of the Board against applicable legal and regulatory requirements, review applicable disclosures and report to the Board on any such transactions; and

•review and discuss with the Auditors the Auditors’ evaluation of the Company’s identification of, accounting for, and disclosure of its relationships and transactions with related parties, including any significant matters arising from the audit in connection therewith.

B.Annual Audit Review

The Committee shall review and discuss with management and the Auditors the annual audited financial statements, including the Auditors’ audit and audit report thereon, and the annual management’s discussion and analysis of financial condition and results of operations of the Company proposed to be included in the Company’s annual filings to be filed with applicable securities regulators. In connection with such review, the Committee shall:

•review the scope of the audit, the audit plan and the audit procedures utilized;

•review with the Auditors any audit problems or difficulties encountered during their audit, including any change in the scope of the planned audit, any restrictions placed on the scope of the audit or access to requested information, and any significant disagreements with management, and management’s response to such problems or difficulties;

•resolve any differences in financial reporting between management and the Auditors;

•review and discuss with management and the Auditors reports required to be submitted by the Auditors concerning:

•all critical accounting policies and practices used in the preparation of the Company’s financial statements;

•all alternative treatments of financial information within IFRS that have been discussed with management, ramifications of such alternatives, and the accounting treatment preferred by the Auditors; and

•any other material written communications between the Auditors and management, such as any management letter or schedule of unadjusted differences;

•review and discuss the integrity of the annual audited Company financial statements and quarterly financial statements with management and the Auditors, including the notes thereto and all matters required by applicable auditing standards, and the written disclosures required by applicable auditing standards regarding the Auditors’ independence;

•review and discuss with management and the Auditors:

◦any major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles, and any major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies; and

◦analyses prepared by management and/or the Auditors setting forth any significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analysis of the effects of alternative IFRS methods on the financial statements and the effects of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company; and

•discuss policies and procedures concerning earnings press releases and review the type and presentation of information to be included in earnings press releases (paying particular attention to any use of “pro forma” and “adjusted” or other non-IFRS information), as well as financial information and earnings guidance provided to analysts and rating agencies.

A-4 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

C.Quarterly Reviews

The Committee shall review and discuss with management, any internal audit function and the Auditors, as appropriate, the quarterly financial statements, together with the Auditors review thereof pursuant to professional standards and procedures for conducting such reviews, as established by IFRS and applicable securities laws, and the quarterly management’s discussion and analysis of financial condition and results of operations of the Company. In connection with the quarterly reviews, the Committee shall review with management and the Auditors any significant risks or exposures faced by the Company and discuss with management the steps taken to minimize such risk or exposure.

D.Other Financial Information

The Committee shall review and recommend to the Board for approval, where appropriate, financial information contained in any prospectuses, annual information forms and Form 20-F, annual reports to shareholders, management proxy circulars, material change disclosure or Form 6-K of a financial nature and similar disclosure and other documents prior to the filing or public disclosure of such documents or information.

E.Oversight of Independent Auditors

The Company’s Auditors shall report directly to the Committee on a regular basis. In connection with its oversight of the performance and independence of the Auditors, the Committee shall:

•be responsible for the appointment, retention, compensation, oversight of the work of the Auditors and any other auditor preparing or issuing an audit report or performing other audit services or attest services for the Company or any consolidated subsidiary of the Company, where required, and review, report and, where appropriate, provide recommendations to the Board on the appointment, terms and review of engagement, removal, independence and proposed fees of the Auditors;

•have the authority to approve the engagement of the Auditors to perform all audit, audit-related, and other permissible non-audit services proposed to be performed by the Auditors, prior to the commencement of such engagement, including the scope of and plans for the audit and the related fees for such services, and the negotiation and execution, on behalf of the Company, of the Auditors’ engagement letters; such approval to be made in accordance with preapproval policies and procedures established by the Committee consistent with applicable laws and rules, including the delegation of preapproval authority to one or more Committee members so long as any such preapproval decisions are presented to the full Committee at the next scheduled meeting;

•prior to the engagement of any prospective Auditors, obtain confirmation and assurance as to the prospective Auditors’ independence, including ensuring that they submit on a periodic basis (not less than annually) to the Committee a formal written statement delineating all relationships between the Auditors, or their affiliates, and the Company, or persons in financial oversight roles at the Company, that may reasonably be expected to bear on independence;

•at least annually, obtain and review a report by the Auditors describing the firm’s internal quality-control procedures, any material issues raised by the most recent internal quality-control review or peer review of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues;

•review and evaluate the performance of the Auditors, as the basis for a decision to reappoint or replace the Auditors, and every five (5) years conduct a comprehensive review of the performance of the Auditors over multiple years to provide further insight on the Auditors, their independent exercise of professional skepticism and application of protection standards;

•set clear hiring policies for employees or former employees of the Auditors, including as required by all applicable laws and listing rules; and

A-5 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

•assure the rotation of the lead audit partner as required by applicable law and rules, and consider periodically and, if deemed appropriate, adopt a policy regarding the rotation of auditing firms.

F.Risk Assessment and Management

The Committee shall discuss with management and the Auditors’ the Company’s major business, operational, and financial risk exposures and the guidelines, policies and practices regarding risk assessment and risk management, including derivative policies, insurance programs and steps management has taken to monitor and control major business, operational and financial risks.

G.Legal and Ethical Matters

The Committee shall

•establish, maintain and oversee the Company’s Code of Business Conduct and Ethics (the “Code”), including dealing with issues that may arise under the Code related to executive officers and directors of the Company, be responsible for reviewing and evaluating the Code periodically and recommending any necessary or appropriate changes thereto to the Board for consideration;

•assist the Board with the monitoring of compliance with applicable laws and rules, as well as compliance with Code and consider any waivers of the Code (other than waivers applicable to the directors or executive officers, which shall be subject to review by the Board as a whole);

•establish procedures for (a) receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, (b) the confidential, anonymous submission by directors, officers, employees, consultants and contractors of the Company of concerns regarding questionable accounting or auditing matters, and (c) the investigation of such matters with appropriate follow-up actions;

•on at least an annual basis, review with the Company’s legal counsel and management, all legal and regulatory matters and litigation, claims or contingencies, including tax assessments, license or concession defaults or notifications, health and safety violations or environmental issues, that could have a material effect upon the financial position of the Company, and the manner in which these matters may be, or have been, disclosed in the financial statements;

•consider and review with management and the Auditors, outside counsel, as appropriate, and any special counsel, separate accounting firm or other consultants and advisors as the Committee deems appropriate, any correspondence with regulators or governmental agencies and any published reports that raise material issues regarding the Company’s financial statements or accounting policies; and

•monitor developments in accounting rules and practices and other legal and regulatory requirements that affect matters within the scope of the Committee’s authority and responsibilities.

H.Other Responsibilities

The Committee shall perform such other duties as may be required by law or requested by the Board or deemed appropriate by the Committee in order to discharge any of the foregoing. The Committee shall discharge its responsibilities, and shall assess the information provided to the Committee, in accordance with its business judgment. The Committee shall have the authority to conduct or authorize investigations into any matters within the scope of its responsibilities as it shall deem appropriate.

Members are entitled to rely, absent knowledge to the contrary, on the integrity of the persons and organizations from whom they receive information, and on the accuracy and completeness of the information provided. Nothing in this Charter is intended or may be construed as imposing on any member of the Committee or the Board a standard of care or diligence that is in any way more onerous or extensive than the standard to which the directors are subject under applicable law. This Charter is not intended to change or interpret the constating documents of the Company or applicable law or stock exchange rule to which the Company is subject, and this Charter should be interpreted in a manner consistent with all such applicable laws and rules

A-6 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

The Board may, from time to time, permit departures from the terms of this Charter, either prospectively or retrospectively. This Charter is not intended to give rise to civil liability on the part of the Company or its directors or officers to shareholders, security holders, customers, suppliers, competitors, employees or other persons, or to any other liability whatsoever on their part.

COMMITTEE ADMINISTRATIVE MATTERS

A.Independent Advisors

The Committee shall have authority to engage, provide appropriate funding for and cause the Company to pay the compensation to obtain advice and assistance from outside legal, accounting or other advisors to carry out its responsibilities.

B.Funding

The Company shall provide appropriate funding, as determined by the Committee, for payment of compensation to the Auditors or any other registered public accounting firm engaged for the purpose of rendering or issuing an audit report or performing other audit, review or attest services for the Company; to any other advisors engaged by the Committee; and for ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

C.Access to Records and Personnel

The Committee shall have full access to any relevant records of the Company that it deems necessary to carry out its responsibilities. The Committee may request that any officer or other employee of the Company or any advisor to the Company meet with members of the Committee or its advisors, as it deems necessary to carry out its responsibilities.

D.Reports to Board of Directors

The Committee shall report regularly to the Board with respect to the Committee’s activities any material issues that arise regarding the quality or integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements and its conclusions with respect to the Auditors, the performance of any internal audit function or such other matters as the Committee deems appropriate, with such recommendations to the Board as the Committee deems appropriate.

E.Education and Orientation

Members of the Committee shall be provided with appropriate and timely training to enhance their understanding of auditing, accounting, regulatory and industry issues applicable to the Company.

New Committee members shall be provided with an orientation program to educate them on the Company’s business, their responsibilities and the Company’s financial reporting and accounting practices.

F.Review of This Charter

The Committee shall review and reassess annually the adequacy of this Charter and recommend any proposed changes to the Board for approval.

G.Evaluation of Committee

The Committee is responsible for developing and conducting an annual self-assessment of its performance. The Committee shall report to the full Board on the results of its assessment each year and shall make any appropriate recommendations to further enhance the Committee’s performance.

A-7 | THE LION ELECTRIC COMPANY | 2023 Annual Information Form

EX-99.2

Table of Contents

1.0Preface	2
2.0    Basis of Presentation	2
3.0    Caution Regarding Forward-Looking Statements	2
4.0    Non-IFRS Measures and Other Performance Metrics	4
5.0    Company Overview	6
6.0    Research and Development	6
7.0    Financial Highlights	7
8.0    Operational Highlights	8
9.0    Recent Developments	10
10.0    Order Book	10
11.0 Key Factors Affecting Lion's Performance	15
12.0    Components of Results of Operations	19
13.0    Results of Operations	22
14.0    Financial Position	34
15.0    Cash Flows	35
16.0    Liquidity and Capital Resources	37
17.0 Use of Proceeds from Public Offerings	44
18.0    Financial Risk Management	45
19.0 Accounting Policies, Accounting Estimates and Judgments,  and New Accounting Standards Not Yet Applied	46
20.0    Emerging Growth Company Status	48
21.0    Internal Controls Over Financial Reporting	48
22.0    Foreign Private Issuer Status	49
23.0    Risk Factors	50

1

1.0Preface

The following management’s discussion and analysis (“MD&A”) provides information concerning the financial condition and results of operations of The Lion Electric Company (the “Company” or “Lion”) for the years ended December 31, 2023 and 2022 and the three months ended December 31, 2023. This MD&A should be read in conjunction with the audited annual consolidated financial statements of the Company and the related notes for the years ended December 31, 2023 and 2022. Some of the information contained in this MD&A contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from underlying forward-looking statements as a result of various factors, including those described in section 3.0 of this MD&A entitled “Caution Regarding Forward-Looking Statements” and in section 23.0 entitled “Risk Factors” of this MD&A. The audited annual consolidated financial statements and this MD&A were reviewed by Lion's Audit Committee, and were approved and authorized for issuance by Lion's Board of Directors on February 28, 2024.

2.0Basis of Presentation

The Company’s fiscal year is the twelve-month period ending December 31 of each year. This MD&A is based on the Company’s audited annual consolidated financial statements and accompanying notes thereto for the years ended December 31, 2023 and 2022, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards

Board (the “IASB”).

All amounts presented are in United States dollars unless otherwise indicated.

Lion has one reportable operating segment, the manufacturing and sale of electric vehicles in Canada and in the United States.

Certain figures, such as interest rates and other percentages included in this MD&A, have been rounded for ease of presentation. Percentage figures included in this MD&A have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this MD&A may vary slightly from those obtained by performing the same calculations using the figures in Lion’s audited annual consolidated financial statements or in the associated text. Certain other amounts that appear in this MD&A may similarly not sum due to rounding.

All references to “fiscal 2023” are to the Company’s fiscal year ending December 31, 2023 and to “fiscal 2022” are to the Company’s fiscal year ended December 31, 2022.

3.0Caution Regarding Forward-Looking Statements

This MD&A contains "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws and within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, "forward-looking statements"). Any statements contained in this MD&A that are not statements of historical fact, including statements about Lion’s beliefs and expectations, are forward-looking statements and should be evaluated as such.

Forward-looking statements may be identified by the use of words such as “believe,” “may,” “will,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “could,” “plan,” “project,” “potential,” “seem,” “seek,” “future,” “target” or other similar expressions and any other statements that predict or indicate future events or trends or that are not statements of historical matters, although not all forward-looking statements may contain such identifying words. These forward-looking statements include statements regarding the Company’s order book and the Company's ability to convert it into actual sales, the expected production capacity of the Company’s manufacturing facilities in Saint-Jerome and the United States and the Company’s battery manufacturing plant (the "Battery Plant") and innovation center in Quebec (the "Innovation Center" and collectively with the Battery Plant, the "Lion Campus"), the certification of the Lion heavy duty (HD) battery packs, the sourcing of lithium-ion battery cells, the Company's future growth and long-term strategy, the Company’s liquidity and capital requirements and

2

management’s forecasts related thereto, ongoing litigation proceedings, the Company’s expected product pipeline, the implementation by the Company of measures aimed at reducing its vehicle and battery development costs and its inventory levels (including the Company’s fiscal 2024 objectives related thereto), and the development and timing of commercial production of certain platforms and models. Such forward-looking statements are based on a number of estimates and assumptions that Lion believes are reasonable when made, including that Lion will be able to retain and hire key personnel and maintain relationships with customers, suppliers and other business partners, that Lion will continue to operate its business in the normal course, that Lion will be able to implement its growth strategy, that Lion will be able to successfully and timely ramp-up manufacturing capacity at its Saint-Jerome facility, its U.S. manufacturing facility and at the Battery Plant and Innovation Center as required in the future, that Lion will not suffer any supply chain challenges or any material disruption in the supply of raw materials on competitive terms, that Lion will be able to maintain its competitive position, that Lion will continue to improve its operational, financial and other internal controls and systems to manage its growth and size, that Lion will be able to benefit, either directly or indirectly (including through applications made by the Company and/or its clients), from governmental programs, subsidies and incentives, that Lion will not incur any material obligations with respect to product warranty claims or product recalls, and that Lion will be able to secure additional funding through equity or debt financing on terms acceptable to Lion and in the amounts needed if and when required in the future. Such estimates and assumptions are made by Lion in light of the experience of management and their perception of historical trends, current conditions and expected future developments, as well as other factors believed to be appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Lion believes that these risks and uncertainties include the following:

•any adverse changes in U.S. or Canadian general economic, business, market, financial, political or legal conditions, including as a consequence of the ongoing uncertainties relating to inflation and interest rates;

•any unavailability, reduction, discriminatory application, delay in processing or elimination of governmental programs, subsidies or incentives due to policy changes, government regulations or decisions or otherwise;

•any inability to ramp-up the production of Lion's products and meet project construction and other project milestones and timelines;

•any inability to meet the expectations of the Company's customers in terms of products, specifications, and services;

•any inability to successfully and economically manufacture and distribute its vehicles at scale;

•any inability to raise additional funds to meet its capital requirements and pursue its growth strategy when and in the amounts needed, if any;

•any inability to execute the Company's growth strategy;

•any escalation, deterioration and adverse effects of current military conflicts, which may affect economic and global financial markets and exacerbate ongoing economic challenges;

•any unfavorable fluctuations and volatility in the availability or price of raw materials included in components used to manufacture the Company's products, including battery cells, modules and packs;

•the reliance on key suppliers and any inability to maintain an uninterrupted supply of raw materials;

•any inability to reduce total cost of ownership of electric vehicles sold by the Company over time;

•the reliance on key management and any inability to attract and/or retain key personnel;

•labor shortages (including as a result of employee departures, turnover, and demands for higher wages) which may force the Company to operate at reduced capacity, to lower its production and delivery rates or lower its growth plans, and could pose additional challenges related to employee compensation;

3

•any inability to maintain the Company's competitive position;

•any inability to reduce the Company's costs of supply over time;

•any inability to maintain and enhance the Company's reputation and brand;

•any significant product repair and/or replacement due to product warranty claims or product recalls;

•any failure of information technology systems or any cybersecurity and data privacy breaches or incidents;

•any inability to secure adequate insurance coverage or a potential increase in insurance costs;

•natural disasters, epidemic or pandemic outbreaks, boycotts and geo-political events such as civil unrest, acts of terrorism, the current ongoing military conflicts or similar disruptions;

•any event or circumstance, including the materialization of any of the foregoing risks and uncertainties, resulting in the Company's inability to convert its order book into actual sales; and

•the outcome of any legal proceedings in which the Company is or may be involved from time to time.

These and other risks and uncertainties related to the business of Lion are described in greater detail in section 23.0 of this MD&A entitled “Risk Factors”. Many of these risks are beyond Lion’s management’s ability to control or predict. All forward-looking statements attributable to Lion or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained and risk factors identified in this MD&A and in other documents filed with the applicable Canadian regulatory securities authorities and the U.S. Securities and Exchange Commission (the "SEC'').

Because of these risks, uncertainties and assumptions, readers should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. This MD&A reflects information available to the Company as of February 28, 2024, the date of this MD&A. Except as required under applicable securities laws, Lion undertakes no obligation, and expressly disclaims any duty, to update, revise or review any forward-looking information, whether as a result of new information, future events or otherwise.

4.0Non-IFRS Measures and Other Performance Metrics

This MD&A makes reference to Adjusted gross profit (loss), Adjusted gross margin, and Adjusted EBITDA, which are non-IFRS financial measures, as well as other performance metrics, including the Company’s order book, which are defined below. These measures are neither required nor recognized measures under IFRS, and, as a result, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. Lion compensates for these limitations by relying primarily on Lion's IFRS results and using Adjusted gross profit (loss), Adjusted gross margin, Adjusted EBITDA, and order book on a supplemental basis. Readers should not rely on any single financial measure to evaluate Lion's business.

Adjusted Gross Profit (Loss) and Adjusted Gross Margin

Adjusted gross profit (loss) is defined as gross profit (loss) before the impact of a non-cash charge to gross profit (loss) resulting from the inventory write-down recorded by the Company in connection with its decision to indefinitely delay the start of commercial production of the LionA and LionM minibuses, as described in section 8.0 of this MD&A entitled "Operational Highlights" and section 13.0 of this MD&A entitled “Results of Operations”. Adjusted gross margin is calculated as Adjusted gross profit (loss) divided by revenue. The Company has elected to introduce Adjusted gross profit (loss) and Adjusted gross margin in order to measure its performance at the gross margin level without the impact of this non-cash charge, which can affect the comparability of its financial results and could potentially distort the analysis of trends in its business performance. The Company believes that these measures are useful to

4

management and investors as they facilitate period-to-period comparisons of the Company’s costs of sales and gross profit, including how efficiently the Company uses labor and materials for manufacturing goods sold to its customers, by excluding the impact of a non-cash charge that is not directly related to its operating performance. However, readers should be aware that when evaluating Adjusted gross profit (loss) and Adjusted gross margin, Lion may incur other charges similar to that excluded when calculating Adjusted gross profit (loss) in the future, and the exclusion of this charge should not be construed as an inference that a charge of a similar nature will not occur in the future. Readers should review the reconciliation of gross profit (loss), the most directly comparable IFRS financial measure, to Adjusted gross profit (loss) and Adjusted gross margin, which is presented by the Company under section 13.0 of this MD&A entitled "Results of Operations - Reconciliation of Adjusted Gross Profit (Loss) and Adjusted Gross Margin."

Adjusted EBITDA

“Adjusted EBITDA” is defined as net earnings (loss) before finance costs, income tax expense or benefit, and depreciation and amortization, adjusted to exclude restructuring costs, share-based compensation, change in fair value of conversion options on convertible debt instruments, change in fair value of share warrant obligations, foreign exchange (gain) loss and transaction and other non-recurring expenses. Adjusted EBITDA also excludes the impact of a non-cash impairment charge relating to intangible assets and property, plant and equipment resulting from the write-down of previously capitalized vehicle development costs and property, plant and equipment as well as the impact of a non-cash charge related to the inventory write-down referred to above, all of which were recorded by the Company in connection with its decision to indefinitely delay the start of commercial production of the LionA and LionM minibuses. Lion uses adjusted EBITDA to facilitate a comparison of the profitability of its business on a consistent basis from period-to-period and to provide a further understanding of factors and trends affecting its business. The Company also believes this measure is useful for investors to assess the Company's profitability, its cost structure and its ability to service debt and to meet other payment obligations. However, readers should be aware that when evaluating Adjusted EBITDA, Lion may incur future expenses similar to those excluded when calculating Adjusted EBITDA. In addition, Lion’s presentation of these measures should not be construed as an inference that Lion’s future results will be unaffected by unusual or non-recurring items. Readers should review the reconciliation of net earnings (loss), the most directly comparable IFRS financial measure, to Adjusted EBITDA presented by the Company under section 13.0 of this MD&A entitled "Results of Operations - Reconciliation of Adjusted EBITDA."

Order Book

This MD&A also makes reference to the Company’s "order book" with respect to vehicles (trucks and buses) as well as charging stations. The Company’s vehicles and charging stations order book is determined by management based on purchase orders that have been signed, orders that have been formally confirmed by clients, or products in respect of which formal joint applications for governmental programs, subsidies or incentives have been made by the applicable clients and the Company. The order book is expressed as a number of units or a total dollar value, which dollar value is determined based on the pricing of each unit included in the order book as further explained under “Pricing” in section 10.0 of this MD&A entitled “Order Book”. The vehicles included in the vehicle order book as of February 28, 2024 provided for a delivery period ranging from a few months to the end of the year ending December 31, 2026, with substantially all of such vehicles currently providing for deliveries before the end of the year ending December 31, 2025. In addition, substantially all deliveries are subject to the granting of subsidies and incentives with processing times that are subject to important variations. There has been in the past and the Company expects there will continue to be variances between the expected delivery periods of orders and the actual delivery times, and certain delays could be significant. Also, there has been in the past and the Company expects there will continue to be variances in the eligibility criteria of the various programs, subsidies and incentives introduced by governmental authorities, including in their interpretation and application. Such variances or delays could result in the loss of a subsidy or incentive and/or in the cancellation of certain orders, in whole or in part.

5

The Company’s presentation of the order book should not be construed as a representation by the Company that the vehicles and charging stations included in its order book will translate into actual sales. See section 10.0 of this MD&A entitled "Order Book" for a full description of the methodology used by the Company in connection with the order book and certain important risks and uncertainties relating to such methodology and the presentation of the order book.

5.0Company Overview

General

Lion's business focuses on the design, development, manufacturing and distribution of all-electric medium- and heavy-duty urban vehicles (“EV”). Each Lion vehicle is purpose-built for electric and entirely designed and assembled in-house, with its own chassis, truck cabin or bus body, proprietary battery technology with modular energy capacity and Lion software integration. Lion’s vehicles are assembled without relying on traditional combustion-engine vehicle retrofitting or third-party integrators. For certain specialized truck applications, Lion has also established partnerships and other relationships with third-party suppliers to enable it to offer to its clients a variety of vehicle configurations, upfit equipment options and applications which range from classic boxes for box trucks to other specialized applications such as all-electric ambulances and utility trucks.

Lion has more than 13 years of focused all-electric vehicle research and development (“R&D”), manufacturing and commercialization experience. Lion’s vehicles and technology benefit from over 22 million miles (over 36 million kilometers ) driven by more than 1,850 of its purpose-built all-electric vehicles that are on the road today, in real-life operating conditions.

Lion’s medium and heavy-duty EVs are specifically designed to address the needs of the sub-250 mile (or 400 km) mid-range urban market, which is generally viewed as well suited for electrification given vehicles are typically driven over a relatively modest distance and return to base at the end of every workday.

Lion’s current line-up of purpose-built all-electric trucks can be divided into four main platforms based on gross vehicle weight rating ("GVWR"), namely the Lion5, the Lion6, the Lion8 and the Lion8 Tractor trucks, and its current line-up of all-electric buses can be divided into two main platforms, namely the LionC and LionD buses, all of which are offered in several range and configuration options with a view to meet customers' needs and route planning. Lion complements its product offering with various services, including sales support, full-service training, charging infrastructure assistance and maintenance support, all of which are available on-site at Lion’s Experience Centers, as well as financing, and identification and seeking of any applicable governmental grants.

Lion has a vehicle manufacturing facility in Canada located in Saint-Jerome, Quebec, which is approximately 25 miles (or 40 km) north of Montreal, Quebec, and a manufacturing facility in the United States located in Joliet, Illinois (the "Joliet Facility"), which supports the Company in addressing the increasing demand in the marketplace for “Made in America” zero-emission vehicles. Lion also has the Battery Plant and Innovation Center in Canada which is located at the YMX International Aerocity of Mirabel, Quebec. Except for the Innovation Center building forming part of the Lion Campus, all of such properties are leased by Lion and Lion does not own any real property.

See section 8.0 entitled "Operational Highlights" for more information, including with respect to the Joliet Facility and the Lion Campus.

6.0Research and Development

Lion’s team of engineers and other R&D professionals conducts development activities from its three R&D centers in Mirabel, Quebec, Saint-Jerome, Quebec, and Montreal, Quebec.

Lion’s R&D is currently focused on enhancing existing vehicles and features and continuing the development of proprietary battery systems and specialized applications that can be integrated into Lion’s

6

vehicles. Lion’s main R&D costs consist of expenditures towards assembly of prototype vehicles, the design, establishment, purchase, and implementation of equipment, as well as costs relating to its R&D professionals performing development activities.

7.0Financial Highlights

For the three months ended December 31, 2023 (Q4 2023), the Company's financial performance was the following when compared to the three months ended December 31, 2022 (Q4 2022):

•Revenue of $60.4 million, up $13.7 million, as compared to $46.8 million in Q4 2022.

•Delivery of 188 vehicles, an increase of 14 vehicles, as compared to the 174 delivered in Q4 2022.

•Gross loss of $9.1 million as compared to a gross loss of $4.8 million in Q4 2022.

•Adjusted gross profit1 of $0.8 million as compared to adjusted gross loss of $4.8 million in Q4 2022.

•Net loss of $56.5 million in Q4 2023, as compared to net loss of $4.6 million in Q4 2022.

•Adjusted EBITDA2 of negative $6.3 million, as compared to negative $13.9 million in Q4 2022.

•Additions to property, plant and equipment related to the Joliet Facility and the Lion Campus, amounted to $13.7 million, down $25.4 million, as compared to $39.1 million in Q4 2022. See section 8.0 of this MD&A entitled "Operational Highlights" for more information related to the Joliet Facility and the Lion Campus.

•Additions to intangible assets, which mainly consist of vehicle and battery development activities, amounted to $17.8 million, down $3.5 million as compared to $21.3 million in Q4 2022.

•Impairment of intangible assets and property, plant and equipment of $36.0 million and write-down of inventory of $9.8 million related to the LionA and LionM minibuses for which the Company made the decision to indefinitely delay the start of commercial production, as announced on November 7, 2023.

For the year ended December 31, 2023 (fiscal 2023), the Company's financial performance was the following when compared to the year ended December 31, 2022 (fiscal 2022):

•Delivery of 852 vehicles, an increase of 333 vehicles, as compared to the 519 delivered in fiscal 2022.

•Revenue of $253.5 million, up $113.6 million, as compared to $139.9 million in fiscal 2022.

•Gross loss of $5.5 million, as compared to gross loss of $12.9 million in fiscal 2022.

•Adjusted gross profit of $4.3 million as compared to adjusted gross loss of $12.9 million in fiscal 2022.

•Net loss of $103.8 million, as compared to net earnings of $17.8 million in fiscal 2022.

•Adjusted EBITDA of negative $34.3 million, as compared to negative $54.8 million in fiscal 2022.

•Additions to property, plant and equipment related to the Joliet Facility and the Lion Campus, amounted to $72.2 million, down $75.8 million, as compared to $148.0 million in fiscal 2022. See section 8.0 of this MD&A entitled "Operational Highlights" for more information related to the Joliet Facility and the Lion Campus.

•Additions to intangible assets, which mainly consist of vehicle and battery development activities, amounted to $67.2 million, down $11.9 million, as compared to $79.1 million in fiscal 2022.

•Impairment of intangible assets and property, plant and equipment of $36.0 million and write-down of inventory of $9.8 million related to the LionA and LionM minibuses for which the

1Adjusted gross profit (loss) is a non-IFRS financial measure. See section 4.0 of this MD&A entitled “Non-IFRS Measures and Other Performance Metrics,” and section 13.0 of this MD&A entitled "Results of Operations - Reconciliation of Adjusted Gross Profit (Loss) and Adjusted Gross Margin" for a reconciliation of gross profit (loss), the most directly comparable IFRS financial measure, to Adjusted gross profit (loss).

2 Adjusted EBITDA is a non-IFRS financial measure. See section 4.0 of this MD&A entitled “Non-IFRS Measures and Other Performance Metrics,” and section 13.0 of this MD&A entitled "Results of Operations - Reconciliation of Adjusted EBITDA" for a reconciliation of net earnings (loss), the most directly comparable IFRS financial measure, to Adjusted EBITDA.

7

Company made the decision to indefinitely delay of the start of commercial production, as announced on November 7, 2023.

8.0Operational Highlights

Joliet Facility

During the quarter ended December 31, 2023, the Company initiated the commercial production of LionD units which led to the completion of first deliveries to customers in January 2024.

As of December 31, 2023, additions to property, plant and equipment incurred by the Company since the beginning of the project totaled approximately $106 million, including approximately $6 million incurred during the fourth quarter of fiscal 2023, and approximately $21 million during fiscal 2023. All of such additions to property, plant and equipment related mostly to tenant improvements and the purchase of equipment, including bus line production equipment.

The Joliet Facility currently has the infrastructure in place, including the production line and equipment, to achieve a production capacity of up to 2,500 buses on an annual basis. While the Company initially planned that, at full scale, the production capacity of the Joliet Facility would be principally focused on the production of trucks, as previously disclosed, the Company currently expects to rely on the truck manufacturing capacity available at its Saint-Jerome manufacturing facility to address current customer demand. As a result, the Company does not expect to incur any material capital expenditures related to the Joliet Facility in the short term. With respect to its operations at the Joliet Facility, the Company will however be required to incur operational expenditures in the future, more particularly if and when it accelerates its production cadence. Such expenditures, which could be significant, will be largely impacted by the production cadence, which, in turn, will be dependent upon a variety of factors, including, to a larger extent, the demand for the Company's products as well as the economic environment and the Company's liquidity profile, all of which have been and will continue to be reassessed by management on a continuous basis. See section 16.0 of this MD&A entitled “Liquidity and Capital Resources.”

Lion Campus

During the quarter ended December 31, 2023, the Company successfully completed the final certification for its medium duty (MD) battery pack, the LionBattery MD, a lithium-ion battery pack specifically designed for the Company's medium duty trucks and school buses. In addition, the Company continued to ramp up the production of lithium ion battery packs at its Battery Plant. The certification process for Lion's heavy duty (HD) battery pack is progressing and the Company expects final certification to occur near the middle of fiscal 2024. The Company is continuing activities to integrate the Lion battery pack technology into its vehicles. In parallel, the Innovation Center building is currently being used for various purposes, including as a testing and certification center for vehicles and batteries, a pre-delivery inspection site, a showroom and delivery center, and as warehousing space, in order to leverage space available and optimize operational efficiency.

As of December 31, 2023, additions to property, plant and equipment (mostly related to the purchase of battery production equipment, property construction, and property improvements) and additions to intangible assets (consisting mainly of battery development and integration activities) incurred by the Company since the beginning of the Lion Campus project (exclusive of capitalized interest) totaled approximately $125 million, including $9 million incurred during the fourth quarter of fiscal 2023, and approximately $47 million ($36 million of additions to property, plant and equipment and $11 million of additions to intangible assets) during fiscal 2023.

The Battery Plant currently has the infrastructure in place, including the production line and equipment, to achieve a production capacity of up to 1.7 GWh on an annual basis.

As previously disclosed, the Company does not expect to incur any material capital expenditures related to the Lion Campus in the short term. With respect to its operations at the Lion Campus, the Company will however be required to incur operational expenditures in the future, more particularly if and

8

when it accelerates its production cadence. Such expenditures, which could be significant, will be largely impacted by the production cadence, which, in turn, will be dependent upon a variety of factors, including, to a larger extent, the demand for the Company's products as well as the economic environment and the Company's liquidity profile, all of which have been and will continue to be reassessed by management on a continuous basis. See section 16.0 of this MD&A entitled “Liquidity and Capital Resources.”

U.S. Environmental Protection Agency (EPA) Clean School Bus Program (the "EPA Program") Update

In May 2022, the EPA announced the availability of $500 million under the first round of funding of the EPA Program (the "2022 rebate round"), which amount was subsequently increased to $945 million. On April 25, 2023, the EPA announced the availability of an additional $400 million of grants through a new 2023 grant funding round (the "2023 grant round") under the EPA Program which was more than doubled in January 2024 as further described below. Rebates under the 2022 rebate round and grants under the 2023 grant round have been awarded. On September 28, 2023, the EPA announced additional funding of up to $500 million through a rebate round (the "2023 rebate round"), in respect of which applications are now closed and awards are expected to be announced in April 2024. Please refer to the EPA's website for additional information on the EPA Program: https://www.epa.gov/cleanschoolbus.

Lion all-electric school buses are eligible under all of the foregoing rounds of the EPA program. Under the 2022 rebate round, Lion all-electric school buses were eligible for up to $375,000 per bus for priority districts ($250,000 for other eligible districts). In addition, subsidies of up to $20,000 were available for charging infrastructure under the 2022 rebate round. Under the 2023 grant round, an aggregate total of $395,000 in funding is available for priority districts (other eligible districts can receive an aggregate total of $250,000) for all-electric buses and charging infrastructure. Under the 2023 rebate round, an aggregate total of $345,000 in funding is available for priority districts (other eligible districts can receive an aggregate total of $200,000) for all-electric buses and charging infrastructure, and stacking with certain other state programs and tax credits is permitted.

In order to benefit from vouchers granted under the EPA Program, applicants which are selected are granted vouchers and must submit a payment request once a purchase order for all-electric school buses has been signed. Under the 2022 rebate round in which Lion participated directly and indirectly through school districts, once the EPA reviewed and was satisfied with a payment request, the EPA issued an initial upfront payment to the applicant selected, such that payments made under the EPA Program were generally made before the actual delivery of the applicable school bus. During fiscal 2023, the Company received initial upfront payments from the EPA of approximately $80 million under the 2022 rebate round, of which approximately $16 million was recorded as deferred revenue and other deferred liabilities as of December 31, 2023, as the related vehicles had not yet been delivered.

As the EPA may issue initial upfront payments before the actual delivery of the applicable school buses, any upfront payment received by Lion remains subject to delivery of the applicable school buses by Lion in accordance with the terms and conditions of the EPA Program and the applicable purchase orders. In the event that a given order is not ultimately fulfilled and that the delivery of any applicable school buses is not ultimately completed, any initial upfront payment received is required to be repaid to the EPA. As of December 31, 2023, no amounts were repaid to the EPA. See section 3.0 of this MD&A entitled “Caution Regarding Forward-Looking Statements.” Also see Section 10.0 of this MD&A entitled “Order Book” for additional information with respect to purchase orders obtained and payment requests submitted by the Company with respect to school buses subject to awards under the 2022 rebate round, as well as a full description of the methodology used by the Company in connection with the order book and certain important risks and uncertainties relating to such methodology and the presentation of the order book.

On January 8, 2024, the EPA announced that it more than doubled the funding amount initially announced for the 2023 grant round, thereby allocating nearly $1 billion to 67 applicants. Based on the EPA, the awards under the 2023 grant round are expected to facilitate the purchase of over 2,700 clean school buses in 280 school districts serving over 7 million students across 37 states. Lion estimates that approximately 70% of all units awarded under the 2023 grant round have been directly granted to school

9

districts, financial entities and third-party contractors. Lion was awarded a grant for 97 school buses and related charging infrastructure, representing a total of $38 million, as part of the 2023 grant round. Lion’s applications submitted in connection with this 2023 grant round were prepared in collaboration with selected school districts. Lion will continue to work closely with the applicable school districts in order to complete the milestones required under the program and execute purchase orders with such school districts.

Lion5 Truck Commercial Production

During the quarter ended December 31, 2023, the Company initiated the commercial production of Lion5 units which are mounted with Lion medium duty (MD) battery packs.

Workforce Reduction

On November 27, 2023, the Company announced a workforce reduction aimed at rationalizing its cost structure. The reduction affected 150 employees in production overhead, manufacturing, product development and administrative functions, both in Canada and the United States.

Delay of Commercial Production of LionA and LionM

On November 7, 2023, the Company announced its decision to indefinitely delay the start of commercial production of the LionA all-electric mini school bus, which was designed for school transportation and to accommodate passengers with special needs, with a capacity of up to 24 passengers. Such decision will also delay the production of the LionM model, an all-electric minibus designed to be used for paratransit or as a standard shuttle bus, and which leverages the same platform as the LionA. The decision was made to prioritize the commercial production of Lion's other products (including the Lion8T) and the integration of Lion batteries to Lion's existing vehicles.

Order for 50 LionC School Buses

On November 3, 2023, Lion announced that it received a conditional purchase order for 50 all-electric LionC school buses from Highland Electric Fleets, a leading provider of Electrification-as-a-Service for school districts, governments, and fleet operators in North America. The purchase order is conditional upon the satisfactory grant of non-repayable contributions to Highland Electric Fleets under the ZETF program. See Section 10.0 of this MD&A entitled “Order Book” for additional information with respect to purchase orders obtained by the Company.

9.0Recent Developments

As of February 28, 2024, the Company decided to proceed with the temporarily lay off of approximately 100 employees, mostly impacting the nightshift production workforce at its Saint-Jerome manufacturing facility. The measure aims at further rationalizing the Company’s cost structure in the context of prolonged challenges experienced by the Company, including delays and challenges associated with the processing and granting of various governmental subsidies and incentives, notably the ZETF program, which continue to negatively impact the Company’s scheduled deliveries and sales efforts, and at further aligning its production workforce with current production requirements. The Company will reassess its production needs in the context of any future developments, including any developments relating to the foregoing challenges. See Section 10.0 of this MD&A entitled “Order Book” for additional information.

10.0Order Book3

As of February 28, 2024, Lion’s vehicle order book stood at 2,076 all-electric medium- and heavy-duty vehicles, consisting of 285 trucks and 1,791 buses, representing a combined total order value of approximately $500 million as calculated per management's methodology further described below.

3 See section 4.0 of this MD&A entitled “Non-IFRS Measures and Other Performance Metrics”.

10

Additionally, LionEnergy, Lion’s division that assists customers with selecting, purchasing, project managing and deploying charging infrastructure ahead of vehicle delivery and which generates revenues through project management and consulting services as well as the resale of charging stations from global charging infrastructure manufacturers, had an order book of 132 charging stations, representing a combined total order value of approximately $4 million, as of February 28, 2024 as calculated per management's methodology further described below. The decrease in the vehicle order book of 156 vehicles (representing a total value order of approximately $25 million) as compared to the vehicle order book of 2,232 vehicles (representing a combined total order value of approximately $525 million) as previously disclosed on November 7, 2023 is mainly due to deliveries made since November 7, 2023 as well as the delays and challenges experienced with various governmental subsidies and incentives, including as described below under in respect of the ZEFT Program, which created uncertainty and negatively impacted the Company's sales efforts. See section 23.0 of this MD&A entitled "Risk Factors".

ZETF Program Delays

Lion and its clients continue to experience delays and challenges in the processing of applications filed under the Federal’s Infrastructure Canada’s Zero-Emission Transit Fund (“ZETF”). Lion is actively engaged in discussions with the Canadian Federal government regarding the application of the program. As previously indicated and described in the disclosure relating to the management’s methodology below, more than half of the vehicles included in the Company’s order book are contingent upon grants under the ZETF. If the above-mentioned delays persist, the orders relating to such vehicles may be cancelled, in whole or in part, or be subject to renegotiation. See section 23.0 of this MD&A entitled “Risk Factors”.

11

Order Book Methodology

General Principle:

The Company’s vehicle and charging stations order book is determined by management based on purchase orders that have been signed, orders that have been formally confirmed by clients or products in respect of which formal joint applications for governmental programs, subsidies or incentives have been made by the applicable clients and the Company. The order book is expressed as a number of units or a total dollar value, which dollar value is determined based on the pricing of each unit included in the order book as further explained below under the section entitled “Pricing”. The vehicles included in the vehicle order book as of February 28, 2024 provided for a delivery period ranging from a few months to the end of the year ending December 31, 2026, with substantially all of such vehicles currently providing for deliveries before the end of the year ending December 31, 2025. In addition, substantially all of the vehicle orders included in the order book are subject to the granting of governmental subsidies and incentives, including programs in respect of which applications relating to vehicles of Lion have not yet been fully processed to date. The processing times of governmental programs, subsidies and incentives are also subject to important variations. As further described below under the sections entitled “Delivery Periods” and “Ongoing Evaluation; Risk Factors”, there has been in the past and the Company expects there will continue to be variances between the expected delivery periods of orders and the actual delivery times, and certain delays could be significant. Also, there has been in the past and the Company expects there will continue to be variances in the eligibility criteria of the various programs, subsidies and incentives introduced by governmental authorities, including in their interpretation and application. Such variances or delays could result in the loss of a subsidy or incentive and/or in the cancellation of certain orders, in whole or in part. The Company’s presentation of the order book should not be construed as a representation by the Company that the vehicles and charging stations included in its order book will translate into actual sales.

Delivery Periods:

The Company’s order book refers to products that have not yet been delivered but which are reasonably expected by management to be delivered within a time period that can be reasonably estimated and includes, in the case of charging stations, services that have not been completed but which are reasonably expected by management to be completed in connection with the delivery of the product. Purchase orders and applications relating to vehicles of Lion generally provide for a time period during which the client expects delivery of the vehicles. Such period can vary from a specific date, a number or range of months after the issuance of the order or application, or a calendar year. The vehicles included in the vehicle order book as of February 28, 2024 provided for a delivery period, subject to the satisfaction of the conditions set forth in each order (which, in substantially all cases as further discussed herein, relate to the approval of governmental subsidies and grants), ranging from a few months to the end of the year ending December 31, 2026, with substantially all of such vehicles currently providing for deliveries before the end of the year ending December 31, 2025 (which corresponds to the latest date by which claims are required to be made according to the current eligibility criteria of the ZETF, unless otherwise agreed by Infrastructure Canada). Delivery periods are disclosed from time to time by the Company when available in respect of material orders. Delivery periods should not be construed as a representation or a guarantee by the Company that the actual delivery time will take place as scheduled. Given the nature of the business and the products of the Company, the implied lead time for the production and delivery of a vehicle (which may be impacted, among other things, by supply chain challenges or changes in specifications), the nature of certain customers of the Company (in many cases, fleet owners operating capital intensive operations which require financing and ongoing scheduling flexibility), and the fact that, as further described herein, substantially all of the vehicle orders included in the order book are subject to the granting of governmental subsidies and incentives, actual delivery times may be subject to important variations or delays. Please refer to the section entitled “Ongoing Evaluation; Risk Factors” below regarding the potential impact of variations or delays in deliveries.

12

Pricing:

When the Company’s order book is expressed as an amount of sales, such amount has been determined by management based on the current specifications or requirements of the applicable order, assumes no changes to such specifications or requirements and, in cases where the pricing of a product or service may vary in the future, represents management’s reasonable estimate of the prospective pricing as of the time such estimate is reported. A small number of vehicles included in the order book have a pricing that remains subject to confirmation based on specifications and other options to be agreed upon in the future between the applicable client and the Company. For purposes of the determination of the order book and the value allocated to such orders, management has estimated the pricing based on its current price lists and certain other assumptions relating to specifications and requirements deemed reasonable in the circumstances.

Performance Metric:

The order book is intended as a supplemental measure of performance that is neither required by, nor presented in accordance with, IFRS, and is neither disclosed in nor derived from the financial statements of the Company. The Company believes that the disclosure of its order book provides an additional tool for investors to use in evaluating the Company’s performance, market penetration for its products, and the cadence of capital expenditures and tooling. The Company’s computation of its order book is subject to the specific methodology described herein and may not be comparable to other similarly entitled measures computed by other companies, because all companies may not calculate their order book in the same fashion. Other companies also sometimes refer to or use “order backlog” or “order intake” as performance metrics, which are most likely not calculated on the same basis as the Company’s order book. In addition, as explained above, the Company’s presentation of the order book is calculated based on the orders and the applications made as of the time that the information is presented, and it is not based on the Company’s assessment of future events and should not be construed as a representation by the Company that the vehicles and charging stations included in its order book will translate into actual sales.

13

Ongoing Evaluation; Risk Factors: A portion of the vehicles or charging stations included in the Company’s order book may be cancellable in certain circumstances (whether by reason of a delivery delay, unavailability of a program, subsidy or incentive or otherwise) within a certain period. Management reviews the composition of the order book every time it is reported in order to determine whether any orders should be removed from the order book. For purposes of such exercise, management identifies orders that have been or are reasonably likely to be cancelled and examines, among other things, whether conditions attaching to the order are reasonably likely to result in a cancellation of the order in future periods as well as any other available information deemed relevant, including ongoing dialogue with clients. Such exercise may result from time to time in orders that have previously been included in the order book being removed even if they have not been formally canceled by the client. See the first paragraph of this section 10.0 entitled "Order Book" for a presentation of the variance in the total number of units and the total dollar value of the vehicles and charging stations included in the Company's order book since November 6, 2023, being the last date on which such information was presented. The Company cannot guarantee that its order book will be realized in full, in a timely manner, or at all, or that, even if realized, revenues generated will result in profits or cash generation as expected, and any shortfall may be significant. The Company’s conversion of its order book into actual sales is dependent on various factors, including those described below and under section 23.0 of this MD&A entitled “Risk Factors”. For instance, a customer may voluntarily or involuntarily default on an order, may become subject to bankruptcy or insolvency or cease its business operations. In addition, substantially all of the vehicle orders included in the order book are subject to conditions relating to the granting of governmental subsidies or incentives or a specified timing for the delivery of the vehicle and, in a limited number of cases, the availability of certain specifications and options or the renewal of certain routes by governmental or school authorities. As a result, the Company’s ability to convert its order book into actual sales is highly dependent on the granting and timing of governmental subsidies and incentives, most notably subsidies and incentives under the Quebec government’s 2030 Plan for a Green Economy (the “Quebec Green Economy Plan”), Federal Infrastructure Canada's ZETF, the Government of Canada Incentives for Medium- and Heavy-Duty Zero-Emission Vehicles (iMHZEV) Program, the U.S. Environmental Protection Agency Clean School Bus Program and California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP). More than half of the vehicles included in the order book are contingent upon grants under the ZETF, in respect of which applications relating to vehicles of Lion have not yet been fully processed to date and December 31, 2025 is the latest date by which claims are required to be made according to the current eligibility criteria of the ZETF program, unless otherwise agreed by Infrastructure Canada. In addition, purchase orders obtained in connection with the first round of funding under the EPA Program, require, among other things, that vehicles be delivered on or prior to October 2024. Any termination, modification, delay or suspension of any governmental programs, subsidies and incentives, including, most importantly as of the date hereof, the ZETF, the Quebec Green Economy Plan or the EPA Program could result in delayed deliveries or the cancellation of all or any portion of orders, which, in turn, could have a material and adverse effect on the Company’s business, results of operations or financial condition. The Company’s conversion of its order book into actual sales is also dependent on its ability to economically and timely manufacture its vehicles, at scale. The Company delivered 519 vehicles during the year ended December 31, 2022 and 852 vehicles during the year ended December 31, 2023. As of February 28, 2024, the Company’s vehicle order book stood at 2,076 vehicles. The execution of the Company’s growth strategy and the conversion of its order book, which currently provides for deliveries ranging from a few months to the end of the year ending December 31, 2026, will require that the Company accelerates its production cadence. While the Saint-Jerome facility and Joliet Facility currently have the infrastructure in place, including in terms of production lines and equipment, to achieve a production capacity of up to 2,500 vehicles and 2,500 buses, respectively, on an annual basis (see section 8.0 of this MD&A entitled “Operational Highlights” and “Product Development and Manufacturing” under section 11.0 of this MD&A entitled “Key Factors Affecting Lion's Performance” for further details), the Company's operations are currently being conducted on a lower scale and it has limited experience to date in high volume manufacturing. In addition, as of February 28, 2024, 166 units included in the order book, consisting of trucks and representing a combined total order value of approximately $60 million, related to products which had been developed and were being sold, but that were not currently in commercial production. See “Products and Solutions” in section 6.2 of the Company’s Annual Information Form for the year ended December 31, 2023 entitled “Business of the Company”. Any failure by the Company to successfully develop its vehicles, source its key components, and scale its manufacturing processes within projected costs and timelines could have a material adverse effect on its business, results of operations or financial condition. As a result, the Company’s realization of its order book is subject to a number of risks and uncertainties, including the risks described in section 3.0 of this MD&A entitled “Caution Regarding Forward-Looking Statements” and section 23.0 of this MD&A entitled “Risk Factors”, and there can be no assurance that the Company will be successful in converting all or a significant portion of its order book into actual sales.

14

11.0     Key Factors Affecting Lion’s Performance

Lion believes that its performance and future success are dependent on multiple factors that present significant opportunities, but also pose risks and challenges, including those discussed below and in section 23.0 of this MD&A entitled “Risk Factors”.

Regulatory Landscape and Government and Economic Incentives

Lion competes in an industry that is subject to environmental regulations across the various jurisdictions in which it sells its products. While regulations are expected to continue to become increasingly stringent over time, especially with respect to the use of diesel vehicles, various programs, subsidies and incentives have been introduced by governmental authorities in Canada and the United States in order to promote the adoption of emissions-free vehicles. Demand for Lion’s vehicles is currently highly influenced by such federal, state, provincial and local tax credits, rebates, grants and other government programs and incentives that promote the use of battery electric vehicles. Substantially all of the vehicle orders included in Lion’s order book are subject to the granting of governmental subsidies and incentives, including programs in respect of which applications relating to vehicles of Lion have not yet been fully processed to date. The application, treatment, and processing times of governmental programs, subsidies and incentives are also subject to important variations. As further described under "ZETF Program Delays", “Delivery Periods” and “Ongoing Evaluation; Risk Factors” in section 10.0 of this MD&A entitled “Order Book,” there has been in the past and the Company expects there will continue to be variances between the expected delivery periods of orders and the actual delivery times, and certain delays could be significant. Also, there has been in the past and the Company expects there will continue to be variances in the eligibility criteria and processing times of the various programs, subsidies and incentives introduced by governmental authorities, including in their interpretation and application. Such variances or delays could result in the loss of a subsidy or incentive and/or in the cancellation of certain orders, in whole or in part. See section 23.0 entitled “Risk Factors” of this MD&A.

Additionally, demand for Lion’s vehicles may be influenced by laws, rules, regulations and programs that require reductions in carbon emissions, such as the various measures implemented by lawmakers and regulators in California and Quebec, among others, designed to increase the use of electric and other zero-emission vehicles, including the establishment of firm goals in certain instances for the number of these vehicles operating on state roads by specified dates and the enactment of various laws and other programs in support of these goals.

Although Lion’s vehicles qualify as zero emissions vehicles (“ZEVs”), they are subject to regulations regarding vehicle emissions. For example, in the United States, every class of heavy-duty engines or vehicles must receive Certificate of Conformity (“COCs”) from the EPA prior to being sold. These COCs must be obtained for each model year of production, and failure to obtain them prior to entering Lion’s vehicles into commerce may result in substantial fines or penalties. In addition, the EPA and California Air Resources Board (“CARB”) have annual certification greenhouse gas emissions requirements related to Lion’s vehicles. The CARB certification is required to participate in California’s HVIP. In Canada, the Heavy-duty Vehicle and Engine Greenhouse Gas Emission Regulations adopted under the Canadian Environmental Protection Act, 1999, establish Canadian emission standards and test procedures for Canadian manufacturers, distributors and importers of heavy-duty vehicles. These standards and procedures are aligned with the requirements of the United States Code of Federal regulations for on-road heavy-duty vehicles and engines published by the EPA, parts of which are incorporated by reference in the regulations. However, testing and other requirements to demonstrate compliance may vary, adding to the regulatory complexity of Lion’s operations. In addition, the use, storage, transport, and disposal of Lion’s battery packs is subject to extensive regulation. Lithium-ion cells may be regulated as “hazardous” or “dangerous” goods under several regulatory regimes in both the United States and Canada. In addition to the proper handling, recycling, and disposal of expended batteries, Lion’s operations are subject to a wide range of laws and regulations related to the protection of the environment, including those regulating air emissions, discharges to water, waste management, worker health and safety, and environmental cleanup.

15

Customer Demand for Electrification

The demand for Lion's vehicles is highly dependent upon the general customer demand for electric vehicles. The electrification of medium and heavy-duty commercial vehicles continues to gain momentum as users and governmental authorities are looking for novel solutions to reduce greenhouse gas (“GHG”) emissions and atmospheric pollution generally while the cost competitiveness of electric vehicles continues to improve. While Lion anticipates that an increasing number of fleet owners and operators will seek all-electric alternatives to reduce the carbon footprint of their diesel fleets, its performance and future success will be largely influenced by the rates of adoption of electric vehicles by customers in markets in which it operates. Lion intends to leverage its broad offering of electric vehicles available for purchase today in order to benefit from the growing customer demand for electric vehicles.

Supply Chain

The Company’s supply, notably in respect of battery cells, battery packs and modules and other raw materials is critical in allowing the Company to scale its operations and execute on its growth strategy, such that any supply delay or vulnerability in the supply chain may cause delays in the availability of the Company’s products. Global supply chain challenges may be caused by labor shortages or other global economic uncertainties and events, including inflationary pressures and military conflicts. Disruptions, including port congestion, rail and weather disruptions, trucker shortages and intermittent supplier shutdowns and delays, may result in component shortages, extended lead times for delivery of parts and raw materials, as well as, in certain cases, additional costs and production slowdowns. In addition, while the Company obtains components from multiple sources whenever possible, some of the components used in its vehicles are purchased from a single source and sometimes require custom design tailored to Lion vehicles such that there could be challenges in securing alternative supply sources for such components. The Company has from time-to-time experienced, and may experience in the future, shortages of raw materials, components and labor resulting in production slowdowns. Supply chain challenges have in certain cases contributed and may contribute in the future to delays in the rollout of certain products, resulting in the loss of a given subsidy or incentive for a client, or forcing a client to reallocate annual spending, therefore contributing to the cancellation of certain orders. In other cases, such challenges have required, and may require in the future, the Company to collaborate with its clients to agree on updated delivery periods or otherwise negotiate revised terms and conditions or enter into new purchase orders. See section 10.0 of this MD&A entitled “Order Book.” In its efforts to mitigate the impact of any supply chain challenges, the Company continues to focus on the management of inventory for critical components such as batteries and motors and to increase its reliance on local sourcing in order to develop a supply chain that is as close as possible to its manufacturing facilities. In addition, the Company has increased its supplier redundancy for specific parts. From a manufacturing standpoint, the Company has also increased in-house fabrication and re-designed certain sub-assemblies to circumvent parts that may be most affected by supply chain challenges, such as connectors used in the fabrication of low and high voltage wiring harnesses. The Company is continuously monitoring its supply chain and expects to continue implementing measures to mitigate identified or potential issues. In addition, the Company continues to monitor market dynamics to roll out, as deemed necessary, price increases in certain markets.

Reduction in Total Cost of Ownership

The total cost of ownership (“TCO”), along with vehicle range and payload capacity, quality and reliability, safety, customer experience, technological innovation, charging expertise and compliance with environmental regulation are the primary drivers of truck and bus purchasing decisions for fleet owners and operators.

Lion’s management believes that Lion’s truck TCO is currently favorable to comparable diesel vehicles in most use cases. Over time, the TCO advantage of electric trucks is expected to further increase as electric vehicle prices reduce, which will in turn further improve the economic benefit and rationale for fleet owners and operators to purchase Lion’s all-electric vehicles. In the school bus market, the lower annual mileage of individual units typically makes it more difficult for the lower energy and

16

maintenance costs to significantly offset the currently higher upfront costs of electric vehicles over incumbent diesel units. As such, at the current time, governmental subsidies and incentives are often required for electric buses to be competitive over diesel units from a pure TCO point of view in this category. Over time, as the cost of the vehicles decreases as a result of, among other things, reduction in battery costs from increased vertical integration in manufacturing of battery systems, increased purchasing power with suppliers through larger volume commitments, increased manufacturing capacity utilization and fixed cost absorption, and other productivity gains, the TCO for electric buses is expected to become favorable even in the absence of governmental subsidies and incentives. However, if the cost of electric vehicles does not decrease over time, or if subsidies or incentives are reduced, eliminated or expire, Lion’s future sales could be negatively impacted. See section 23.0 entitled “Risk Factors” of this MD&A.

Product Development and Manufacturing

Lion’s success will depend on its ability to economically develop, manufacture and sell its vehicles at scale and meet its customers’ business needs. Lion’s current line-up of purpose-built all-electric vehicles consists of trucks, which can be divided into four main platforms, and all-electric buses, which can be divided into two main platforms. Lion has also established partnerships and other relationships with third-party suppliers to enable it to offer to its clients a variety of vehicle configurations, upfit equipment options and applications. Although Lion has developed and manufactured specialized chassis for such applications that can fit all-electric battery packs, the electrification and final configuration of certain of the specialized applications offered by Lion and its partners require input from upfitters and their ultimate customers and, in certain instances, Lion is still in the process of finalizing testing and integration with its partners and customers. Lion has also developed, and may in the future develop, additional products, specialized applications and services. Lion continuously assesses the timing and allocation of resources with respect to the development of other products and/or integration of specialized applications. See “Products and Solutions” in section 5.4 entitled “Business of the Company” of the Company’s Annual Information Form for the year ended December 31, 2023, for a description of Lion’s products and solutions and product development pipeline. See also “Delay of Commercial Production of LionA and LionM” in section 8.0 of this MD&A entitled “Operational Highlights.” In addition, vehicle manufacturers often experience, and the Company has in the past experienced delays in the design, production and launch of new products. Any delay in the design, production and launch of new models or in doing so cost-effectively and with high quality, or any failure by the Company to satisfy the needs and requirements of its customers in terms of products, specifications and services, could harm the Company’s reputation and brand.

The Saint-Jerome facility and Joliet Facility currently have the infrastructure in place, including in terms of production lines and equipment, to achieve a production capacity of up to 2,500 vehicles and 2,500 buses, respectively, on an annual basis. Lion also has the Lion Campus, which is located at the YMX International Aerocity of Mirabel, Quebec, and consists of the Company’s Battery Plant and Innovation Center. The majority of the vehicles delivered by the Company during the year ended December 31, 2023 were manufactured in Saint-Jerome. With respect to the estimated annual capacity at full scale at the Saint-Jerome manufacturing facility of 2,500 vehicles and at the Joliet Facility of 2,500 buses, the Company does not expect that any significant capital expenditure will be required to achieve such production capacity, which would require mostly operational expenditures and could be achieved through additional workforce and certain optimization of production lines. The Company has not to date produced at such level and has limited experience to date in high volume manufacturing of its vehicles. Any failure by the Company to successfully develop its vehicles, source its key components, and scale its manufacturing processes within projected costs and timelines could have a material adverse effect on its business, results of operations or financial condition.

17

Costs of Raw Materials and Supplies

Components in Lion’s vehicles are made of various raw materials, including aluminum, steel, composite, non-ferrous metals (such as copper) and other materials and minerals used to manufacture lithium-ion batteries. The prices for these raw materials fluctuate depending on market conditions, global demand and other factors, including inflation. While Lion has, in certain cases, entered into long-term contractual arrangements with suppliers with respect to the supply of certain key components of its vehicles, including lithium-ion batteries and battery cells, it remains exposed to multiple risks relating to price fluctuations and other factors which could impact supply. In particular, the inability of the Company’s current or future suppliers of key parts to sustainably meet the Company’s timelines, or cost, quality and volume needs may negatively impact the Company, force the redesign of certain of its models or translate in the cancellation of orders or the loss of certain clients or sales.

Prior to the commencement of its manufacturing operations at the Battery Plant, Lion relied only on third-party battery suppliers to source battery cells, modules and packs that it integrated in its vehicles. In connection with the establishment of its manufacturing operations at the Battery Plant, Lion now manufactures its own battery modules and packs that integrate 21700 cylindrical battery cells sourced from third-party suppliers. While Lion intends to continue in certain instances to rely on third-party suppliers for battery packs, it expects to increase optimization for product design, cost and production efficiency over time by producing battery packs in-house.

As previously disclosed, the Company initiated in fiscal 2022 arbitration proceedings in order to enforce the terms and conditions of the multi-year battery pack supply contract it had entered into with Romeo Systems, Inc. ("Romeo") (who became a subsidiary of Nikola Corporation (''Nikola'')) in November 2020. On June 30, 2023, Nikola announced the liquidation of Romeo's assets for the benefit of its creditors. In light of such liquidation, the Company decided not to pursue its arbitration proceedings against Romeo, and to only maintain its legal proceedings against Nikola. Romeo’s failure to comply with its obligations under the multi-year battery pack supply contract resulted in delays in the commencement of the commercial production of the Lion8T, which is now expected to commence near the middle of fiscal 2024, and in the Company deciding to mount its Lion8T trucks with the Company’s proprietary battery packs manufactured at the Battery Plant. See section 13.0 of the Company’s Annual Information Form entitled “Legal Proceedings and Regulatory Actions.”

The Company does not currently hedge its long-term exposure to price fluctuations of raw materials and supplies. Therefore, an increase in prices of raw materials and supplies could negatively impact the Company’s operating results if its suppliers are unable or unwilling to fulfill purchase orders submitted by the Company and/or if the Company is not able to find other manufacturing or supply alternatives or transfer these cost increases to customers.

Foreign Exchange

The Company’s revenues are reported in U.S. dollars but its functional currency is the Canadian dollar and the majority of its transactions are in Canadian dollars. The Company's main manufacturing operations are currently located in Canada. Suppliers of the Company are located in Canada, the United States and other foreign jurisdictions. The Company’s current indebtedness is denominated in both Canadian and U.S. dollars. Therefore, the Company’s revenues, gross profit and net income (loss) reported in U.S. dollars are and are expected to continue to be exposed to foreign exchange fluctuations.

Seasonality

The Company’s sales have historically experienced substantial fluctuations from quarter to quarter, particularly considering that they have been mainly comprised of sales of school buses which are mainly driven by the school calendar. While the Company expects to continue to experience seasonal variations in its sales in the foreseeable future, management believes that the mix of product sales may vary in the future, especially in connection with the Company’s execution of its growth strategy and as sales of trucks may become more prevalent and new products and applications may be introduced. As a result, it is difficult to predict if any historical trends will be reproduced in the future.

18

12.0     Components of Results of Operations

Revenues

To date, Lion has primarily generated revenues from the sale of its all-electric school buses. Over time, Lion anticipates a significant proportion of its revenues to be generated from the sale of all-electric trucks.

Cost of Sales

Lion’s cost of sales includes material costs, transportation costs, labor, manufacturing overhead, and other direct costs related to electric vehicle production.

Administrative Expenses

Administrative expenses consist of non-manufacturing facility leasing, share-based compensation, as well as employee benefits for management, information technology, human resources, accounting, legal, investor relations, and other general administrative functions. Administrative expenses also include professional fees, non-manufacturing depreciation expense, and non-manufacturing related insurance costs (including director and officer insurance).

Selling Expenses

Selling expenses consist of salaries and other similar expenses related to Lion’s bus and truck sales force and employee benefit costs, sales commissions, share-based compensation, business development, aftermarket sales and advertising, marketing and communications.

Restructuring Costs

Restructuring costs are comprised mainly of severance costs recognized in connection with the workforce reduction announced on November 27, 2023.

Impairment of Intangible Assets and Property, Plant and Equipment

Impairment of intangible assets and property, plant and equipment relates to the write-down of previously capitalized vehicle development costs and property, plant and equipment which resulted from the Company’s decision to indefinitely delay the start of the commercial production of the LionA and LionM minibuses, as announced on November 7, 2023.

Finance Costs

Finance costs consists primarily of interest paid on Lion’s outstanding debts, legal and other costs related to debt and share warrant financing activities, interest on lease liabilities, accretion expense on convertible and non-convertible debentures, and non-cash accretion and revaluation expenses on the balance of purchase price payable related to the acquisition of dealership rights.

Foreign Exchange (Gain) Loss

Foreign exchange gains and losses represent the gains and losses on instruments such as cash balances, accounts receivable, accounts payable, debt balances and other accounts that are denominated in foreign currencies to the functional currencies of the related Lion entities, as a result of changes in foreign currency rates.

Change in Fair Value of Conversion Options on Convertible Debt Instruments

The Convertible Debentures issued on July 19, 2023 are, subject to their terms and conditions, convertible at the holders’ option into Common Shares. Their conversion price is also subject to customary adjustments and, upon the occurrence of certain events, including a “fundamental change”, holders of Convertible Debentures will either (i) convert all of their Convertible Debentures, with the number of Common Shares issuable upon such conversion being subject to a grid-based “make-whole”

19

adjustment, or (ii) require the Company to repurchase for cash all of their Convertible Debentures at a given repurchase price. See “Convertible Debentures” in section 16.0 of this MD&A entitled “Liquidity and Capital Resources" for further details regarding the terms and conditions of the convertible Debentures.

Lion determined that since the conversion options are financial instruments that do not meet the “Fixed for Fixed” criteria under IAS 32, the conversion options are derivative instruments and are classified as a liability in accordance with IAS 32 - Financial Instruments: Presentation and IFRS 9 - Financial Instruments, and are each initially recorded at fair value and then revalued at each reporting date.

Change in Fair Value of Share Warrant Obligations

On July 1, 2020, in connection with the entering into of a master purchase agreement and a work order (collectively, the “MPA”) with Amazon Logistics, Inc. (the "Specified Customer"), the Company issued warrants to purchase common shares of the Company (the “Specified Customer Warrant”) to Amazon.com NV Investment Holdings LLC (the “Warrantholder”) which vests, subject to the terms and conditions contained therein, based on the aggregate amount of spending by Amazon.com, Inc. and its affiliates on Lion’s products or services.

At the election of the Warrantholder, any vested portion of the Specified Customer Warrant can be exercised either on a cash basis by the payment of the applicable exercise price or on a net issuance basis based on the in-the-money value of the Specified Customer Warrant. The exercise price of the Specified Customer Warrant corresponds to $5.66. The Specified Customer Warrant grants the Warrantholder the right to acquire up to 35,350,003 common shares of Lion.

There was an initial vesting of a portion of the Specified Customer Warrant which is exercisable for 5,302,511 common shares of Lion. The remaining portion of the Specified Customer Warrant vests in three tranches based on the aggregate amount of spending by Amazon.com, Inc. and its affiliates on Lion’s products or services. The Specified Customer Warrant has a term of 8 years ending on July 1, 2028. Full vesting of the Specified Customer Warrant requires spending of at least $1.2 billion on Lion’s products or services over the term of the Specified Customer Warrant, subject to accelerated vesting upon the occurrence of certain events, including a change of control of Lion or a termination of the MPA for cause.

Lion determined that the Specified Customer Warrant is a derivative instrument and is classified as a liability in accordance with IAS 32 - Financial Instruments: Presentation and IFRS 9 - Financial Instruments. The vested portion of the Specified Customer Warrant is initially recorded at fair value as a share warrant obligation and then revalued at each reporting date, with a corresponding contract asset recognized at inception. The corresponding contract asset recognized at inception will be amortized as a reduction of revenues on a percentage per dollar of revenue generated with Amazon.com, Inc. and its affiliates.

Upon completion of the Company's business combination and plan of reorganization (the ''Business Combination''), which resulted in a wholly-owned subsidiary of Lion merging with Northern Genesis Acquisition Corp. (''NGA''), each outstanding warrant to purchase shares of NGA’s common stock ("NGA Warrant" was converted into a warrant to acquire one common share of Lion (a “Business Combination Warrant”), at a price of $11.50 per share. A total of 27,111,741 NGA Warrants were converted into 27,111,741 Business Combination Warrants, 15,972,672 of which were public Business Combination Warrants and 11,139,069 of which were private Business Combination Warrants.

Each Business Combination Warrant entitles the holder to acquire one common share of Lion at an exercise price of $11.50 per share until May 6, 2026, subject to adjustment in certain customary events. The public Business Combination Warrants may be redeemed by the Company in whole at a price of $0.01 per public Business Combination Warrant, provided that the last reported sales price of the Company’s common shares equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period commencing once the public Business Combination Warrants become exercisable and

20

ending on the third trading day prior to the date on which the Company gives proper notice of such redemption.

Each private Business Combination Warrant may be exercised on a cashless basis and may not be redeemed by the Company for so long as it is held by Northern Genesis Sponsor LLC or its permitted transferees. Once transferred to any person that is not Northern Genesis Sponsor LLC or any of its permitted transferees, a private Business Combination Warrant becomes treated as a public Business Combination Warrant.

In connection with the December 2022 Offering (as defined below), the Company issued 22,637,795 ''2022 Warrants''. Each whole 2022 Warrant entitles the holder to purchase one common share for a price $2.80 per share for a period of five years ending December 15, 2027, subject to adjustment in certain customary events.

In connection with the 2023 Debenture Financing, the Company issued the July 2023 Warrants to holders of Non-Convertible Debentures entitling them to purchase, at any time after six (6) months following the issuance thereof until July 19, 2028, 22,500,000 common shares in the aggregate at an exercise price of C$2.81 per common share. The exercise price of the July 2023 Warrants is subject to customary adjustments.

The Company determined that the Business Combination Warrants, the 2022 Warrants, and the July 2023 Warrants are derivative instruments and are classified as a liability in accordance with IAS 32 - Financial Instruments: Presentation and IFRS 9 - Financial Instruments. The Business Combination Warrants, the 2022 Warrants, and the July 2023 Warrants are each initially recorded at fair value and then revalued at each reporting date.

21

13.0     Results of Operations

Comparison of Annual Results

Lion’s results of operations for the years ended December 31, 2023, 2022 and 2021 are presented below:

	Years ended
	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Variation 2023-2022	% Change 2023-2022	Variation 2022-2021	% Change 2022-2021
Revenue	$253,496	$139,914	$57,710	$113,582	81%	$82,204	142%
Cost of sales	$259,020	$152,862	$57,665	$106,158	69%	$95,197	165%
Gross profit (loss)	$(5,524)	$(12,947)	$45	$7,423	n.a.	$(12,993)	n.a.
Gross margin	(2.2)%	(9.3)%	—%	n.a.	7.1%	n.a.	(9.3)%
Adjusted gross profit (loss) (1)	$4,285	$(12,947)	$45	$17,232	n.a	$(12,993)	n.a
Adjusted gross margin (1)	1.7%	(9.3)%	—%	n.a	11.0%	n.a	(9.3)%
Operating expenses:
Administrative expenses	$51,479	$44,843	$78,423	$6,636	15%	$(33,580)	(43)%
Selling expenses	$19,650	$22,974	$27,720	$(3,324)	(14)%	$(4,746)	(17)%
Transaction costs	$—	$—	$13,655	$0	n.m.	$(13,655)	(100)%
Restructuring costs	$1,426	$—	$—	$1,426	n.m.	n.m.	n.m.
Impairment of intangible assets and property, plant and equipment	$35,998	$—	$—	$35,998	n.m	n.m.	n.m.
Operating loss	$(114,079)	$(80,764)	$(119,752)	$(33,315)	41%	$38,988	(33)%
Finance costs	$17,892	$955	$8,332	$16,937	1774%	$(7,377)	(89)%
Foreign exchange (gain) loss	$(2,260)	$1,973	$1,037	$(4,233)	(215)%	$936	90%
Change in fair value of conversion options on convertible debt instruments and interest paid in kind	$(4,982)	$—	$—	$(4,982)	n.m.	$—	n.m.
Change in fair value of share warrant obligations	$(20,963)	$(101,468)	$(85,796)	$80,505	(79)%	$(15,672)	18%
Net earnings (loss)	$(103,766)	$17,776	$(43,325)	$(121,542)	n.m.	$61,101	n.m.
Foreign currency translation adjustment	$6,947	$(18,310)	$321	$25,257	n.m.	$(18,631)	n.m.
Comprehensive loss	$(96,819)	$(534)	$(43,004)	$(96,285)	n.m.	$42,470	n.m.
Basic earnings (loss) per share	$(0.46)	$0.09	$(0.27)	$(0.55)	n.m.	$0.36	n.m.
Diluted earnings (loss) per share	$(0.46)	$0.09	$(0.27)	$(0.55)	n.m.	$0.36	n.m.
Basic weighted average number of common shares outstanding	224,311,227	193,113,983	162,245,092	31,197,244	n.a.	30,868,891	n.a.
Diluted weighted average number of common shares outstanding	224,311,227	200,591,663	162,245,092	23,719,564	n.a.	38,346,571	n.a.

(1) Adjusted gross profit (loss) and Adjusted gross margin are non-IFRS financial measures. See section 4.0 of this MD&A entitled “Non-IFRS Measures and Other Performance Metrics,” and section 13.0 of this MD&A entitled "Results of Operations - Reconciliation of Adjusted Gross Profit (Loss) and Adjusted Gross Margin" for a reconciliation of gross profit (loss), the most directly comparable IFRS financial measure, to Adjusted gross profit (loss).

n.a. = not applicable

n.m. = not meaningful

22

Revenue

Fiscal 2023 compared to Fiscal 2022

For the year ended December 31, 2023, revenue amounted to $253.5 million, an increase of $113.6 million, compared to the year ended December 31, 2022. The increase in revenue was primarily due to an increase in vehicle sales volume of 333 units, from 519 units (409 school buses and 110 trucks; 471 vehicles in Canada and 48 vehicles in the U.S.) for the year ended December 31, 2022, to 852 units (771 school buses and 81 trucks; 625 vehicles in Canada and 227 vehicles in the U.S.) for the year ended December 31, 2023. Revenues for the year ended December 31, 2023 were positively impacted by the impact of a higher proportion of U.S. vehicle sales as compared to fiscal 2022, however were negatively impacted by delays in the processing and granting of subsidies, which resulted in the postponement of deliveries of vehicles which were ready for delivery.

Fiscal 2022 compared to Fiscal 2021

For the year ended December 31, 2022, revenue amounted to $139.9 million, an increase of $82.2 million, compared to the year ended December 31, 2021. The increase in revenue was primarily due to an increase in vehicle sales volume of 323 units, from 196 units (151 school buses and 45 trucks; 134 vehicles in Canada and 62 vehicles in the U.S.) for the year ended December 31, 2021, to 519 units (409 school buses and 110 trucks; 471 vehicles in Canada and 48 vehicles in the U.S.) for the year ended December 31, 2022. Revenues for the year ended December 31, 2022 were impacted by global supply chain challenges, which required the Company to delay the final assembly of certain vehicles and resulted in increased inventory levels, as well as challenges associated with the production ramp-up and the development of certain models.

Cost of Sales

Fiscal 2023 compared to Fiscal 2022

For the year ended December 31, 2023, cost of sales amounted to $259.0 million, representing an increase of $106.2 million, compared to the year ended December 31, 2022. The increase was primarily due to increased sales volumes and higher production levels, increased fixed manufacturing and inventory management system costs related to the ramp-up of production capacity, higher raw material and commodity costs, and the impact of the inflationary environment. In addition, cost of sales were impacted by the $9.8 million write-down of inventory to net realizable value as a result of the decision to indefinitely delay the commercial production of the LionA and LionM minibuses.

Fiscal 2022 compared to Fiscal 2021

For the year ended December 31, 2022, cost of sales amounted to $152.9 million, representing an increase of $95.2 million, compared to the year ended December 31, 2021. The increase was primarily due to increased sales volumes and higher production levels, increased fixed manufacturing and inventory management system costs related to the ramp-up of production capacity, higher raw material and commodity costs, and the impact of global supply chain challenges and the inflationary environment.

Gross Loss

Fiscal 2023 compared to Fiscal 2022

For the year ended December 31, 2023, gross loss improved by $7.4 million to negative $5.5 million, compared to negative $12.9 million for the year ended December 31, 2022. The improvement was primarily due to the positive impact of increased sales volumes, favorable product mix, and higher manufacturing throughput, partially offset by higher raw material and commodity costs, higher inventory management system costs related to the ramp-up of production capacity, and the impact of the inflationary environment. Gross loss for the year ending December 31, 2023 was also negatively impacted by the $9.8 million write-down of inventory to net realizable value as a result of the decision to indefinitely delay the commercial production of the LionA and LionM minibuses.

23

Fiscal 2022 compared to Fiscal 2021

For the year ended December 31, 2022, gross profit decreased by $13.0 million to negative $12.9 million, compared to nil for the year ended December 31, 2021. The decrease was primarily due to the impact of increased fixed manufacturing costs and inventory management system costs related to the ramp-up of production capacity, higher raw material and commodity costs, product mix, and the impact of global supply chain challenges and the inflationary environment, partially offset by the positive impact of increased sales volumes.

Administrative Expenses

Fiscal 2023 compared to Fiscal 2022

For the year ended December 31, 2023, administrative expenses increased by $6.6 million, from $44.8 million for the year ended December 31, 2022, to $51.5 million. Administrative expenses for the year ended December 31, 2023 included $5.0 million of non-cash share-based compensation, compared to $9.5 million for the year ended December 31, 2022. Excluding the impact of non-cash share-based compensation, administrative expenses increased from $35.3 million for the year ended December 31, 2022, to $46.5 million for year ended December 31, 2023. The increase was mainly due to an increase in expenses and a higher headcount, both resulting from the expansion of Lion’s head office and general corporate capabilities. As a percentage of sales, administrative expenses represented 20% of net sales for the year ended December 31, 2023, compared to 32% for the year ended December 31, 2022.

Fiscal 2022 compared to Fiscal 2021

For the year ended December 31, 2022, administrative expenses decreased by $33.6 million, from $78.4 million for the year ended December 31, 2021, to $44.8 million. Administrative expenses for the year ended December 31, 2022 included $9.5 million of non-cash share-based compensation, compared to $56.7 million for the year ended December 31, 2021. Excluding the impact of non-cash share-based compensation, administrative expenses increased from $21.7 million for the year ended December 31, 2021, to $35.3 million for year ended December 31, 2022. The increase was mainly due to an increase in expenses reflecting Lion’s transition to being a public company in May 2021, an increase in expenses resulting from the expansion of Lion’s head office and general corporate capabilities in anticipation of an expected increase in business activities, as well as professional fees related to supply chain and strategic project optimization initiatives.

Selling Expenses

Fiscal 2023 compared to Fiscal 2022

For the year ended December 31, 2023, selling expenses decreased by $3.3 million, from $23.0 million for the year ended December 31, 2022, to $19.7 million. Selling expenses for the year ended December 31, 2023 included $0.2 million of non-cash share-based compensation, compared to $2.9 million for the year ended December 31, 2022. Excluding the impact of non-cash share-based compensation, selling expenses decreased from $20.1 million for the year ended December 31, 2022, to $19.5 million for year ended December 31, 2023. The slight decrease was primarily due to streamlined selling related expenses, including lower headcount and marketing costs, partially offset by higher sales commissions related to higher revenue.

Fiscal 2022 compared to Fiscal 2021

For the year ended December 31, 2022,selling expenses decreased by $4.7 million, from $27.7 million for the year ended December 31, 2021, to $23.0 million. Selling expenses for the year ended December 31, 2022 included $2.9 million of non-cash share-based compensation, compared to $14.4 million for the year ended December 31, 2021. Excluding the impact of non-cash share-based compensation, selling expenses increased from $13.3 million for the year ended December 31, 2021, to $20.1 million for year ended December 31, 2022. The increase was primarily due to Lion expanding its

24

sales force in anticipation of the ramp-up of production capacity, and an increase in expenses as a result of the opening and operations of new Experience Centers.

Restructuring Costs

Restructuring costs of $1.4 million for the year ended December 31, 2023 are comprised mainly of severance costs related to the workforce reduction announced on November 27, 2023. No such restructuring costs were incurred in fiscal 2022 or 2021.

Impairment of Intangible Assets and Property, Plant and Equipment

Impairment of intangible assets and property, plant and equipment of $36.0 million for the year ended December 31, 2023 relates to the write-down of previously capitalized vehicle development costs and property, plant and equipment related to the Lion A and Lion M minibuses for which the Company made the decision to indefinitely delay the start of commercial production, as announced on November 7, 2023. No such impairment was recorded in fiscal 2022 and 2021.

Transaction Costs

Transaction costs of $13.7 million for the year ended December 31, 2021 were incurred in the second quarter of 2021 and related to the completion of the Business Combination pursuant to which Lion became a public company, and were mainly composed of legal, banking, and other professional fees. No such transaction costs were incurred in fiscal 2022 and 2023.

Finance Costs

Fiscal 2023 compared to Fiscal 2022

For the year ended December 31, 2023, finance costs increased by $16.9 million, from $1.0 million for the year ended December 31, 2022, to $17.9 million for the year ended December 31, 2023. Finance costs for the year ended December 31, 2023 were net of $6.5 million of capitalized borrowing costs, compared to $5.1 million for the year ended December 31, 2022. Excluding the impact of capitalized borrowing costs, finance costs increased by $18.3 million compared to the year ended December 31, 2022. The increase was driven primarily by higher interest expense on long-term debt, due to higher average debt outstanding during the year relating to borrowings made under the Revolving Credit Agreement, the IQ Loan, the SIF Loan, the Finalta-CDPQ Loan Agreement, and the Supplier Credit Facility (as such terms are defined below), interest and accretion expense as well as financing costs related to the Convertible Debentures and Non-Convertible Debentures issued in July 2023, and an increase in interest costs related to lease liabilities, including for the Battery Plant. In addition, finance costs for the year ended December 31, 2022 included a gain of $2.1 million on the derecognition of the financial liability occurred as a result of the termination of an agreement maturing on May 7, 2022 granting a private company with dealership rights in certain regions in the United States.

Fiscal 2022 compared to Fiscal 2021

For the year ended December 31, 2022 finance costs decreased by $7.4 million, from $8.3 million for the year ended December 31, 2021, to $1.0 million for the year ended December 31, 2022. Finance costs for the year ended December 31, 2022 were net of $5.1 million of capitalized borrowing costs. Excluding the impact of capitalized borrowing costs, finance costs decreased by $2.2 million compared to the year ended December 31, 2021. The decrease was driven primarily by lower interest expense on long-term debt, the non-recurrence of interest expense on convertible debt instruments that was repaid in fiscal 2021 and accretion expense on retractable common shares which were repaid on May 6, 2021, and the $2.1 million gain on the derecognition of a financial liability (which occurred as a result of the termination of an agreement maturing on May 7, 2022 granting a private company with dealership rights in certain regions in the United States), partially offset by an increase in financing costs related to the establishment of the ATM Program, the issuance of the 2022 Warrants, and interest on lease liabilities, including for the Joliet Facility.

25

Foreign Exchange Loss (Gain)

Fiscal 2023 compared to Fiscal 2022

Foreign exchange loss (gain) relates primarily to the revaluation of net monetary assets denominated in foreign currencies to the functional currencies of the related Lion entities. For the year ended December 31, 2023, foreign exchange gain was $2.3 million, compared to a loss of $2.0 million in the prior year, related primarily to the impact of changes in foreign currency rates, related primarily to the impact of changes in the Canadian dollar relative to the U.S. dollar.

Fiscal 2022 compared to Fiscal 2021

Foreign exchange losses and gains for both periods relate primarily to the revaluation of net monetary assets denominated in foreign currencies to the functional currencies of the related Lion entities. For the year ended December 31, 2022, foreign exchange loss was $2.0 million, compared to a loss of $1.0 million in the prior year, and related primarily to the impact of changes in foreign currency rates, related primarily to the impact of changes in the Canadian dollar relative to the U.S. dollar.

Change in Fair Value of Conversion Options on Convertible Debt Instruments

For the year ended December 31, 2023, change in fair value of conversion options on convertible debt instruments was a gain of $5.0 million, and was related to the revaluation of the conversion options on the Convertible Debentures issued in July 2023.

Change in Fair Value of Share Warrant Obligations

Fiscal 2023 compared to Fiscal 2022

Change in fair value of share warrant obligations moved from a gain of $101.5 million for the year ended December 31, 2022, to a gain of $21.0 million, for the year ended December 31, 2023. The gain for the year ended December 31, 2023 was related to the Specific Customer Warrants, the public and private Business Combination Warrants, the 2022 Warrants, and the July 2023 Warrants, and resulted mainly from the decrease in the market price of Lion equity as compared to the previous valuations.

Fiscal 2022 compared to Fiscal 2021

Change in fair value of share warrant obligations resulted in a gain of $101.5 million for the year ended December 31, 2022, compared to a gain of $85.8 million for the year ended December 31, 2021, related to the Specific Customer Warrants, the public and private Business Combination Warrants, and the 2022 Warrants. The gain for the year ended December 31, 2022 results mainly from the decrease in the market price of Lion equity as compared to the previous valuations.

Net Earnings (Loss)

Fiscal 2023 compared to Fiscal 2022

The net loss of $103.8 million for the year ended December 31, 2023 as compared to the net earnings of $17.8 million for the prior year was largely due to an improvement in gross loss, inclusive of the impact of the inventory write-down related to the delay of the start of commercial production of the LionA and LionM minibuses, more than offset by higher administrative and selling expenses, the impairment charge related to the delay of the start of commercial production of the LionA and LionM minibuses, higher finance costs, and lower gains related to non-cash decrease in the fair value of share warrant obligations.

Fiscal 2022 compared to Fiscal 2021

For year ended December 31, 2022, net earnings increased by $61.1 million, from a net loss of $43.3 million for the year ended December 31, 2021, to net earnings of $17.8 million. The improvement in net earnings for the year ended December 31, 2022, as compared to the year ended December 31, 2021,

26

was largely due to lower non-cash share-based compensation, lower transaction and finance costs, and the higher gain on the fair value of share warrant obligations during discussed in “Change in fair value of share warrant obligations” in fiscal 2022, partially offset by higher gross loss and higher administrative and selling expenses (excluding share-based compensation).

27

Comparison of Fourth Quarter Results for Fiscal 2023 and Fiscal 2022

Lion’s results of operations for the three months ended December 2023 and 2022 are presented below:

	Unaudited - three months ended
	Dec 31, 2023	Dec 31, 2022	Variation	% Change
	(dollar amounts in thousands, except share and per share data)
Revenue	$60,429	$46,769	$13,660	29%
Cost of sales	$69,480	$51,533	$17,946	35%
Gross loss	$(9,051)	$(4,765)	$(4,286)	n.a.
Gross margin	(15.0)%	(10.2)%	n.a	(5)%
Adjusted gross profit (loss) (1)	$758	$(4,765)	$5,523	n.a
Adjusted gross margin (1)	1.3%	(10.2)%	n.a	11%
Operating expenses:
Administrative expenses	$13,011	$9,997	$3,014	30%
Selling expenses	$3,147	$5,643	$(2,496)	(44)%
Restructuring costs	$1,426	$—	$1,426	n.a.
Impairment of intangible assets and property, plant and equipment	$35,998	$—	$35,998	n.a.
Operating loss	$(62,634)	$(20,405)	$(42,229)	n.m.
Finance costs (income)	$6,743	$(891)	$7,634	(856)%
Foreign exchange (gain) loss	$(2,155)	$559	$(2,714)	n.m.
Change in fair value of conversion options on convertible debt instruments	$(1,626)	$—	$(1,626)	n.m.
Change in fair value of share warrant obligations	$(9,052)	$(15,434)	$6,382	n.m.
Net loss	$(56,543)	$(4,638)	$(51,905)	n.m.
Foreign currency translation adjustment	$5,786	$3,523	$2,263	n.m.
Comprehensive loss	$(50,757)	$(1,115)	$(49,642)	n.m.
Basic earnings loss per share	$(0.25)	$(0.02)	$(0.23)	n.m.
Diluted earnings (loss) per share	$(0.25)	$(0.02)	$(0.23)	n.m.
Basic weighted average number of common shares outstanding	226,184,932	200,557,268	–	n.a.
Diluted weighted average number of common shares outstanding	226,184,932	200,557,268	–	n.a.

(1) Adjusted gross profit (loss) and Adjusted gross margin are non-IFRS financial measures. See section 4.0 of this MD&A entitled “Non-IFRS Measures and Other Performance Metrics,” and section 13.0 of this MD&A entitled "Results of Operations - Reconciliation of Adjusted Gross Profit (Loss) and Adjusted Gross Margin" for a reconciliation of gross profit (loss), the most directly comparable IFRS financial measure, to Adjusted gross profit (loss).

n.a. = not applicable

n.m. = not meaningful

28

Revenue

For the three months ended December 31, 2023, revenue amounted to $60.4 million, an increase of $13.7 million, compared to the corresponding period in the prior year. The increase in revenue was primarily due to an increase in vehicle sales volume of 14 units, from 174 units (139 school buses and 35 trucks; 160 vehicles in Canada and 14 vehicles in the U.S.) for the three months ended December 31, 2022, to 188 units (178 school buses and 10 trucks; 107 vehicles in Canada and 81 vehicles in the U.S.) for the three months ended December 31, 2023, including the impact of a higher proportion of U.S. vehicle sales than in the corresponding period in the prior year.

Cost of Sales

For the three months ended December 31, 2023, cost of sales amounted to $69.5 million, representing an increase of $17.9 million compared to $51.5 million in the corresponding period in the prior year. The increase was primarily due to the $9.8 million write-down of inventory to net realizable value as a result of the decision to indefinitely delay the start of commercial production of the LionA and LionM minibuses, increased sales volumes and higher production levels, increased fixed manufacturing and inventory management system costs related to the ramp-up of production capacity, higher raw material and commodity costs, and the impact of the inflationary environment.

Gross Loss

For the three months ended December 31, 2023, gross loss increased by $4.3 million, from a gross loss of $4.8 million for the corresponding period in the prior year, to a gross loss of $9.1 million for the three months ended December 31, 2023. The increase in gross loss was primarily due to the negative impact of the $9.8 million write-down of inventory to net realizable value as a result of the decision to indefinitely delay the start of commercial production of the LionA and LionM minibuses, increased fixed manufacturing costs and inventory management system costs related to the ramp-up of future production capacity, higher raw material and commodity costs, product mix, and the impact of continuing global supply chain challenges and inflationary environment, partially offset by the positive gross profit impact of increased sales volumes.

Administrative Expenses

For the three months ended December 31, 2023, administrative expenses increased by $3.0 million, from $10.0 million for the three months ended December 31, 2022, to $13.0 million for the three months ended December 31, 2023. Administrative expenses for the three months ended December 31, 2023 included $1.4 million of non-cash share-based compensation, compared to $2.1 million for the three months ended December 31, 2022. Excluding the impact of non-cash share-based compensation, administrative expenses increased from $7.9 million for the three months ended December 31, 2022, to $11.6 million for the three months ended December 31, 2023. The increase was mainly due to an increase in expenses, including higher headcount, resulting from the expansion of Lion’s head office and general corporate capabilities.

Selling Expenses

For the three months ended December 31, 2023, selling expenses decreased by $2.5 million, from $5.6 million for the three months ended December 31, 2022, to $3.1 million for the three months ended December 31, 2023. Selling expenses for the three months ended December 31, 2023 included a recovery of $1.0 million of non-cash share-based compensation, compared to a charge of $0.4 million for the three months ended December 31, 2022. Excluding the impact of non-cash share-based compensation, selling expenses decreased from $5.2 million for the three months ended December 31, 2022, to $4.1 million for the three months ended December 31, 2023. The decrease was primarily due to streamlined selling related expenses and lower marketing costs, partially offset by higher sales commissions related to higher revenue.

29

Restructuring Costs

Restructuring costs of $1.4 million for the three months ended December 31, 2023 are comprised mainly of severance costs related to the workforce reduction announced on November 27, 2023. No such restructuring costs were incurred in the three months ended December 31, 2022.

Impairment of Intangible Assets and Property, Plant and Equipment

Impairment of intangible assets and property, plant and equipment of $36.0 million for the three months ended December 31, 2023 relates to the write-down of previously capitalized vehicle development costs and property, plant and equipment which resulted from the Company’s decision to indefinitely delay the start of the commercial production of the LionA and LionM minibuses, as announced on November 7, 2023. No such impairment was recorded in the three months ended December 31, 2022.

Finance Costs (Income)

For the three months ended December 31, 2023, finance costs increased by $7.6 million compared to the corresponding period in the prior year. Finance costs for the three months ended December 31, 2023 were net of $1.8 million of capitalized borrowing costs, compared to $5.1 million for the three months ended December 31, 2022. Excluding the impact of capitalized borrowing costs, finance costs increased by $4.3 million compared to the three months ended December 31, 2022. The increase was driven primarily by higher interest expense on long-term debt, due to higher average debt outstanding during the quarter relating to borrowings made under the Revolving Credit Agreement, the IQ Loan, the SIF Loan, the Finalta-CDPQ Loan Agreement, and the Supplier Credit Facility, interest and accretion expense as well as financing costs related to the Convertible Debentures and Non-Convertible Debentures issued in July 2023, and an increase in interest costs related to lease liabilities, including for the Battery Plant.

Foreign Exchange (Gain) Loss

Foreign exchange gains (loss) for both periods relate primarily to the revaluation of net monetary assets denominated in foreign currencies to the functional currencies of the related Lion entities. For the three months ended December 31, 2023, foreign exchange gain was $2.2 million, compared a loss of $0.6 million in the corresponding period in the prior year, related primarily to the impact of changes in the Canadian dollar relative to the U.S. dollar.

Change in Fair Value of Conversion Options on Convertible Debt Instruments

For the three months ended December 31, 2023, change in fair value of conversion options on convertible debt instruments was a gain of $1.6 million, and was related to the revaluation of the conversion options on the Convertible Debentures issued in July 2023.

Change in Fair Value of Share Warrant Obligations

Change in fair value of share warrant obligations moved from a gain of $15.4 million for the three months ended December 31, 2022, to a gain of $9.1 million, for the three months ended December 31, 2023. The gain for the three months ended December 31, 2023, was related to the Specific Customer Warrants, the public and private Business Combination Warrants, the 2022 Warrants, and the July 2023 Warrants, and resulted mainly from the decrease in the market price of Lion equity as compared to the previous valuations.

Net Loss

The net loss for the three months ended December 31, 2023 as compared to the net loss for the corresponding prior period is higher as it includes the impacts of the inventory write-down and the impairment charge related to the delay of start of commercial production of the LionA and LionM minibuses, and it reflects higher administrative and selling expenses and finance costs, and lower gains related to non-cash decrease in the fair value of share warrant obligations, as compared to the comparative period in the prior year.

30

Summary of Quarterly Results

The table below sets forth certain summarized unaudited quarterly financial data for the eight most recently completed quarters. This quarterly information has been prepared in accordance with IFRS. The operating results for any quarter are not necessarily indicative of the results to be expected for any future period.

For the three months ended (amounts in thousands, except per share amounts or otherwise indicated) - Unaudited	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022
Revenue	$60,429	$80,348	$58,016	$54,703	$46,769	$40,978	$29,521	$22,647
Net earnings (loss)	$(56,543)	$(19,853)	$(11,788)	$(15,583)	$(4,638)	$(17,200)	$37,511	$2,102
Net earnings (loss) per share
Basic	(0.25)	(0.09)	(0.05)	(0.07)	(0.02)	(0.09)	0.20	0.01
Diluted	(0.25)	(0.09)	(0.05)	(0.07)	(0.02)	(0.09)	0.19	0.01
Weighted average number of shares outstanding (in thousands)
Basic	226,185	226,134	224,068	220,778	200,557	191,792	190,003	190,003
Diluted	226,185	226,134	224,068	220,778	200,557	191,792	196,667	198,499

See “Seasonality” in section 11.0 of this MD&A entitled “Key Factors Affecting Lion’s Performance.”

31

Reconciliation of Adjusted Gross Profit (Loss) and Adjusted Gross Margin

The following table reconciles gross profit (loss) and gross margin to Adjusted gross profit (loss) and Adjusted gross margin for the three months ended December 2023 and 2022, and the years ended December 31, 2023, 2022 and 2021:

	Three months ended December 31,		Year ended December 31,
	2023	2022	2023	2022	2021
	(in thousands)		(in thousands)
Revenue	$60,429	$46,769	$253,496	$139,914	$57,710
Cost of sales	$69,480	$51,533	$259,020	$152,862	$57,665
Gross profit (loss)	$(9,051)	$(4,765)	$(5,524)	$(12,947)	$45
Inventory write-down related to the delay of start of commercial production of LionA and LionM minibuses (1)	$9,809	$—	$9,809	$—	$—
Adjusted gross profit (loss)	$758	$(4,765)	$4,285	$(12,947)	$45
Gross margin	(15.0)%	(10.2)%	(2.2)%	(9.3)%	0.1%
Adjusted gross margin	1.3%	(10.2)%	1.7%	(9.3)%	0.1%

(1)During the fourth quarter of fiscal 2023, the Company decided to indefinitely delay the start of commercial production of the LionA all-electric mini school bus, which is designed for school transportation and to accommodate passengers with special needs, with a capacity of up to 24 passengers. Such decision has also delayed the start of commercial production of the LionM model, an all-electric minibus designed to be used for paratransit or as a standard shuttle bus, and which leverages the same platform as the LionA. The decision was made to prioritize the commercial production of its other products (including the Lion8T) and the integration of Lion batteries to its existing vehicles.

32

Reconciliation of Adjusted EBITDA

The following table reconciles net earnings (loss) to Adjusted EBITDA for the three months ended December 31, 2023 and 2022, and the years ended December 31, 2023, 2022 and 2021:

	Three months ended December 31,		Year ended December 31,
	2023	2022	2023	2022	2021
	(in thousands)		(in thousands)
Revenue	$60,429	$46,769	$253,496	$139,914	$57,710
Net earnings (loss)	$(56,543)	$(4,638)	$(103,766)	$17,776	$(43,325)
Restructuring costs(1)	$1,426	$—	$1,426	$—	$—
Impairment of intangible assets and property, plant and equipment(2)	$35,998	$—	$35,998	$—	$—
Inventory write-down related to the delay of start of commercial production of LionA and LionM minibuses(3)	$9,809	$—	$9,809	$—	$—
Finance costs	$6,743	$(891)	$17,892	$955	$8,332
Depreciation and amortization	$8,359	$3,724	$26,075	$11,492	$5,260
Share-based compensation(4)	$409	$2,522	$5,204	$12,362	$71,081
Change in fair value of conversion options on convertible debt instruments(5)	$(1,626)	$—	$(4,982)	$—	$—
Change in fair value of share warrant obligations(6)	$(9,052)	$(15,434)	$(20,963)	$(101,468)	$(85,796)
Foreign exchange loss (gain)(7)	$(2,155)	$559	$(2,260)	$1,973	$1,037
Transaction and other non-recurring expenses(8)	$312	$245	$1,262	$2,140	$15,815
Adjusted EBITDA	$(6,320)	$(13,915)	$(34,305)	$(54,770)	$(27,596)

(1)Represents the restructuring costs (mainly severance costs) recognized in connection with workforce reduction announced on November 27, 2023, as described in note 17 to the annual audited consolidated financial statements as at December 31, 2023 and for the years ended December 31, 2023, and 2022. See also “Workforce Reduction” in section 8.0 of this MD&A entitled “Operational Highlights.”

(2)Represents impairment of previously capitalized vehicle development costs and property, plant and equipment related to the LionA and LionM minibuses for which the Company made the decision to indefinitely delay of the start of commercial production, as announced on November 7, 2023, as described in Notes 6 and 8 to the annual audited consolidated financial statements as at December 31, 2023 and for the years ended December 31, 2023, and 2022.

(3)Represents the write-down of inventory to net realizable value as a result of the decision to indefinitely delay the start of commercial production of the LionA and LionM minibuses as described in Note 5 to the annual audited consolidated financial statements as at December 31, 2023 and for the years ended December 31, 2023, and 2022.

(4)Represents non-cash expenses recognized in connection with the issuance of stock options, restricted share units, and deferred share units issued under Lion's omnibus incentive plan as described in Note 16 to the annual audited consolidated financial statements as at December 31, 2023 and for the years ended December 31, 2023, and 2022.

(5)Represents non-cash change in the fair value of the conversion options on convertible debt instruments as described in Note 13 to the annual audited consolidated financial statements as at December 31, 2023 and for the years ended December 31, 2023, and 2022.

(6)Represents non-cash change in the fair value of the share warrant obligations as described in Note 14 to the annual audited consolidated financial statements as at December 31, 2023 and for the years ended December 31, 2023, and 2022.

(7)Represents losses (gains) relating to foreign exchange translation.

(8)For the years ended December 31, 2023, and 2022, represents non-recurring professional, legal and consulting fees.

33

14.0     Financial Position

The following table sets out selected information related to the financial position of Lion as of December 31, 2023 and December 31, 2022 as well as explanations for variations:

dollar amounts in thousands - unaudited	Dec 31, 2023	Dec 31, 2022	Variation	Explanation of Variation
	$	$
Cash	29,893	88,267	(58,374)	See section 16.0 of this MD&A entitled "Liquidity and Capital Resources"
Inventories	249,607	167,192	82,415	Mainly due to higher volumes of raw materials, work in process and finished goods inventories in line with the Company's ramp-up of manufacturing activities, as well as the impact of delays in the processing and granting of subsidies, which resulted in the postponement of deliveries of vehicles which were ready for delivery, partially offset by the write-down of inventory related to the delay of start of commercial production of the LionA and LionM minibuses.
Accounts receivable	75,642	62,972	12,670	Mainly due to higher sales volumes in fiscal 2023 as compared to fiscal 2022.
Current assets	356,695	323,498	33,197	Mainly due to lower cash offset by increases in inventories and accounts receivable as explained above.
Property, plant and equipment	198,537	160,756	37,780	Mainly due to spending related to the Joliet Facility and Lion Campus projects as described in section 8.0 of this MD&A entitled “Operational Highlights'' partially offset the sale of the Battery Plant building and depreciation.
Right-of-use assets	89,663	60,508	29,155	Mainly due to the addition related to the Battery Plant building lease and the manufacturing equipment lease in Joliet, partially offset by depreciation.
Intangible assets	175,703	151,364	24,339	Mainly due to development costs capitalized related to enhancing existing vehicles and features, developing additional purpose-built electric vehicle platforms and continuing to develop battery systems, partially offset by amortization and impairment related to delay of the start of production of the LionA and LionM minibuses.
Total assets(1)	841,121	710,411	130,710	Mainly due to factors explained above
Trade and other payables	92,425	75,222	17,203	Mainly due to the increase in purchases of raw materials, property, plant and equipment, and intangible assets, and a higher allowance for warranties.
Deferred revenue and other deferred liabilities	18,267	635	17,632	Mainly due to deferred revenue related to initial upfront rebate payments from the EPA Clean School Bus Program
Current liabilities	145,733	81,092	64,641	Mainly due to higher trade and other payables mainly resulting from the ramp-up of manufacturing activities, deferred revenues related to initial upfront rebate payments from the EPA, and the classification of the Finalta-CDPQ Loan Agreement as current due to its November 2024 maturity date.
Lease liabilities	83,972	58,310	25,662	Mainly due to the addition related to the Battery Plant building lease and the manufacturing equipment lease in Joliet, partially offset by lease payments

34

Non-current financial liabilities(2)	252,502	133,892	118,610	Mainly due to the Convertible Debentures, the conversion options on convertible debt instruments, the Non-Convertible Debentures, and the July 2023 Warrants issued as part of the 2023 Debenture Financing, the issuance of 2022 Warrants through the exercise of the over-allotment option, and higher debt outstanding related to the SIF Loan, the IQ Loan and the Supplier Credit Facility, partially offset by classification of the Finalta-CDPQ Loan Agreement as current due to its November 2024 maturity date, and the impact of the market price of Lion equity as compared to the previous valuations of outstanding share warrant obligations.
Non-current liabilities	336,474	192,202	144,272	Mainly due to factors explained above
Total liabilities	482,207	273,294	208,913	Mainly due to factors explained above
Total shareholders’ equity	358,914	437,117	(78,203)	Due to net proceeds from the December 2022 Offering through the exercise of the over-allotment option, the issuance of common shares under the ATM Program, share-based compensation expense, foreign currency translation adjustment, more than fully offset by the net loss for the year ended December 31, 2023.

(1)    Total assets were $590.6 million as at December 31, 2021.

(2)    Represents financial liabilities related to long-term debt, convertible debt instruments, and share warrant obligations. Non-current financial liabilities were $106.3 million as at December 31, 2021.

15.0     Cash Flows

The following table provides a summary of Lion’s operating, investing, and financing cash flows for the years ended December 31, 2023, 2022 and 2021:

	(Unaudited)
	Three months ended		Year ended
	December 31, 2023	December 31, 2022	December 31, 2023	December 31, 2022	December 31, 2021
	(in thousands)		(in thousands)
Cash flows used in operating activities	$(23,790)	$(30,606)	$(110,036)	$(119,553)	$(130,969)
Cash flows used in investing activities	$(27,150)	$(57,221)	$(123,506)	$(204,607)	$(62,599)
Cash flows from financing activities	$45,509	$108,852	$175,454	$172,802	$434,697
Effect of exchange rate changes on cash held in foreign currency	$(344)	$629	$(286)	$(2,078)	$663
Net decrease in cash	$(5,776)	$21,654	$(58,374)	$(153,435)	$241,793
Cash, end of year	$29,893	$88,267	$29,893	$88,267	$241,702

Cash Flows Used in Operating Activities

For the year ended December 31, 2023, cash flows used in operating activities was $110.0 million, and was composed of Lion’s net loss of $103.8 million driven by the factors discussed in section 13.0 of this MD&A, entitled "Results of Operations", and by net changes in non-cash working capital of $58.0 million, partially offset by net non-cash items of $55.5 million. Non-cash items were mainly composed of $26.1 million for depreciation and amortization, $5.7 million for accretion expense on the Convertible Debentures and the Non-Convertible Debentures, and $5.2 million for share-based compensation

35

expense, partially offset by the $21.0 million gain related to the change in fair value of share warrant obligations and the $5.0 million gain related to the change in fair value of conversion options on convertible debt instruments. The increase in non-cash working capital was primarily driven by increases in inventories and accounts receivable, partially offset by increases in trade and other payables and by initial upfront rebate payments received from the EPA.

For the year ended December 31, 2022, cash flows used in operating activities was $119.6 million, and was composed of Lion’s net earnings of $17.8 million driven by the factors discussed in section 13.0 of this MD&A, entitled "Results of Operations," net changes in non-cash working capital of $59.0 million, and net non-cash items of $78.4 million. Non-cash items were mainly composed of the $101.5 million gain related to the change in fair value of share warrant obligations, partially offset by $12.4 million for share-based compensation expense and $11.5 million for depreciation and amortization. The increase in non-cash working capital was primarily driven by increases in inventories and accounts receivable, partially offset by increases in trade and other payables.

Cash Flows Used in Investing Activities

Cash flows used in investing activities primarily relates to capitalized development costs for vehicles and battery systems, capital expenditures for equipment and machinery, leasehold improvements, and office furniture as Lion invested in its business infrastructure and made progress with the ramp-up of its manufacturing operations. Acquisitions of property, plant and equipment for the year ended December 31, 2023, and the year ended December 31, 2022, related primarily to the Joliet Facility and Lion Campus, as well as the ramp-up of Lion's current manufacturing operations. The majority of the additions to intangible assets were related to capitalized development costs for vehicles and battery systems.

For the year ended December 31, 2023, cash flows used in investing activities related to capital expenditures of $78.3 million and the addition of intangible assets of $75.2 million, partially offset by net proceeds of $20.5 million received as part of sale and leaseback of the Battery Plant building. In addition, the Company received government assistance of $9.5 million relating to vehicle development projects and the government grant portion of the SIF Loan.

For the year ended December 31, 2022, cash flows used in investing activities related to capital expenditures of $129.6 million and the addition of intangible assets of $78.3 million, partially offset by government assistance of $3.2 million relating to the government grant portion of the SIF Loan.

Cash Flows from Financing Activities

Cash flows from financing activities were $175.5 million for the year ended December 31, 2023 and were primarily due to proceeds of $142.9 million from the 2023 Debenture Financing (gross of the of $3.8 million for finance costs attributable to the conversion option on the convertible debt and the share warrants issued with the non-convertible debt), borrowings of $21.5 million in the aggregate made under the SIF Loan and IQ Loan, the exercise of the over-allotment option of the December 2022 Offering of $7.1 million, net proceeds from the issuance of common shares under the Company's ATM Program of $8.6 million, and proceeds of $4.4 million from the Supplier Credit Facility (as defined below), partially offset by net repayments of $2.5 million under the Revolving Credit Agreement and the repayment of lease liabilities of $6.5 million. See section 16.0 entitled "Liquidity and Capital Resources".

Cash flows from financing activities were $172.8 million for the year ended December 31, 2022 and was primarily due to net proceeds relating to the December 2022 Offering of $47.2 million, borrowings made under the Revolving Credit Agreement in the amount of $71.9 million, and borrowings made under the IQ Loan and the SIF Loan in the aggregate amount of $16.6 million (net of $3.2 million recorded as a government grant related to investments at the Lion Campus), borrowings made under the Finalta-CDPQ Loan Agreement of $22.2 million, and net proceeds from the issuance of common shares under the Company's ATM program of $29.4 million, partially offset by the repayment of the Previous Finalta Credit Facilities (as defined below) in the amount of $9.8 million, and repayment of lease liabilities of $5.0 million. See section 16.0 entitled "Liquidity and Capital Resources".

36

16.0     Liquidity and Capital Resources

Liquidity and Capital Management

As of December 31, 2023, Lion had a cash balance of $29.9 million ($88.3 million as at December 31, 2022). Lion incurred an operating loss of $114.1 million for the year ended December 31, 2023, of which $36.0 million related to impairment of intangible assets and property, plant and equipment $9.8 million for the write-down of inventory related to the decision to indefinitely delay the start of commercial production of the LionA and LionM minibuses, $5.2 million related to non-cash share-based compensation, and an operating loss of $80.8 million for the year ended December 31, 2022, of which $12.4 million related to non-cash share-based compensation. Further, the Company had negative cash flows from operating activities of $110.0 million and of $119.6 million in each of the years ended December 31, 2023, and 2022, respectively. These operating losses and negative cash flows were mainly the result of the substantial investments made by the Company to grow its business and scale its manufacturing operations. While the material capital expenditures relating to the Joliet Facility and the Lion Campus were, as previously disclosed, completed in fiscal 2022 and 2023 and the Company expects that its capital expenditures (additions to property, plant and equipment) for fiscal 2024 will relate mostly to its ongoing operations and be less than $10 million, the Company will continue to be required to incur operational expenditures in the future, more particularly if and when it accelerates its production cadence. Such expenditures, which could be significant, will be largely impacted by the production cadence, which, in turn, will be dependent upon a variety of factors, including, to a larger extent, the demand for the Company's products as well as the economic environment and the Company's liquidity profile, all of which have been and will continue to be reassessed by management on a continuous basis. See section 8.0 of this MD&A entitled “Operational Highlights.” As a result, despite its continuous efforts to achieve profitability and implement various initiatives to improve its performance, the Company may continue to incur operating losses and have negative cash flows in the short term. Lion’s primary sources of liquidity used in the funding of its operations and the execution of its growth strategy (which includes the ramp-up of manufacturing capacity at its manufacturing facilities) are currently its cash on hand, including funds raised under prior financing transactions such as the 2023 Debenture Financing, cash it generates from the sale of its products and services, its working capital (defined as accounts receivable and inventories, less trade and other payables), funds available under its existing credit facilities and other borrowings, and debt capital as described in the section entitled “Capital Resources” below.

Lion manages its liquidity risk through cash flow forecasting. Management monitors forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet its operational needs through maintaining sufficient cash and/or availability under its sources of liquidity, including its credit facilities and other borrowings. Such forecasting involves a significant degree of judgment and takes into consideration the Company’s current liquidity level, its current and projected performance, its cash collection efforts and the terms and conditions of the Company’s financing instruments, including required covenant compliance. There is a risk that such liquidity forecasts may not be achieved and that currently available credit facilities and other borrowings may no longer be available to the Company. In the short term, Lion will continue to closely monitor market conditions and its liquidity and working capital requirements as well as the cadence of its operational and other expenditures and, in parallel, evaluate different opportunities that may enable it to strengthen its financial position and continue to pursue its business strategy. Over the past few months, Lion has implemented a number of cost reduction measures, which included certain workforce reductions and other operational initiatives aimed at optimizing its production cadence with demand. In the future, Lion expects to continue to evaluate other measures and initiatives that may become available to it. Notably, in fiscal 2024, Lion also expects to implement various initiatives aimed at reducing its vehicle and battery development costs and its inventory level, with the objective of reducing its annual vehicle and battery development costs by up to 30% as compared to fiscal 2023 and reducing its inventory levels by up to $50 to $75 million as compared to the level that existed as at the end of fiscal 2023. That being said, the implementation of the foregoing initiatives will be subject to a number of risks and uncertainties and there can be no assurance that Lion will be able to successfully implement, in full or in part, such measures or initiatives, including as they relate to the reduction of vehicle and battery development costs and inventory level. With respect to financing opportunities, while the Company has

37

been successful in securing financing in the past, including through private or public issuance of equity or other form of equity-related or debt securities or through obtaining credit from government or financial institutions, the availability of additional funds to Lion will depend on a variety of factors, some of which are outside of its control, including dynamics impacting the industries in which Lion operates, and the fact that Lion has raised substantial amounts of capital in the past. Additional funds may not be available to Lion on commercially reasonable terms or at all, when needed. See section 23.0 of this MD&A entitled “Risk Factors”.

Capital Resources

Convertible Debentures

The Convertible Debentures, with a principal amount of approximately $74 million bear interest at the rate of 13% per annum, compounded monthly on the last day of each month. Prior to any accrual date, the Company has the right, at its discretion, to make an election to pay interest accrued on the principal for the applicable month in cash (in which case any interest so paid shall not be compounded).

The Convertible Debentures will mature on July 19, 2028, and are convertible at the holders’ option into Common Shares at a conversion price of $2.58 per Common Share. The conversion price is subject to customary adjustments, including for share splits or consolidation, share dividends, rights offerings, asset or other distributions and above market repurchases of shares (including above market exchanges or tender offers), in each case in compliance with the rules and requirements of the TSX relating to anti-dilution mechanisms.

The Convertible Debentures contain customary covenants and events of default for an instrument of its nature, including covenants relating to compliance with the financial ratios and negative covenants included in the Revolving Credit Agreement (as defined below) (provided (i) that any amendment to the financial ratios to which the lenders under the Revolving Credit Agreement consent will automatically be incorporated in the Convertible Debentures, and (ii) that a default shall only occur under the Convertible Debentures if a financial ratio default occurs and is continuing on the date that is fifteen business days following the delivery of the Company's financial statements evidencing such event of default, and only if the lenders under the Revolving Credit Agreement have not waived or tolerated such event of default before the expiry of this fifteen business day period). The Convertible Debentures also include certain covenants relating to maintaining the current headquarters, employees and facilities of the Company in the province of Quebec and certain covenants limiting the incurrence of capital expenditures over the term of the Convertible Debentures, including limits on capital expenditures towards increasing production capacity at the Company’s manufacturing facilities beyond certain capacity as well as limits on the incurrence of maintenance and other capital expenditures.

The Convertible Debentures contain customary events of default for an instrument of its nature, including, among other things, the occurrence of an event of default under any other debt of the Company with a principal amount exceeding $15,000,000 if such default results in the acceleration of the amounts owed thereunder. Upon the occurrence of an event of default under the Convertible Debentures or, if later, at the expiry of any agreed-upon period for curing an event of default, as the case may be, holders of Convertible Debentures will have the right, upon giving written notice to the Company, to (i) require the Company to redeem all of their Convertible Debentures, or (ii) require that the principal amount of the Convertible Debentures, plus any accrued, compounded and unpaid interest, be converted into Common Shares, with the number of Common Shares issuable upon such conversion being subject to a grid-based “make-whole” adjustment as set forth below.

Upon the occurrence of a “fundamental change”, including a change of control of the Company or the Company failing to comply with the covenants to maintain the current headquarters, employees and facilities of the Company in the province of Quebec, holders of Convertible Debentures will either (i) convert all of their Convertible Debentures, with the number of Common Shares issuable upon such conversion being subject to a grid-based “make-whole” adjustment, or (ii) require the Company to

38

repurchase for cash all of their Convertible Debentures at a repurchase price equal to 150% of the principal amount and the accrued, compounded and unpaid interest.

In the event holders of Convertible Debentures elect to convert their Convertible Debentures upon a fundamental change or an event of default, the number of Common Shares issuable upon such conversion will be subject to a grid-based “make-whole” adjustment pursuant to which the conversion rate determining the number of Common Shares issuable will be increased by a number of Additional Shares, (i) in the case of a conversion in connection with a fundamental change, based on a reference price on the date on which the fundamental change occurs or becomes effective, or (ii) in the case of a conversion following an event of default, based on a reference price on the date on which the holder exercises its conversion right.

In connection with the Financing, the Company issued 258,155 Closing Fee Shares to the holders of Convertible Debentures, representing 0.75% of the principal amount of Convertible Debentures.

Non-Convertible Debentures

The Non-Convertible Debentures with a principal amount of C$90.9 million (approximately $68 million) bear interest at the rate of 11% per annum and are payable in cash quarterly. The Non-Convertible Debentures will mature on July 19, 2028. The Company will have the right, at any time after January 19, 2024, upon 30-day notice, to redeem all or part of the principal amount thereunder, without penalty, at a price equal to one hundred per cent (100%) of the principal amount so redeemed, plus accrued and unpaid interest on the principal amount so repaid, accruing to the date of such redemption.

The Non-Convertible Debentures contain customary covenants for an instrument of its nature, including covenants relating to compliance with the financial ratios and negative covenants included in the Revolving Credit Agreement (as defined below) (provided (i) that any amendment to the financial ratios to which the lenders under the Revolving Credit Agreement consent will automatically be incorporated in the Non-Convertible Debentures, and (ii) that a default shall only occur under the Non-Convertible Debentures if a financial ratio default occurs and is continuing on the date that is fifteen business days following the delivery of the Company's financial statements evidencing such event of default, and only if the lenders under the Revolving Credit Agreement have not waived or tolerated such event of default before the expiry of this fifteen business day period), in addition to certain covenants relating to maintaining the current headquarters, employees and facilities of the Company in the province of Quebec.

The Non-Convertible Debentures contain customary events of default for an instrument of its nature, including, among other things, (i) the occurrence of an event of default under the Revolving Credit Agreement if such default results in the acceleration of the payments owed thereunder and (ii) the occurrence of an event of default under any other debt instrument of the Company with a principal amount exceeding $15,000,000 if such default permits the acceleration of the payment of such debt.

The Non-Convertible Debentures constitute senior secured obligations of the Company and are secured by a hypothec and other liens on substantially all of the Company’s and certain of its subsidiaries’ movable/personal property as well as on the immovable/real rights related to the Company’s innovation center facility located in Mirabel, Quebec and guaranteed by such subsidiaries.

July 2023 Warrants

In connection with the 2023 Debenture Financing, the Company issued July 2023 Warrants to holders of Non-Convertible Debentures entitling them to purchase, at any time after six (6) months following the issuance thereof until July 19, 2028, 22,500,000 Common Shares in the aggregate at an exercise price of C$2.81 per Common Share. The exercise price of the July 2023 Warrants is subject to customary adjustments, including for share splits or consolidation, share dividends, rights offerings, asset or other distributions and above market repurchases of shares (including above market exchanges or tender offers), in each case in compliance with the rules and requirements of the TSX relating to anti-dilution mechanisms.

39

Upon a change of control of the Company, the Company will have the right to redeem and cancel all of the outstanding July 2023 Warrants for a cash purchase price based on the remaining term of the July 2023 Warrants and the value of the consideration offered or payable per Common Share in the transaction constituting the change of control. In addition, upon a change of control of the Company resulting in (or which is reasonably anticipated to result in) the Common Shares ceasing to be listed on a stock exchange, the holders of July 2023 Warrants may require the Company to redeem and cancel all July 2023 Warrants at the Redemption Price subject to and on the date such transaction resulting in a change of control is completed.

December 2022 Unit Offering

On December 16, 2022, the Company closed the “December 2022 Offering”, pursuant to which the Company issued 19,685,040 units (each, a ''Unit'') at a price of $2.54 per Unit. Each Unit consisted of one Common Share and one 2022 Warrant. Each whole 2022 Warrant entitles the holder thereof to acquire one Common Share at an exercise price of $2.80 per share for a period of five years ending on December 15, 2027, subject to adjustment in certain customary events. On January 17, 2023, the Company announced full exercise and closing of the underwriters’ over-allotment option, which resulted in the Company issuing and selling to the underwriters 2,952,755 additional Units at a price of $2.54 per Unit. The December 2022 Offering resulted in aggregate gross proceeds to the Company of approximately $57.5 million, or net proceeds of $52.3 million after deducting underwriting commissions of approximately $2.9 million and other offering costs (including legal expenses) relating to the December 2022 Offering. The 2022 Warrants are trading on the NYSE under the symbol “LEV WS.A” and on the TSX under the symbol “LEV.WT.A.”

Please refer to section 17.0 of this MD&A entitled “Use of Proceeds from Public Offerings” for additional details regarding the use of proceeds from the December 2022 Offering.

ATM Program

On June 17, 2022, the Company established an ATM program (the "ATM Program") that allowed the Company to issue and sell, from time to time through a syndicate of agents, newly issued common shares of the Company, for an aggregate offering amount of up to $125 million (or the Canadian dollar equivalent).

In connection with the 2023 Debenture Financing closed on July 19, 2023, the Company terminated its ATM Program which was set to expire in July 2024 and will therefore no longer make any sales thereunder.

Please refer to section 17.0 of this MD&A entitled “Use of Proceeds from Public Offerings” for additional details regarding the use of proceeds from the ATM Program.

Credit Agreement with Banking Syndicate

Lion is a party to a credit agreement (the “Revolving Credit Agreement”) which was entered into on August 11, 2021 with a syndicate of lenders represented by National Bank of Canada, as administrative agent and collateral agent, and including Bank of Montreal and Federation des Caisses Desjardins du Quebec, as amended on January 25, 2022, to increase the maximum principal amount that may become available from time to time under the revolving credit facility, subject to the borrowing base and compliance with the covenants contained under the Revolving Credit Agreement, from $100,000,000 to $200,000,000. The Revolving Credit Agreement was further amended on July 19, 2023 (the "July 2023 Amendment") to permit the incurrence of the 2023 Debenture Financing, extend the maturity of the Revolving Credit Agreement by one year to August 11, 2025, and provide for an availability block and the establishment of an interest reserve account.

The credit facility under the Revolving Credit Agreement is available for use to finance working capital and for other general corporate purposes, and available to be drawn subject to a borrowing base comprised of eligible accounts (including insured or investment grade accounts) and eligible inventory, in

40

each case, subject to customary eligibility and exclusionary criteria, advance rates and reserves. The credit facility under the Revolving Credit Agreement currently bears interest at a floating rate by reference to the Canadian prime rate or pursuant to banker’s acceptance based on the CDOR rate, if in Canadian dollars, or the U.S. base rate or Term Secured Overnight Financing Rate ("SOFR"), if in U.S. dollars, as applicable, plus the relevant applicable margin. The Revolving Credit Agreement matures on August 11, 2025. The obligations under the Revolving Credit Agreement are secured by a first priority security interest, hypothec and lien on substantially all of Lion’s and certain of its subsidiaries’ movable property and assets (subject to certain exceptions and limitations). The Revolving Credit Agreement includes certain customary affirmative covenants, restrictions and negative covenants on Lion’s and its subsidiaries’ activities, subject to certain exceptions, baskets and thresholds. The Revolving Credit Agreement also provides for customary events of default, in each case, subject to customary grace periods, baskets and materiality thresholds. Finally, the Revolving Credit Agreement also requires Lion to maintain certain financial ratios and namely, an all times tangible net worth test and a springing fixed charge coverage ratio based on a minimum availability test which may, from time to time, impact the maximum amount available under the revolving credit facility. Further, in accordance with the July 2023 Amendment, the amount available under the revolving credit facility provided under the Revolving Credit Agreement is subject to an availability block of C$10,000,000 which, upon availability dropping below 30% and so long as no default then exist or would result therefrom, may become available and be drawn to fund an interest reserve account to be made subject to the control of the administrative agent and collateral agent under the Revolving Credit Agreement. Such interest reserve account amounts can be used to pay interest under the Non-Convertible Debentures if no default or event of default shall have occurred and be continuing or shall result therefrom.

As at December 31, 2023, $70.0 million was drawn under the Revolving Credit Agreement, at weighted average all-in interest rate of 6.96%. As of the same date, the Company estimates that the total borrowing base under the Revolving Credit Agreement corresponded to approximately $153 million, which translated, after the application of the 12.5% minimum availability test related to a springing fixed charge coverage ratio, in a total remaining availability of approximately $63 million. For further details regarding the terms and conditions of the Revolving Credit Agreement, please refer to the copy of the Revolving Credit Agreement which has been made available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.

Financing Agreement with Investissement Quebec

On July 1, 2021, the Company entered into an interest-bearing secured loan agreement with Investissement Quebec (the “IQ Loan”) relating to the construction of the Lion Campus. The IQ Loan provides for financing of up to C$50,000,000. On July 19, 2023, in connection with the 2023 Debenture Financing, the IQ Loan was amended (the “IQ Loan 2023 Amendment”) to allow holders of the Non-Convertible Debentures to benefit from a second-priority hypothec on substantially all movable/personal property of the Company, subject to certain exceptions in regards to excluded assets, and a first-rank hypothec on each of the immovable/real rights related to the Company’s Innovation Center facility located in Mirabel, Quebec and battery factory equipment financed by Investissement Quebec.

As part of the IQ Loan 2023 Amendment, the potential forgiveness of up to 30% of the IQ Loan subject to certain criteria tied to the Company and to the operations of the facilities, including the creation and maintenance of workforce and certain minimum spending related to R&D activities was replaced with certain financial penalties of up to C$3,000,000 and/or C$15,000,000 for the Company, pro-rated based on the proportion of criteria achieved and the borrowing amount relative to the C$50,000,000 maximum. Funds will be provided to the Company by way of reimbursement of a predetermined percentage of qualified expenditures incurred by the Company, such that the ultimate amount to be received by the Company from Investissement Quebec is dependent upon qualified expenditures being made by the Company in connection with the Lion Campus. The Company will conduct work, incur expenses and fund all costs from its own capital resources, and then submit claims to Investissement Quebec for reimbursement of a predetermined percentage of eligible qualified expenditures up to C$50,000,000. Disbursement by Investissement Quebec is conditional upon, among other things, the Company's

41

compliance with certain affirmative and negative covenants as set out in the IQ Loan, including covenants relating to Company's creation and maintenance of workforce, operations and R&D activities.

The IQ Loan bears interest at a fixed rate of 4.41%, and will be repayable over a ten-year term, beginning in June 2027. The IQ Loan contains certain affirmative and negative covenants, including covenants relating to the Company’s workforce, operations and R&D activities and to the location of its head office in the Province of Quebec, as well as certain financial covenants. Following the IQ Loan 2023 Amendment and the purchase of the equipment used in the battery factory of the Company, the obligations under the IQ Loan are secured by a second-priority hypothec on the Company's immovable (real) property rights related to the Innovation Center facility located on the Lion Campus and the equipment used in connection with the battery factory of the Company, and a hypothec on substantially all of the Company’s other movable property and assets (subject to certain exceptions and limitations in regards to excluded assets) ranking after those securing the Revolving Credit Agreement, the Non-Convertible Debentures and the Finalta-CDPQ Loan Agreement. As at December 31, 2023, $23.6 million was drawn under the IQ Loan.

Financing Agreement with Strategic Innovation Fund (SIF) of the Government of Canada

On August 19, 2021, the Company entered into an unsecured non-interest bearing loan agreement with the Strategic Innovation Fund of the Government of Canada relating to the construction of the Lion Campus (the “SIF Loan”). The SIF Loan provides for financing of up to C$49,950,000, of which up to 30% is expected to be forgiven subject to certain criteria tied to the Company and to the operations of the facilities, including the creation and maintenance of workforce and certain minimum spending related to R&D activities. Funds will be provided to the Company by way of reimbursement of a predetermined percentage of qualified expenditures incurred by the Company, such that the ultimate amount to be received by the Company from the SIF is dependent upon qualified expenditures being made by the Company in connection with the Lion Campus. The Company will conduct work, incur expenses and fund all costs from its own capital resources, and then submit claims to the SIF for reimbursement of a predetermined percentage of eligible qualified expenditures up to C$49,950,000. Disbursement by the SIF is conditional upon, among other things, the Company's compliance with certain affirmative and negative covenants as set out in the SIF Loan, including covenants relating to Company's creation and maintenance of workforce, operations and R&D activities.

The SIF Loan is repayable over a 15-year term beginning in April 2026. The SIF Loan contains certain affirmative and negative covenants, including relating to the Company’s workforce, operations and R&D activities and to the location of its head office. As at December 31, 2023, $22.0 million was drawn under the SIF Loan, of which $15.1 million was recorded as long-term debt.

Finalta-CDPQ Loan Agreement

On November 8, 2022, Lion entered into the Finalta-CDPQ Loan Agreement with Finalta, as lender and administrative agent, and Caisse de dépôt et placement du Quebec (through one of its subsidiaries), as lender, to finance certain refundable tax credits and grants under government programs. The Finalta-CDPQ Loan Agreement provides for a loan facility of up to a principal amount of C$30 million ($22.2 million) and bears interest at the rate of 10.95% per annum. The obligations thereunder are secured by a first priority security interest, hypothec and lien in certain tax credits and government grants and a subordinate security interest, hypothec and lien in substantially all other movable property and assets. The Finalta-CDPQ Loan Agreement matures on November 6, 2024. The Finalta-CDPQ Loan Agreement includes certain customary restrictions and negative covenants on Lion’s and its subsidiaries’ activities, subject to certain exceptions, baskets, and thresholds. The Finalta-CDPQ Loan Agreement also provides for customary events of default, in each case, subject to customary grace periods, baskets and materiality thresholds. Upon the occurrence and during the continuance of an event of default, the lenders would be entitled to demand the immediate repayment of all amounts owing to them under the Finalta-CDPQ Loan Agreement and/or the lenders may exercise their other rights, remedies and/or recourses. As of December 31, 2023, $22.7 million (C$30 million) was drawn under the Finalta-CDPQ Loan Agreement.

42

Equipment Financing

On September 27, 2022, Lion entered into a lease financing agreement with BMO Harris Bank N.A. to finance a portion of the purchase of the Company's automated guided vehicles (AGVs) for the Joliet Facility. The lease financing is for a maximum principal amount of $10 million and bears interest at a rate of 6.4% per year. It also provides for a five-year lease term beginning in 2023 and it includes an early purchase option after year four.

Credit Facility for the Supplier Payment Program

On February 8, 2023, the Company entered into a financing offer with National Bank of Canada with respect to a credit facility (the "Supplier Credit Facility") to finance the Company's accounts payable related to goods or services purchased in the normal course of its operations. The Supplier Credit Facility is insured by Export Development Canada ("EDC") and provides for financing of up to $5,000,000. Each term loan drawn under the Supplier Credit Facility has a period of minimum 30 days and a maximum of 120 days. The Supplier Credit Facility is subject to an annual review and may be cancelled by National Bank of Canada at any time. The Supplier Credit Facility bears interest at a floating rate by reference to SOFR for a comparable period, plus the relevant credit adjustment spread. As at December 31, 2023, $4.4 million was drawn under the Supplier Credit Facility.

Off-Balance Sheet Arrangements

During the periods presented, Lion did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which were established for the purpose of facilitating off-balance sheet arrangements.

Maturity analysis of contractual obligations

Lion enters into contractual obligations that will require it to disburse cash over future periods. In the normal course of business, the Company enters into purchasing agreements with suppliers related to raw material used in the manufacturing of vehicles, including purchase commitments to third-party suppliers related to raw material and components used in the manufacturing of vehicles (including commitments under a four-year supply agreement entered into by Lion in November 2022 for the supply of lithium-ion battery cells). The following table sets forth the contractual undiscounted cash flows and maturity of the Company's significant contractual obligations by period as at December 31, 2023 (amounts in thousands).

	Carrying amount		Undiscounted contractual cash flows	Less than 1 year		Between 1 and 3 years		Between 4 and 5 years		More than 5 years
	$		$	$		$		$		$
Trade and other payables	71,857		71,857	71,857		—		—		—
Long-term debt and other debts(1)	224,942		322,891	37,572		85,120		154,644		45,555
Purchase and other obligations(2)	—	—	72,782	58,682	—	14,100	—	—	—	—
Lease obligations(3)	91,957		133,667	12,903		23,301		25,085		72,379
Total contractual obligations	388,756		601,197	181,013		122,521		179,729		117,934

(1) Represents the amounts outstanding under the Company's long-term debt and other debt (including, as applicable, current portion and interest), and includes, among others, amounts outstanding under the Revolving Credit Agreement, the Convertible Debentures (not taking into account any potential conversion), the Non-Convertible Debentures, the IQ Loan, the SIF Loan (not taking into account any potential forgiveness), and the Finalta-CDPQ Loan Agreement which matures on November 6, 2024 ($22.7 million drawn thereunder as of December 31, 2023).

43

(2) Represents purchase and other obligations and includes, among others, purchase commitments to third party suppliers related to raw material and components used in the manufacturing of vehicles (including commitments under the Cell Supply Agreement). These agreements are usually entered into before production begins and may specify a fixed or variable quantity of material to be purchased, at a fixed or variable price. Due to the uncertainty as to the amount and pricing of material that may be purchased, the Company is generally not able to determine with precision its commitments in connection with these supply agreements. Figures included above under “Purchase and other obligations” have therefore been estimated by management based on the information available as at December 31, 2023. Amounts also include Lion's purchase commitments related to capital expenditures.

(3) Represents lease obligations for the rental of premises and rolling stock and includes, among others, lease obligations under the lease for the Joliet Facility, Battery Plant, and the Saint-Jerome facility.

Disclosure of Outstanding Share Data

As of February 28, 2024, the Company had the following issued and outstanding shares, warrants, convertible debentures, stock options, restricted share units (“RSUs”), and deferred share units ("DSUs"):

•226,215,913 common shares, which are listed on the TSX and on the NYSE under the symbol LEV;

•27,111,323 Business Combination Warrants, which are listed on the TSX and on the NYSE under the symbols "LEV.WT" and “LEV WS,” respectively;

•22,637,795 2022 Warrants, which are listed on the TSX and on the NYSE under the symbols "LEV.WT.A" and “LEV WSA,” respectively;

•22,500,000 July 2023 Warrants, entitling the holder to purchase, until July 19, 2028, 22,500,000 common shares in the aggregate at an exercise price of C$2.81 per common share;

•the Specified Customer Warrant which, if and when fully vested, will be exercisable for up to 35,350,003 common shares upon an exercise on a cash basis (see section 13.0 of this MD&A, entitled “Components of Results of Operations—Change in Fair Value of Share Warrant Obligations”). The portion of the Specified Customer Warrant which was vested as of February 28, 2024, was exercisable for 5,302,511 common shares;

•Convertible Debentures with an aggregate principal amount of $74,005,000, bearing interest at 13% per annum compounded on a monthly basis when not paid in cash (otherwise not compounded), convertible at any time until July 19, 2028 into common shares at a conversion price of $2.58 per common share;

•stock options to purchase 10,759,583 common shares;

•897,240 RSUs and 779,975 DSUs, each of which can be settled in cash and/or in common shares purchased on the open market or issued from treasury, at the discretion of Lion’s Board of Directors.

17.0     Use of Proceeds from Public Offerings

The December 2022 Offering resulted in aggregate net proceeds to the Company of approximately $52.3 million ($45.3 million in December 2022 and $6.8 million in January 2023 as a result of the exercise of the over-allotment option which closed on January 17, 2023). In addition, the Company has raised approximately $38.0 million on a net basis under its ATM Program following the implementation of the Program in June 2022 (including approximately $8.6 million in the year ended December 31, 2023). See “Liquidity and Capital Resources” under section 16.0 of this MD&A entitled “Liquidity and Capital Management.”

As per the disclosure made in the Company’s prospectus supplements dated December 12, 2022 and June 15, 2022, the principal reasons for the sale of securities under the December 2022 Offering and the ATM Program were to increase the Company’s cash balance and financial flexibility, and the net proceeds were intended to be used to strengthen the Company’s financial position, and allow it to continue to pursue its growth strategy, including the Company’s capacity expansion projects in Joliet, Illinois and Mirabel, Quebec.

Since the December 2022 Offering and the establishment of the ATM Program, no changes were made to the intended use of the net proceeds from the December 2022 Offering and the ATM Program described in the Company’s prospectus supplements dated December 12, 2022 and June 15, 2022, and all of the net proceeds were deployed in accordance with such intended use.

44

In connection with the closing of the 2023 Debenture Financing, in July 2023, the Company terminated its ATM Program which was set to expire in July 2024 and will therefore no longer make any sales thereunder.

18.0     Financial Risk Management

Lion's financial instruments, divided into financial assets and financial liabilities, are measured at the end of each period at fair value or amortized costs using the effective interest method depending on their classification determined by IFRS. By nature, financial liabilities are exposed to liquidity risk whereas financial assets are exposed to credit risk. Additionally, Lion's financial instruments and transactions could be exposed to currency and interest rate risk. While Lion may enter into hedging contracts from time to time to reduce exposure to certain of these risks, any change in the fair value of the contracts could be offset by changes in the underlying value of the transactions being hedged. Lion does not actively engage in the trading of financial assets for speculative purposes, nor does it write options. Furthermore, Lion does not currently have foreign-exchange hedging contracts in place with respect to all currencies in which it does business.

Liquidity Risk

Liquidity risk is the risk that Lion might be unable to meet its obligations related to its financial liabilities. During fiscal 2022 and the first half of fiscal 2023, Lion explored and evaluated different financing alternatives to strengthen its financial position and allow it to continue to pursue its growth strategy, which ultimately resulted in the Company establishing its ATM Program in June 2022 and raising funds under the December 2022 Offering and the 2023 Debenture Financing. Lion will continue to closely monitor market conditions and its liquidity and working capital requirements as well as the cadence of its operational and other expenditures and, and in parallel, evaluate different opportunities that may enable it to strengthen its financial position and continue to pursue its business strategy. Over the past few months, Lion has implemented a number of cost reduction measures, which included certain workforce reductions and other operational initiatives aimed at optimizing its production cadence with demand. In the future, Lion expects to continue to evaluate other measures and initiatives that may become available to it. In fiscal 2024, Lion also expects to implement various initiatives aimed at reducing its vehicle and battery development costs and its inventory levels. With respect to financing opportunities, while the Company has been successful in securing financing in the past, the availability of additional funds to Lion will depend on a variety of factors, some of which are outside of its control, including dynamics impacting the industries in which Lion operates, and the fact that Lion has raised substantial amounts of capital in the past. Additional funds may not be available to the Company on commercially reasonable terms or at all when needed, and if capital is not available to Lion when and in the amounts needed, Lion could be required to delay, scale back or abandon all or part of its growth strategy, including ramp-up of production at its manufacturing facilities. See section 16.0 of this MD&A entitled “Liquidity and Capital Resources” and section 23.0 of this MD&A entitled “Risk Factors”.

Credit Risk

Lion is exposed to credit risk by granting payment terms to its customers. With respect to customers, Lion’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognized on the consolidated statement of financial position. Lion continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. Lion’s policy is to deal only with creditworthy counterparties. Lion’s management considers that all the financial assets that are not impaired or past due are of good credit quality. Lion has not experienced material credit losses to date.

Currency Risk

While Lion presents its financial statements in U.S. dollars, the functional currency of the parent company and its subsidiaries is the Canadian dollar, except for Northern Genesis Acquisition Corp., The

45

Lion Electric Co USA Inc., and Lion Electric Manufacturing USA Inc., whose functional currencies are the US dollar. Lion is exposed to currency risk due to cash, trade and other receivables, borrowings, warrant liabilities, and trade and other payables denominated in a foreign currency, being primarily the U.S. dollar.

Interest Rate Risk

Lion is exposed to interest rate risk with respect to financial assets and liabilities bearing fixed and variable interest rates as described in section 16.0 of this MD&A entitled "Liquidity and Capital Resources."

19.0     Accounting Policies, Accounting Estimates and Judgments, and New Accounting Standards Not Yet Applied

Lion's significant accounting policies are described in Note 3 to its annual audited consolidated financial statements for the years ended December 31, 2023 and 2022.The preparation of financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Significant Management Judgments in Applying Accounting Policies

The following are significant judgments that management has made in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements:

•Capitalization of internally developed intangible assets; and

•Recognition of deferred tax assets.

Key Sources of Estimation Uncertainty

Key sources of estimation uncertainty that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities are as follows:

•Tax credits receivable;

•Impairment of non-financial assets;

•Leases;

•Useful lives of depreciable assets;

•Inventories; and

•Fair value measurement of share-based compensation, share warrant obligations and conversion options on convertible debt instruments.

For a more detailed discussion on these areas requiring the use of management estimates and judgments, please refer to Note 3 to Lion's annual audited consolidated financial statements for the years ended December 31, 2023 and 2022.

Initial application of new accounting standards and interpretations in the reporting standards

Amendments to IAS 1, Presentation of Financial Statements an IFRS Practice Statement 2, Making Materiality Judgements

On February 11, 2021, the IASB issued amendments to IAS 1, Presentation of Financial Statements and IFRS Practice Statement 2, Making Materiality Judgements, to provide guidance in determining which accounting policies to disclose. The amendments require entities to disclose material accounting policies rather than significant policies. The amendments clarify that accounting policy information is material if users of an entity’s financial statements would need it to understand other material information in the financial statements. In assessing the materiality of accounting policy information, entities need to consider both size of the transaction, other events or conditions and the nature of them, even if the

46

related amounts are immaterial.The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IAS 8, Accounting Policies, Change in Accounting Estimates and Errors

On February 11, 2021, the IASB issued amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, to clarify how to distinguish changes in accounting policies, which must be applied retrospectively, from changes in accounting estimate, which are accounted for prospectively. The amendments clarify the definition of accounting estimates as "monetary amounts in the financial statements that are subject to measurement uncertainty". The amendments clarify that a change in accounting estimate is a change in input or a change in a measurement technique used to develop an accounting estimate, if they do not result in the correction of a prior period error. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IAS 12, Income Taxes

On May 6, 2021, the IASB released Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12). The amendment relates to the recognition of deferred tax when an entity accounts for transactions, such as leases or decommissioning obligations, by recognizing both an asset and a liability. The objective of this amendment is to narrow the initial recognition exemption in paragraphs 15 and 24 of IAS 12, so that it would not apply to transactions that give rise to both taxable and deductible temporary differences, to the extent the amounts recognized for the temporary differences are the same. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IFRS 16, Leases

On September 22, 2022, the IASB issued an amendment to IFRS 16, Leases to clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. The amendment requires a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. The early adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IAS 7, Statement of Cash Flow and IFRS 7, Financial Instruments : Disclosures

On May 25, 2023, the IASB issued an amendment to IAS 7, Statement of Cash Flow and IFRS 7, Financial Instruments: Disclosures to add qualitative and quantitative disclosure requirements to allow users to assess how supplier finance arrangements affect an entity’s liabilities, cash flows and liquidity risk. The amendments to IAS 7 will become effective for annual reporting periods beginning on or after January 1, 2024 and the amendments to IFRS 7 when it applies the amendments to IAS 7. Earlier application is permitted. The Company made the election to early adopt the amendments as of June 30, 2023 and disclose the additional information in the Company's financial statements.

New Accounting Standards Not Yet Applied

New accounting standards not yet applied are described in Note 3 to the Company's annual audited consolidated financial statements for the years ended December 31, 2023 and 2022.

At the date of authorization of the audited annual consolidated financial statements, several other new, but not yet effective, standards and amendments to existing standards, and interpretations have been published by the IASB. None of these standards or amendments to existing standards have been adopted early by the Company.

Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New standards, amendments and interpretations not adopted in the current period have not been disclosed as they are not expected to have a material impact on the Company’s financial statements.

47

20.0     Emerging Growth Company Status

As defined in Section 101(a)(19) of the Jumpstart Our Business Startups Act, or JOBS Act, Lion qualifies as an emerging growth company (“EGC”). As such, Lion is eligible for and relies on certain exemptions and reduced reporting requirements provided by the JOBS Act, including the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act.

Lion will remain an EGC under the JOBS Act until the earliest of (i) the last day of the fiscal year in which it has total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation), (ii) the date on which it has issued more than $1 billion in non-convertible debt in the prior three-year period, (iii) the last day of the fiscal year following the fifth anniversary of the date of the closing of the Business Combination or (iv) when it has qualified as a “large accelerated filer,” which refers to when it (1) has an aggregate worldwide market value of voting and non-voting shares of common equity securities held by non-affiliates of $700 million or more, as of the last business day of its most recently completed second fiscal quarter, (2) has been subject to the requirements of Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), for a period of at least twelve calendar months, (3) has filed at least one annual report pursuant to Section 13(a) or 15(d) of the Exchange Act, and (4) is not eligible to use the requirements for “smaller reporting companies,” as defined in the Exchange Act.

21.0     Internal Control over Financial Reporting

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company's management, including its Chief Executive Officer and Founder and its Chief Financial Officer, the Company conducted an evaluation of the effectiveness of its disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of December 31, 2023, the end of the periods covered by this MD&A. Based on this evaluation, the Company's Chief Executive Officer and Founder and Chief Financial Officer have concluded that as of December 31, 2023, the end of the periods covered by this report, the Company's disclosure controls and procedures were effective.

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings, or other reports filed or submitted by it under securities legislation is recorded, processed, summarized, and reported within the time periods specified in the securities legislation and include controls and procedures designed to ensure that information required to be disclosed by an issuer is accumulated and communicated to the issuer’s management, including its certifying officers, as appropriate to allow timely decisions regarding required disclosure.

Management’s Assessment on Internal Control over Financial Reporting

The Company's management, under the supervision and with the participation of its Chief Executive Officer and Founder and its Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13(a)-15(f) and 15(d)-15(f) under the Exchange Act and under National Instrument 52-109.

Internal control over financial reporting refers to a process designed by, or under the supervision of, an issuer’s certifying officers, and effected by the issuer’s board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company's assets; (2) are designed to provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with International Financial Reporting Standards as issued by the

48

International Accounting Standards Board, and that the Company's receipts and expenditures are being made only in accordance with authorization of the Company's management and directors; and (3) are designed to provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the annual financial statements or interim financial reports.

The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of certain events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. As a result, due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of the Company's Chief Executive Officer and Founder and its Chief Financial Officer, management conducted an evaluation of the effectiveness of the Company's internal control over financial reporting, as at December 31, 2023, based on the framework set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation under this framework, management, including the Company's Chief Executive Officer and its Chief Financial Officer concluded that the Company's internal control over financial reporting was effective as of December 31, 2023.

Changes in Internal Control over Financial Reporting

Under the supervision and with the participation of the Company's Chief Executive Officer and its Chief Financial Officer, management has determined that there have been no changes in the Company's internal control over financial reporting that occurred during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

22.0    Foreign Private Issuer Status

Lion qualifies as a “foreign private issuer” as defined under SEC rules. As long as Lion continues to qualify as a foreign private issuer under SEC rules (even if Lion no longer qualifies as an EGC), Lion will be exempt from certain SEC rules that are applicable to U.S. domestic public companies, including:

•the rules requiring domestic filers to issue financial statements prepared under U.S. GAAP;

•the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

•the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time;

•the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial statements and other specified information, and current reports on Form 8-K upon the occurrence of specified significant events; and

•the selective disclosure rules by issuers of material non-public information under Regulation FD.

Lion may take advantage of these exemptions until such time as Lion no longer qualifies as a foreign private issuer. Lion would cease to be a foreign private issuer at such time as more than 50% of its outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i) the majority of its executive officers or directors are U.S. citizens or residents, (ii) more than 50% of its assets are located in the United States or (iii) its business is administered principally in the United States.

Foreign private issuers are also exempt from certain more stringent executive compensation disclosure rules. In addition, because Lion qualifies as a foreign private issuer under SEC rules, Lion is

49

permitted to follow the corporate governance practices of Canada (the jurisdiction in which Lion is organized) in lieu of certain NYSE corporate governance requirements that would otherwise be applicable to Lion, including with respect to certain independence criteria as well as the composition of board committees.

23.0    Risk Factors

In addition to the risks previously described in this MD&A, including under the sections “Financial Risk Management”, and “Accounting Estimates and Judgments,” this section describes the principal risks and challenges that could have a material and adverse effect on Lion's business, results of operations or financial condition, and consequently the trading price of its common shares, and that could cause actual results to differ materially from underlying forward-looking statements included in this MD&A. The risks listed below are not the only risks that could affect the Company. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial may also materially and adversely affect its financial condition, results of operations, cash flows, or business.

Lion’s success will depend on its ability to economically develop, manufacture, market and sell its vehicles at scale and meet its customers’ business needs.

Lion’s business depends in large part on its ability to economically develop, manufacture, market and sell its vehicles at sufficient capacity to meet the transportation demands of its customers. Lion’s execution of its business strategy and the satisfaction of its customers’ needs will require it to further scale its manufacturing capacity, most notably its production cadence, at its Saint-Jerome facility, its Joliet Facility and its Battery Plant, and to improve its absorption of fixed costs and its operational margins. Although Lion has experience in developing and manufacturing buses and trucks, its operations have historically been conducted on a lower scale, and Lion has limited experience to date in high volume manufacturing of its vehicles. Lion does not know whether it will be able to develop efficient, automated, low-cost manufacturing capabilities and processes, or whether it will be able to maintain its existing or secure new reliable sources of component supply, in each case that will enable it to meet the quality, price, engineering, design, and production standards, as well as the production volumes, required to successfully mass market its vehicles and meet its business objectives and customer needs. While Lion’s manufacturing facilities currently have the infrastructures in place to achieve an annual production capacity of up to 2,500 vehicles at the St-Jerome facility, up to 2,500 buses at the Joliet Facility and up to 1.7 GWh at the Battery Plant, the Company has not produced at such levels to date and there is no assurance the Company will be able to do so in the short term or at all. Ramping up production at Lion’s Saint-Jerome facility, Joliet Facility and Battery Plant will require Lion to incur operational expenditures as further described below, and management resources and may not meet Lion’s expectations with respect to increasing current capacity, efficiency and satisfying additional demand. For example, if there are delays in the manufacturing facilities achieving target yields and output, Lion may not meet its target for adding capacity, which would limit its ability to meet customers’ demand or increase sales and result in lower than expected sales and higher than expected costs and expenses. Further, Lion’s experience with developing and implementing manufacturing innovations outside of its Saint-Jerome facility remains relatively recent. Even if Lion is successful, when necessary, in ramping-up manufacturing activities and production cadence and developing high-volume manufacturing capability and processes and can reliably source component supplies in sufficient volume, it does not know whether it will be able to do so in a manner that avoids significant delays and cost overruns, including as a result of factors beyond its control such as problems with suppliers or disruptions in the global supply chain, or in time to meet the commercialization schedules of future vehicles or to satisfy the requirements of its customers.

Lion’s operations, which involve the development, design, manufacturing, sale and servicing of all electric-vehicles, are capital-intensive in nature, which may impact Lion’s ability to effectively reduce its cost structure over time. In addition, with respect to Lion's Saint-Jerome facility, Joliet Facility and Battery Plant, the Company will be required to incur operational expenditures in the future, if and when it accelerates its production cadence. Such expenditures, which could be significant, will be largely impacted by the production cadence, which, in turn, will be dependent upon a variety of factors, including,

50

to a larger extent, the demand for the Company's products as well as the economic environment and the Company's liquidity profile, all of which have been and will continue to be reassessed by management on a continuous basis. As a result, Lion cannot provide any assurance that it will realize, in full or in part, the anticipated benefits it expects to generate from its growth strategy, including as it relates to the Joliet Facility and the Battery Plant. Failure to realize or efficiently manage any of the above or otherwise execute on its growth strategy, or Lion’s inability to enhance and scale its manufacturing capabilities and processes in accordance with its projected costs and timelines, could have a material adverse effect on Lion’s business, results of operations or financial condition.

Even if it can achieve the above benefits and successfully implement its growth strategy, any failure to manage its growth effectively, including with respect to the management of its operational costs and the quality of its products, could materially and adversely affect Lion’s business, results of operations or financial condition. In the longer term, to the extent that demand for its vehicles increases, Lion intends to expand its operations, which will further exacerbate the foregoing risks as it will require it to, among other things, further hire and train new employees, secure sufficient supply in light of forecasted demand, production and revenue, control expenses and investments in anticipation of expanded operations, establish new or expand current design, production, and sales and service facilities, and enhance administrative infrastructure, systems and processes. Failure to efficiently manage any of the above could have a material adverse effect on Lion’s business, results of operations or financial condition. In addition, failure to satisfy customers’ demands may result in a loss of market share to competitors, damage Lion’s relationships with its key customers and suppliers, a loss of business opportunities or otherwise materially adversely affect its business, results of operations or financial condition.

The unavailability, reduction, delay in processing, discriminatory application or elimination of governmental programs, subsidies or incentives due to policy changes, government regulation or otherwise, could result in the cancellation of certain orders for Lion vehicles or have a material adverse effect on Lion’s business, results of operations or financial condition.

Demand for Lion’s vehicles is currently highly influenced by federal, state, provincial and local tax credits, rebates, grants and other government programs, subsidies and incentives that promote the use of battery electric vehicles. Any unavailability, reduction, delay in processing, discriminatory application or elimination of government subsidies and economic incentives because of policy changes, the reduced need for such subsidies and incentives due to the perceived success of the electric vehicle industry or other reasons may result in the diminished competitiveness of the electric vehicle industry generally or Lion’s vehicles. While certain subsidies, rebate vouchers, tax credits and other incentives for electric vehicles have been available in the past, there is no guarantee these incentives will be available in respect of Lion’s vehicles or otherwise to Lion’s customers in the future, on the same terms and conditions or at all. The unavailability, reduction, discriminatory application or elimination of current governmental programs, subsidies or incentives could significantly affect Lion’s ability to market or sell its products or materially adversely affect Lion’s business, results of operations or financial condition.

In addition, substantially all of the vehicle orders included in Lion’s order book4 are subject to the granting of governmental subsidies and incentives, including programs in respect of which applications relating to vehicles of Lion have not yet been fully processed to date. The processing times of governmental programs, subsidies and incentives are also subject to important variations. As a result, the Company’s ability to convert its order book into actual sales is highly dependent on the granting and timing of governmental subsidies and incentives, most notably subsidies and incentives under the Quebec Green Economy Plan, the Federal Infrastructure Canada's ZETF, the Government of Canada Incentives for Medium- and Heavy-Duty Zero-Emission Vehicles (iMHZEV) Program, the U.S. Environmental Protection Agency Clean School Bus Program and California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP). Also, there has been in the past and the Company expects there will continue to be variances in the eligibility criteria of the various programs, subsidies and incentives introduced by governmental authorities, including in their interpretation and application. Such variances

4 See section 10.0 of this MD&A entitled “Order Book” for a full description of the methodology used by the Company in connection with the order book.

51

or delays could result in the loss of a subsidy or incentive and/or in the cancellation of certain orders, in whole or in part.

More than half of the vehicles included in the order book are contingent upon grants under the ZETF, in respect of which applications relating to vehicles of Lion have not yet been fully processed to date and December 31, 2025 is the latest date by which claims are required to be made according to the current eligibility criteria of the ZETF program, unless otherwise agreed by Infrastructure Canada. Lion and its clients continue to experience delays and challenges in the processing of applications filed under the ZETF and Lion is actively engaged in discussions with the Canadian Federal government regarding the application of the program. See “ZETF Program Delays” under section 10.0 of this MD&A entitled “Order Book”. In addition, purchase orders obtained in connection with the first round of funding under the EPA Program, require, among other things, that vehicles be delivered on or prior to October 2024. Any termination, modification, delay or suspension of any governmental programs, subsidies and incentives, including, most importantly as of the date hereof, the ZETF, the Quebec Green Economy Plan or the EPA Program could result in delayed deliveries or the cancellation of all or any portion of orders, which, in turn, could have a material and adverse effect on the Company’s business, results of operations or financial condition. In addition, the timing of and the aforementioned challenges associated with such governmental programs, subsidies or incentives have caused and may in the future continue causing volatility in the pacing of new purchase orders, which could materially adversely affect Lion’s business, results of operations or financial condition.

Additionally, demand for Lion’s vehicles may be influenced by laws, rules, regulations and programs that require reductions in carbon emissions, such as the various measures implemented by lawmakers and regulators in California and Quebec, among others, designed to increase the use of electric and other zero-emission vehicles, including the establishment of firm goals in certain instances for the number of these vehicles operating on state roads by specified dates and the enactment of various laws and other programs in support of these goals. These programs and regulations, which have the effect of encouraging the use of battery electric vehicles, could expire or be repealed or amended for a variety of reasons. For example, parties with an interest in gasoline and diesel, hydrogen or other alternative vehicles or vehicle fuels, including lawmakers, regulators, policymakers, environmental or advocacy organizations, OEMs, trade groups, suppliers or other groups, may invest significant time and money in efforts to delay, repeal or otherwise negatively influence regulations and programs that promote the use of battery electric vehicles. Many of these parties have substantially greater resources and influence than Lion has. Further, changes in federal, state, provincial or local political, social or economic conditions, including a lack of legislative focus on these programs and regulations, could result in their modification, delayed adoption or repeal. Any failure to adopt, delay in implementation, expiration, repeal or modification of these programs and regulations, or the adoption of any programs or regulations that encourage the use of other alternative fuels or alternative vehicles over battery electric vehicles, would reduce the market for battery electric vehicles and could materially adversely affect Lion’s business, results of operations or financial condition.

Lion’s inability to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans or other incentives for which it may apply could have a material adverse effect on its business, results of operations or financial condition.

Lion has applied, and expects in the future to apply, for federal, state and provincial grants, loans and tax incentives under government programs designed to stimulate the economy and support the production of battery electric vehicles and related technologies. Lion anticipates that in the future there will be new opportunities to apply for grants, loans and other incentives from federal, state, provincial and foreign governments. Lion’s ability to obtain funds or incentives from government sources is subject to the availability of funds under applicable government programs and approval of Lion’s applications to participate in such programs. Lion cannot assure that it will be successful in obtaining any of these additional grants, loans and other incentives, and Lion’s inability to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives for

52

which it may apply could have a material adverse effect on its business, results of operations or financial condition.

Lion may in the future need to raise additional funds to meet its capital requirements and pursue its growth strategy, and such funds may not be available to Lion on commercially reasonable terms or at all when it needs them, which could materially adversely affect Lion’s business, results of operations or financial condition.

As of December 31, 2023, Lion had a cash balance of $29.9 million ($88.3 million as at December 31,
2022). The development, design, manufacturing, sale and servicing of Lion’s battery electric vehicles is capital-intensive, and the Company continues to face a challenging environment with recurring operating losses and negative cash flows from operating activities. In addition, with respect to its operations at its Saint-Jerome facility, its Joliet Facility and its Battery Plant, the Company will be required to incur operational expenditures in the future, if and when it accelerates its production cadence. Such expenditures, which could be significant, will be largely impacted by the production cadence, which, in turn, will be dependent upon a variety of factors, including the demand for the Company's products, the economic environment and the Company's liquidity profile, all of which have been and will continue to be reassessed by management on a continuous basis. In addition, despite management’s foregoing efforts to make adjustments on an ongoing basis, Lion’s operations are capital-intensive in nature, and Lion’s ability to reduce or defer certain expenses is constrained by its need to continue making significant investments in its working capital to secure sufficient supply, meet its current contractual obligations (as described under “Maturity analysis of contractual obligations” in section 16.0 of this MD&A entitled “Liquidity and Capital Resources”), maintain the workforce required for the planned production and meet customer demand. The Company's liquidity may also be impacted from time to time by the terms and conditions of the Revolving Credit Agreement which requires, among other things, Lion to maintain certain financial ratios and namely, an all times tangible net worth test and a springing fixed charge coverage ratio based on a minimum availability test and provides for an availability block of C$10,000,000 which can be triggered upon availability dropping below 30%. Based on the foregoing and considering that the Company’s sales are largely dependent upon the funding of subsidies and incentives with processing times that are subject to important variations, the specific timing of the Company’s cash inflows and outflows may fluctuate substantially from period to period and Lion may in the future need to raise additional funds.

Management forecasts the Company’s liquidity requirements to ensure it has sufficient cash to meet its operational needs through maintaining sufficient cash and/or availability under its sources of liquidity, including its credit facilities and other borrowings. Such forecasting involves a significant degree of judgment and takes into consideration the Company’s current liquidity level, its current and projected performance, its cash collection efforts and the terms and conditions of the Company’s financing instruments, including required covenant compliance. There is a risk that such liquidity forecasts may not be achieved and that currently available credit facilities and other borrowings may no longer be available to the Company. In the short-term, Lion will continue to closely monitor market conditions and its liquidity and working capital requirements as well as the cadence of its operational and other expenditures and, in parallel, evaluate different opportunities that may enable it to strengthen its financial position and continue to pursue its business strategy. Over the past few months, Lion has implemented a number of cost reduction measures, which included certain workforce reductions and other operational initiatives aimed at optimizing its production cadence with demand. In the future, Lion expects to continue to evaluate other measures and initiatives that may become available to it. In fiscal 2024, Lion also expects to implement significant reductions in its vehicle and battery development costs and its inventory levels. With respect to financing opportunities, while the Company has been successful in securing financing in the past, including through private or public issuance of equity or other form of equity-related or debt securities or through obtaining credit from government or financial institutions, the availability of additional funds to Lion will depend on a variety of factors, some of which are outside of its control, including dynamics impacting the industries in which Lion operates, and the fact that Lion has raised substantial amounts of capital in the past. Additional funds may not be available to Lion on commercially reasonable terms or at all, when needed, and if capital is not available to Lion when and in the amounts needed, Lion could be

53

required to delay, scale back or abandon all or part of its growth strategy, including ramp-up of production at its manufacturing facilities, which could materially adversely affect its business, results of operations or financial condition.

In addition, management retains broad discretion in the application of the available funds, and shareholders of Lion will be relying on management’s judgment regarding such application. If additional funds are raised by issuing equity securities, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common shares, Lion’s existing shareholders may incur dilution and the market price of Lion’s common shares could decline.

Lion has a history of losses and negative cash flows from operating activities and there is no guarantee it will achieve or sustain profitability.

Lion incurred an operating loss of approximately $114 million for the year ended December 31, 2023, and approximately $81 million for the year ended December 31, 2022. Further, Lion had negative cash flows from operating activities of approximately $110 million for the year ended December 31, 2023, and approximately $120 million for the year ended December 31, 2022. These operating losses and negative cash flows were mainly the result of the substantial investments Lion made to grow its business and scale its manufacturing operations as well as, for the year ended December 31, 2023, the impact of the decision to indefinitely delay the start of commercial production of the LionA and LionM minibuses in fiscal 2023. While Lion has taken a number of measures to rationalize its cost structure, including the workforce reduction announced in November 2023, and it expects to evaluate other opportunities which may help improve its liquidity, Lion nonetheless expects to continue to incur significant expenditures in the future, including to support its manufacturing operations, both in the United States and Canada, and the purchase of inventories of parts and components for its vehicles, including battery cells, and in connection with the design, development and production of its products. Lion also expects to continue spending on technical and other operational enhancements to its business and to continue to invest in development activities. As a result, it will remain very challenging for Lion to achieve profitability and positive cash flow and Lion cannot guarantee it will achieve either in the near or medium term, or at all. If Lion is unable to generate adequate revenue growth and manage its expenses, it may continue to incur losses and have negative cash flows from operating activities, which could materially adversely affect Lion’s business, results of operations or financial condition. In addition, Lion may make decisions that could reduce its short-term operating results if it believes those decisions will improve the quality of its products or services or improve its operating results, business or prospects over the long-term. These decisions may not be consistent with the expectations of investors and may not produce the long-term benefits that Lion expects, in which case Lion’s business, results of operations or financial condition may be materially and adversely affected.

There is no guarantee that Lion will have sufficient cash flow from its business to pay its indebtedness or meet its other contractual obligations or that Lion will not incur additional indebtedness.

As of December 31, 2023, Lion had approximately $225 million in aggregate outstanding principal amount of indebtedness, including $22.7 million (C$30 million) drawn under the Finalta-CDPQ Loan Agreement which matures in November 2024. In addition, as of December 31, 2023, Lion had other important contractual obligations as described under “Maturity analysis of contractual obligations” in section 16.0 of this MD&A entitled “Liquidity and Capital Resources”. Lion’s indebtedness and significant contractual commitments, including contractual obligations to be met during fiscal 2024, may increase Lion's vulnerability to any generally adverse economic and industry conditions. Lion may, subject to the limitations in the terms of its existing and future indebtedness, incur additional debt, secure existing or future debt or recapitalize its debt.

Lion’s ability to make scheduled payments of the principal and interest on its indebtedness when due or to refinance its indebtedness as it may need or desire will depend on the future performance of the Company, which is subject to economic, financial, competitive and other factors beyond Lion’s control as well as the other risks described in this section 23.0 of the MD&A entitled “Risk Factors”. Lion’s business

54

may not continue to generate cash flow from operations in the future sufficient to satisfy its obligations under its existing indebtedness and any future indebtedness Lion may incur. If Lion is unable to generate such cash flow, Lion may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, refinancing or obtaining additional equity capital on terms that may be highly onerous or dilutive. Lion’s ability to refinance existing or future indebtedness will depend on the capital markets and its financial condition at such time. Lion’s ability to make payments may be limited by law, by regulatory authority or by agreements governing Lion’s current or future indebtedness. Lion may not be able to engage in these activities on desirable terms or at all. In addition, Lion’s ability to finance its operations, capital expenditures and working capital needs could be impacted by a rise in interest rates, as any such increase in interest rates would lead to higher costs of borrowing for the Company. Lion may not be able to effectively manage its borrowing costs and may lack alternative sources of funding to mitigate risks associated with a rise in interest rates. Any of the foregoing could materially adversely affect Lion’s business, results of operations or financial condition.

Lion is dependent on its manufacturing facilities. If one or more of its current manufacturing facilities becomes inoperable, capacity constrained or if operations are disrupted, Lion’s business, results of operations or financial condition could be materially adversely affected.

Lion’s business is and will be dependent on the continued operations and ramp-up of its Saint-Jerome facility, its Joliet Facility and its Battery Plant, all of which rely on complex machinery and equipment, including in connection with automated production lines. Such complex machinery and equipment may involve a significant degree of uncertainty and risk in terms of operational performance and costs and may suffer unexpected malfunctions from time to time and will depend on repairs and spare parts to resume operations, which may not be available when needed. To the extent that Lion experiences any operational challenges or future risks relating to such facilities, including, among other things, any of its current manufacturing facilities becoming capacity constrained, failures to comply with applicable regulations and standards, fire and explosions, severe weather and natural disasters (such as floods and hurricanes), failures in water supply, major power failures, equipment failures, work stoppages or slowdowns, Lion will be required to make capital and/or other expenditures even though it may not have available resources at such time. In addition, manufacturing of Lion’s vehicles requires it to store a significant number of lithium-ion cells at its facility. Any mishandling of battery cells may cause disruption to the operation of Lion’s facilities. While Lion has implemented safety procedures related to the handling of the cells, a safety issue or fire related to the cells could disrupt Lion’s operations. Such damage or injury could lead to adverse publicity, potential safety recalls and materially adversely affect Lion’s business, results of operations or financial condition. Additionally, Lion may not be adequately covered by its insurance policies to cover for such disruptions on capital or other expenditures. As a result, Lion’s insurance coverage and available resources may prove to be inadequate for events that may cause significant disruption to its operations. Any disruption in Lion’s manufacturing processes could result in delivery delays, scheduling problems, increased costs, or production interruption, which, in turn, may result in its customers deciding to cancel existing orders or purchase products from its competitors. If one or more of Lion’s manufacturing facilities becomes inoperative, capacity constrained or if operations are disrupted, its business, results of operations or financial condition could be materially adversely affected.

Increases in costs, disruption of supply or shortage of raw materials, particularly lithium-ion battery cells and battery modules and packs, could impact Lion’s ability to execute its growth strategy or materially adversely affect Lion’s business, results of operations or financial condition.

Lion has experienced and may, from time to time experience, increases in costs or shortages of raw materials, components and labor, including as a result of global supply chain disruptions or other factors which may or may not be specific to Lion. Any such increase in cost or supply interruption or shortage could result in production slowdowns and increase Lion’s operating costs, which in turn, could materially adversely affect Lion’s business, results of operations or financial condition. Components in Lion’s vehicles are made of various raw materials, and the prices for these raw materials may fluctuate depending on a variety of factors, including market conditions, global supply and demand for these

55

materials, global economic conditions, geopolitical risks (including as a result of military conflicts) and related sanctions, export controls or other actions that may be initiated by nations, and could materially affect Lion’s business, results of operations or financial condition.

Although Lion has, in certain cases, entered into long-term contractual arrangements with suppliers with respect to the supply of certain key components of its vehicles, including lithium-ion batteries and cells, Lion is nevertheless exposed to multiple risks relating to such supply, including: the inability or unwillingness of current lithium-ion battery cell manufacturers to build or operate battery cell manufacturing plants to supply the numbers of lithium-ion cells required to support the growth of the electric vehicle industry as demand for such cells increases; disruptions in the supply of cells, modules or packs that could arise due to, among other things, quality issues or recalls by battery cells, modules or packs manufacturers, suppliers favoring larger volume customers over Lion, the acquisition of suppliers by Lion’s competitors, any key or other supplier of Lion becoming economically distressed, insolvent or bankrupt; increased regulation of supply chains; and an increase in the cost of raw materials, such as cobalt. Any disruption in the supply of battery cells, modules or packs or other key vehicle components such as motors, fiberglass, composite panels and harnesses could temporarily disrupt production of Lion’s vehicles or result in delays in respect of the deliveries of certain orders until a different supplier is identified and fully qualified, which could result in the cancellation of existing orders for its vehicles. Moreover, manufacturers of battery cells, modules or packs or other components may refuse to supply electric vehicle manufacturers if they have concerns about the use of their supplies. Furthermore, various fluctuations in market and economic conditions may cause Lion to experience significant increases in freight charges and raw material costs. Substantial increases in the prices for raw materials would also increase Lion’s operating costs and could reduce Lion’s margins if the increased costs cannot be recouped through increased vehicle prices. In addition, as pricing of Lion’s products is determined at the time an order is passed and generally cannot be subsequently adjusted at the time of delivery and payment to take into account any increase in the price of raw materials, any delay by Lion in producing and delivering vehicles increases Lion’s exposure to the risk of an increase in such costs, which increase will ultimately needs to be absorbed by Lion and could reduce Lion’s margins.

Prior to the commencement of its manufacturing operations at the Battery Plant, Lion relied only on third-party battery suppliers to source battery cells, modules and packs that it integrated in its vehicles. In connection with the establishment of its manufacturing operations at the Battery Plant, Lion now manufactures its own battery modules and packs that integrate 21700 cylindrical battery cells sourced from third-party suppliers. While Lion intends to continue in certain instances to rely on third-party suppliers for battery packs, it expects to increase optimization for product design, cost and production efficiency over time by producing battery packs in-house. However, Lion’s efforts to develop, manufacture and optimize such battery modules and packs have required significant expenditures, and the Company will be required to incur operational expenditures in the future, if and when it accelerates its production cadence at the Lion Campus and such acceleration may not meet Lion’s expectations with respect to increasing current capacity, efficiency and satisfying additional demand. See “Lion Campus” in section 8.0 of this MD&A entitled “Operational Highlights”. There can be no assurance that Lion will realize, in full or in part, the anticipated benefits it expects to generate from producing battery modules and packs in-house at the Battery Plant. If Lion cannot ramp-up production at the Battery Plant, or if it cannot do so in a cost-effective or timely manner, Lion could have to curtail its planned vehicle production or procure additional battery modules and packs from suppliers at potentially greater costs, either of which could materially adversely affect Lion’s business, results of operations or financial condition. In addition, even if Lion can ramp-up production at the Battery Plant, failure to meet the quality, engineering, design, and production standards for its proprietary battery modules and packs, as well as the necessary production volumes, could materially adversely affect Lion’s business, results of operations or financial condition.

As previously disclosed, the Company initiated in fiscal 2022 arbitration proceedings in order to enforce the terms and conditions of the multi-year battery pack supply contract in had entered into with Romeo (who became a subsidiary of Nikola) in November 2020 which arbitration proceedings have since then been terminated such that only the proceedings against Nikola are still ongoing as described in section 11.0 of this MD&A entitled “Key Factors Affecting Lion's Performance”. Romeo’s failure to comply

56

with its obligations under the multi-year battery pack supply contract resulted in delays in the commencement of the commercial production of the Lion8T, which is now expected to commence near the middle of fiscal 2024, and in the Company deciding to mount its Lion8T trucks with the Company’s proprietary battery packs manufactured at the Lion Campus battery plant. Mounting Lion8T truck with the Company’s proprietary battery packs may result in higher costs to Lion and there can be no assurance that Lion will realize, in full or in part, the anticipated benefits it expects to generate from doing so. See “Products and Solutions” under section 6 of the Company’s Annual Information Form entitled “Business Overview” and see section 13 of the Company’s Annual Information Form entitled “Legal Proceedings and Regulatory Actions.” Any similar contractual or other dispute with one of the Company’s suppliers could temporarily disrupt production of Lion’s vehicles or result in delays in respect of the deliveries of certain orders, which could, in turn, materially adversely affect Lion’s business, results of operations or financial condition.

Lion is dependent on third-party suppliers, some of which are single-source suppliers, and Lion expects to continue to rely on third-party suppliers. The inability of any such supplier to deliver necessary parts or components according to Lion’s schedule and at prices, volumes or quality levels acceptable to it, or the termination or interruption of any supply arrangement could materially adversely affect Lion’s business, results of operations or financial condition.

Each Lion vehicle is designed and assembled in-house, using parts and components sourced from third-party suppliers such that Lion is dependent on its third-party suppliers, some of which are single or limited source suppliers, and such suppliers’ ability to supply and manufacture parts and components included in Lion’s vehicles. Lion expects to continue to rely on third parties to supply and manufacture such parts and components in the future, as well as to maintain and grow its supply chain for its manufacturing operations in both Canada and the United States. While Lion obtains components from multiple sources whenever possible, some of the components used in its vehicles, including certain key battery system components, are purchased from a single source and sometimes require custom design tailored to Lion vehicles. While Lion believes that it may be able to establish alternate supply relationships and can obtain or potentially engineer replacement components for some of its single source components, it may be unable to do so in the short term or at all, or at prices, volumes or quality levels that are acceptable to it. Although Lion has, in certain cases, entered into long-term contractual arrangements with suppliers with respect to the supply of certain key components of its vehicles, Lion does not have long-term agreements with all of its suppliers which, may exacerbate risks related to the supply of such components not subject to a long-term supply arrangement. In addition, the inability of any of Lion’s suppliers to deliver necessary parts or components according to Lion’s schedule and at prices, volumes or quality levels acceptable to Lion, or the termination or interruption of any material supply arrangement could materially adversely affect Lion’s business, results of operations or financial condition. Also, if any of Lion’s suppliers become economically distressed or go bankrupt, or is acquired by a competitor of Lion, or if there is a dispute between Lion and one of its suppliers, Lion may be required to, as applicable, provide substantial financial support or take other measures to ensure supplies of components or materials, which could increase its costs, affect its liquidity or cause production disruptions, all of which could materially adversely affect Lion’s business, results of operations or financial condition.

In addition, Lion operates in multiple jurisdictions where it is party to certain agreements with suppliers, vendors, and other third parties located in jurisdictions that could impact enforcement of judgments against such third parties. These agreements may contain provisions that limit such third parties’ liability, require arbitration or litigation in a specific jurisdiction, or provide for indemnification against certain claims. Any limitation in Lion enforcing its rights of judgments against suppliers or other third parties could materially adversely affect Lion’s business, results of operations or financial condition.

57

Lion may not be able to adequately forecast its inventory and supply requirements, its manufacturing capacity and its profitability under customer orders, which could result in a variety of inefficiencies in its business and hinder its business and could materially adversely affect Lion’s business, results of operations or financial condition.

It is difficult to predict Lion’s future sales. In addition, the vehicles included in Lion’s vehicle order book as of February 28, 2024 provided for a delivery period ranging from a few months to the end of the year ending December 31, 2026, with substantially all of such vehicles currently providing for deliveries before the end of the year ending December 31, 2025. In addition, substantially all deliveries are subject to the granting of subsidies and incentives with processing times that are subject to important variations. There has been in the past and Lion expects there will continue to be variances between the expected delivery periods of orders and the actual delivery times and certain delays could be significant. As a result, it is difficult for Lion to appropriately budget for Lion’s expenses, and Lion may have limited insight into trends that may emerge and affect its business. Lion is required to forecast its demand and its deliveries in order to build its inventory and save supply several months prior to the scheduled delivery of products to customers. Currently, there remains limited historical basis for making judgments on future demand and pace of delivery for Lion’s vehicles or its ability to mass develop, manufacture and deliver vehicles at scale, or Lion’s profitability in the future. If Lion fails to accurately predict its manufacturing requirements, it could incur additional costs or experience delays. If Lion overestimates manufacturing requirements, it or its suppliers may have excess inventory, which indirectly could increase Lion’s costs. For example, in fiscal 2023, the Company’ decision to delay of the start of commercial production of the LionA and LionM resulted in a write-down of inventory of $9.8 million which negatively impacted the Company’s operating losses. If Lion underestimates manufacturing requirements, it or its suppliers may have inadequate inventory, which could interrupt manufacturing of Lion’s vehicles and result in delays in revenues. In addition, lead times for materials and components that Lion’s suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time. If Lion fails to order sufficient quantities of product components in a timely manner, the delivery of vehicles to its customers could be delayed, which could result in the cancellation of existing orders or materially adversely affect its business, results of operations or financial condition.

In addition, the MPA with the Specified Customer requires Lion to reserve necessary manufacturing capacity to deliver up to 500 trucks per year between now and 2025 and the greater of 500 trucks per year or 10% of Lion’s manufacturing capacity from 2026 to 2030, which could hinder Lion’s ability to capitalize on future business opportunities. While the Specified Customer has placed a limited number of orders to date, any significant order placed by the Specified Customer could potentially disrupt Lion’s manufacturing operations and impact the delivery schedule of existing orders. Almost all of Lion’s customers operate on a purchase order basis, which means such customers are not required to purchase any specified minimum quantity of vehicles beyond the quantities in an existing purchase order and may in certain circumstances cancel or reschedule purchase orders on relatively short notice, including as a result of the loss or delay in processing of a governmental incentive or subsidy on which an order is conditioned upon, the Company not delivering the vehicle in accordance with the delivery period provided for in the applicable purchase order or otherwise. In additions, delay in the processing of governmental incentives or subsidies have required and may require in the future the Company to reschedule delivery periods under existing purchase orders, which if unsuccessful, can result in the cancellation of orders. Cancellations or a rescheduling of customer orders could result in the delay or loss of anticipated sales without allowing sufficient time to reduce, or delay the incurrence of, corresponding inventory and operating expenses, which could materially adversely affect Lion’s business, results of operations or financial condition.

Lion may not succeed in establishing, maintaining and strengthening its brand, which would materially and adversely affect customer acceptance of its vehicles, which could materially adversely affect its business, results of operations or financial condition.

Lion’s business heavily depends on its ability to develop, maintain and strengthen the Lion brand. If it is unable to establish, maintain and strengthen its brand, Lion may lose the opportunity to build and

58

maintain a critical mass of customers. Lion’s ability to develop, maintain and strengthen the Lion brand will depend heavily on the success of its sales and marketing efforts, and doing so may be challenging due to Lion’s limited operating history relative to established competitors, customer unfamiliarity with its products, any delays it may experience in scaling manufacturing, delivery and service operations to meet demand, competition and uncertainty regarding the future of electric vehicles, Lion’s production and sales performance compared with market expectations, and other factors including some over which Lion has no control. In addition, it will remain very challenging for Lion to achieve profitability and positive cash flow

and Lion cannot guarantee it will achieve either in the near or medium term, or at all, which could make it more difficult for Lion to develop, maintain and strengthen the Lion brand and negatively impact confidence among customers and analysts within its industry. The all-electric vehicle industry, and the alternative fuel vehicle industry in general, are highly competitive, and Lion may not be successful in building, maintaining and strengthening its brand. Many of Lion’s current and potential competitors, particularly manufacturers headquartered in the United States, Japan and the European Union, have greater name recognition, broader customer relationships and substantially greater resources than Lion. Failure to develop and maintain a strong brand would materially and adversely affect customer acceptance of Lion’s vehicles, could result in suppliers and other third parties being less likely to invest time and resources in developing business relationships with Lion, and could materially adversely affect Lion’s business, results of operations or financial condition.

In addition, Lion’s brand is dependent on the quality and performance characteristics of Lion’s vehicles, including battery life and range, which may vary or decline over time including due to factors outside of Lion’s control. Driver behavior, usage, speed, terrain, time and stress patterns may impact the ability of the batteries incorporated into Lion vehicles’ (whether purchased from third party suppliers or produced in-house) to hold a charge, which would decrease Lion’s vehicles’ range before needing to recharge. Such battery deterioration and the related decrease in range may negatively influence potential customer decisions and Lion’s brand, and could materially adversely affect Lion’s business, results of operations or financial condition. Lion cannot guarantee that battery life and range deterioration will not be greater than what is currently anticipated. Any battery life and range deterioration greater than what’s currently anticipated or any other quality issues, could harm Lion’s reputation and brand, result in customers purchasing vehicles from other manufacturers or in the cancellation of certain orders for Lion vehicles, which could have a material adverse effect on Lion’s business, results of operations or financial condition. In addition, media and other reports on the performance or reliability of Lion’s products, whether founded or unfounded, may negatively influence potential customer decisions and Lion’s brand, and could materially adversely affect Lion’s business, results of operations or financial condition.

Lion is also working with third-party suppliers to enable it to offer a variety of vehicle configurations, upfit equipment options and applications, some of which are still in the process of being developed and/or integrated into Lion’s vehicles. Vehicle manufacturers often experience, and the Company has in the past experienced delays in the design and launch of new products. Any delay in the financing, design, regulatory approval, production and launch of new products, specialized applications or solutions, or in doing so cost-effectively and with high quality, could harm Lion’s reputation and brand or materially adversely affect its business, results of operations or financial condition.

Lion’s growth will depend on its ability to successfully attract new customers and to retain existing customers. Failure to increase sales to both new and existing customers could have a material adverse effect on Lion’s business, results of operations or financial condition.

Lion’s success, and its ability to increase revenue and operate profitably, depends in part on its ability to identify new customers and, its ability to retain existing customers, and its ability to meet current and new customers business needs. Failure to achieve any of the foregoing could materially and adversely affect Lion’s business, results of operations or financial condition. Lion may fail to attract new customers or retain existing customers, retain revenue from existing customers or increase sales to both new and existing customers as a result of a number of other factors, including:

59

•reductions in Lion’s existing or potential customers’ spending levels, including as a result of any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes;

•increases to customer borrowing costs as a result of higher inflation level or an increase in interest rates;

•competitive factors affecting the battery electric vehicles industry, including the introduction of other alternative fuel vehicles or other technologies; discount, pricing and other strategies that may be implemented by its competitors;

•its ability to execute on its growth strategy;

•a decline in its customers’ level of satisfaction with its vehicles and services;

•changes in its relationships with third parties, including its suppliers and other partners;

•the timeliness and success of new products it may offer in the future; and

•its focus on long-term value over short-term results, meaning that Lion may make strategic decisions that may not maximize its short-term revenue or profitability if it believes that the decisions are consistent with its vision and will improve its financial performance over the long-term.

The electric vehicle industry is highly competitive and Lion is likely to face competition from a number of sources. Lion may not be successful in competing in this industry, which may materially adversely affect its business, results of operations or financial condition.

The North American medium and heavy-duty urban truck market is highly competitive today and Lion expects it will become even more so in the future. Lion’s competition for their trucks comes from manufacturers of purpose-built all-electric vehicles such as Nikola, BYD, and Xos, manufacturers of hybrid/retrofit EVs such as Workhorse, and Hyliion, and manufacturers of trucks with internal combustion engines powered by diesel fuel, which includes Traton, Daimler, Volvo, PACCAR, Hino (Toyota), and other automotive manufacturers. Lion cannot assure that customers will choose its vehicles over those of its competitors’ diesel-powered trucks. As of February 28, 2024, few class 5 to 8 electric trucks or battery electric buses are being sold in the United States or Canada. However, Lion expects that an increasing number of competitors will enter the electric truck market within the next several years.

The North American school bus market is mainly concentrated in the hands of three incumbent automotive original equipment manufacturers (“OEMs”) selling both diesel school buses as well as electric school buses: Blue Bird Corporation, Thomas Built Buses (Daimler), and IC Bus (Navistar International, subsidiary of Traton). In addition to the incumbent diesel school bus OEMs, a few early-stage EV OEMs have entered in competition with Lion such as Green Power Motor, which offers purpose-built electric Type D school buses.

Some of Lion’s current and potential competitors may also have greater financial resources (in part due to their traditional diesel offering), more extensive development, manufacturing, technical, marketing and service capabilities, greater brand, customer and industry recognition, a larger number of managerial and technical personnel or a lower cost of funds than Lion does or other competitive advantages relative to Lion. Many of Lion’s current and potential competitors may also be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their products.

Lion expects competition in its industry to intensify in the future in light of increased demand for electric and other alternative fuel vehicles and continuing globalization. Factors affecting competition include total cost of ownership, product quality and features, innovation and development time, pricing, availability, reliability, safety, fuel economy, customer service (including breadth of service network) and financing terms. Increased competition may lead to lower vehicle unit sales and increased inventory, which may result in a further downward price pressure and adversely affect Lion’s business, financial condition and results of operation. There can be no assurances that Lion will be able to compete successfully in the markets in which it operates. If Lion’s competitors introduce new vehicles or services that compete with or surpass the quality, price, performance or availability of Lion’s vehicles or services, Lion may be unable to satisfy existing customers or attract new customers at the prices and levels that

60

would allow it to generate attractive rates of return on its investment. Increased competition could result in price reductions and revenue shortfalls, loss of customers and loss of market share, which could materially adversely affect Lion’s business, results of operations or financial condition.

The use of lithium-ion cells may become disfavored as a result of the availability, or perceived superiority of, other types of batteries or technologies, and the occurrence of certain unforeseen events could result in negative public perception of lithium-ion cells.

Lion’s vehicles use lithium-ion cells, which Lion believes currently represent the industry standard for battery technology for electric vehicles. It is possible, however, that other types of batteries or technologies may become favored in the future, such as lithium-iron phosphate, hydrogen or solid state. While Lion believes that its products and services based on the lithium-ion cells that it has chosen for its vehicles present advantages with respect to ease of integration and underlying performance, it is possible that Lion’s customers and partners may deem other technologies as sufficient or superior for their purposes and decide to partner with other manufacturers who employ such technologies. It is possible that the performance, safety features or characteristics, reliability or cost-effectiveness of another form of battery or technology could improve in the future such that the lithium-ion cells used in Lion’s vehicles could become, or be perceived as, inferior or obsolete. In the event that a new form of battery or technology emerges or is deemed to exhibit better performance, operate at lower cost or exhibit better safety features, Lion could be compelled to attempt to integrate those new types of batteries into its vehicles, which may not be possible or feasible at a price that could be attractive to its customers. Any developments with respect to new battery technology, or new electrification technologies that are based on unforeseen developments in cell technology, or the perception that they may occur, may prompt the Company to invest heavily in additional research to compete effectively with these advances, which research and development may not be effective. Any failure by Lion to successfully react to changes in existing technologies could materially adversely affect Lion’s business, results of operations or financial condition.

In addition, negative public perceptions regarding the suitability of lithium-ion cells for automotive applications, the social and environmental impacts of cobalt mining could materially adversely affect Lion’s business, results of operations or financial condition.

Lion’s vehicles use lithium-ion cells which have been observed to catch fire or vent smoke and flame.

The battery packs within Lion’s vehicles use lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. While the battery pack is designed to contain any single cell’s release of energy without spreading to neighboring cells, a field or testing failure of Lion’s vehicles could occur, which could result in bodily injury or death and could subject Lion to lawsuits, product recalls, or redesign efforts, all of which could be time consuming and expensive, and materially adversely affect Lion’s business, results of operations or financial condition. Also, any future incident involving lithium-ion cells, such as a vehicle or other fire, even if such incident does not involve Lion’s vehicles, could seriously harm Lion's business and prospects.

Failure to carry adequate insurance coverage may have a material adverse effect on Lion’s business, results of operations or financial condition.

Lion maintains liability insurance, property and business interruption insurance, cargo insurance, cybersecurity insurance, automotive liability insurance and directors' and officers' insurance, and such insurance coverage reflects deductibles, self-insured retentions, limits of liability and similar provisions. However, there is no guarantee that Lion’s insurance coverage will be sufficient, or that insurance proceeds will be paid to Lion in a timely manner. In addition, there are types of losses Lion may incur but against which it cannot be insured or which it believes are not economically reasonable to insure, such as losses due to acts of war and certain natural disasters. Additionally, manufacturing of Lion’s vehicles requires it to store a significant number of lithium-ion cells at its facility, and Lion has and may in the future

61

have difficulties in obtaining and maintaining insurance policies covering such risk, whether at reasonable costs, on acceptable terms or with adequate coverage or at all. As a result, Lion may also decide not to insure a portion of its battery cells, modules or packs inventory and manage the risk relating to the storage of battery cells, modules or packs differently, such as diversifying storage solutions and locations.If Lion incurs any material losses in connection with the foregoing, its business, results of operations or financial condition could be materially adversely affected. Moreover, Lion may not be able to maintain insurance policies in the future at reasonable costs, on acceptable terms or with adequate coverage for certain specific risks or types of assets, such as batteries, which in turn may adversely affect the Company’s business, results of operations or financial condition.

Unfavorable economic conditions may have a material adverse effect on Lion’s business, results of operations and financial condition.

Lion’s business may be affected by global economic markets and levels of customer comfort and spend, including recessions, slow economic growth, economic and pricing instability (including the current inflationary environment), increase of interest rates and credit market volatility, all of which could impact demand in the worldwide transportation industries or otherwise have a material adverse effect on Lion’s business, operating results and financial condition. In addition, unforeseen events such as the global COVID-19 pandemic and geopolitical risks (including as a result of military conflicts) have resulted and may in the future result, in widespread disruptions to economic markets, manufacturing operations, supply chains, employment and customer behavior or governmental spending (as a result of a reduction or different allocation in spending or otherwise). Lion has already experienced, and may continue to experience, adverse effects as a result of these events, including supply chain disruptions and labor shortages. The impact of these and any future unforeseen events on Lion’s business, results of operations and financial condition is yet unknown and varied across geographic regions. Lion’s ability to accurately project supply and demand, infrastructure requirements and pace of delivery for Lion’s vehicles and allocate resources accordingly is critical. If current global market conditions continue or worsen, including further pandemic-related disruptions, geopolitical risks (including as a result of military conflicts), or other unforeseen events, Lion’s business, results of operations and financial condition could be materially adversely affected.

Increased freight and shipping costs or disruptions in transportation and shipping infrastructure could materially adversely impact Lion’s business, results of operations or financial condition.

Lion uses external freight shipping and transportation services to transport and deliver its vehicles as well as subcomponents and raw materials incorporated therein. Adverse fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the transportation and shipping infrastructure at important shipping and delivery points for Lion’s products and subcomponents incorporated in Lion’s vehicles have affected and could materially adversely affect Lion’s business, financial condition and results of operations. For example, from time to time, global supply chain disruptions have resulted in delivery delays and increases in transportation costs which negatively affected Lion’s sales, cost of sales and gross profits. Any further delivery delays and increases in transportation costs (including through increased fuel or other energy costs, increased carrier rates or driver wages as a result of driver shortages, a decrease in transportation capacity, or work stoppages or slowdowns) could significantly decrease Lion’s ability to make sales and earn profits. Labor shortages or work stoppages in the transportation industry or long-term disruptions to the national and international transportation infrastructure that lead to delays or interruptions of deliveries or which could necessitate Lion securing alternative shipping suppliers has increased in the past and could also increase Lion’s costs or otherwise materially adversely affect its business, results of operations or financial condition.

Significant product repair and/or replacement due to product warranty claims or product recalls could have a material adverse impact on Lion’s business, results of operations or financial condition.

Lion generally provides a limited warranty against defects for all of its products, and customers may in certain instances purchase extended warranties. In addition, Lion has in the past been required to

62

proceed to certain product recalls. Lion may also in the future be required to make product recalls or could be held liable in the event that some of its products do not meet safety standards or statutory requirements on product safety, even if the defects related to any such recall or liability are not covered by Lion’s limited warranty. Although Lion employs quality control procedures, products manufactured by it will need repair or replacement or may be recalled. Lion’s standard warranties generally require it to repair or replace defective products during such warranty periods at no cost to the customer. Lion records provisions based on an estimate of product warranty claims, but there is the possibility that actual claims may exceed these provisions and therefore negatively impact Lion’s results of operations of financial condition. Lion has made in the past, and may in the future make, product recalls, or could be held liable in the event that some of its products do not meet safety standards or statutory requirements on product safety. In addition, the risks associated with product recalls may be aggravated if production volumes increase significantly, supplied goods do not meet Lion’s standards, Lion fails to perform its risk analysis systematically or product-related decisions are not fully documented. The repair and replacement costs that Lion could incur in connection with a recall could have a material adverse effect on its business, results of operations or financial condition. Product recalls could also harm Lion’s reputation and cause it to lose customers, particularly if recalls cause customers to question the safety or reliability of its products, which could have a material adverse effect on its business, results of operations or financial condition.

In addition, purchase agreements with Lion’s customers may from time to time contain, in addition to Lion’s limited warranty, undertakings related to certain specific levels of performance and availability for the vehicles sold thereunder or other specific indemnity provisions. Failure by Lion to provide the required levels of performance and availability, even if such failure is the result of factors outside of Lion’s control, could result in Lion being liable or provide indemnification under such contractual arrangements or allow customers to terminate their arrangements with Lion, which could have a material adverse effect on its business, results of operations or financial condition.

An adverse determination in any significant product liability claim against Lion could materially adversely affect its business, results of operations or financial condition.

The development, manufacturing, sale and usage of Lion’s vehicles expose Lion to significant risks associated with product liability claims. The automotive industry in particular experiences significant product liability claims, and Lion may face inherent risk of exposure to claims in the event its vehicles do not perform or are claimed to not have performed as expected. If Lion’s products are defective, malfunction or are used incorrectly by its customers, it may result in bodily injury, property damage or other injury, including death, which could give rise to product liability claims against Lion. Changes to Lion’s manufacturing processes, including as a result of the ramp-up of production capacity at the Joliet Facility and Battery Plant, and the production of new products and applications could result in product quality issues, thereby increasing the risk of litigation and potential liability. Any losses that Lion may suffer from any liability claims and the effect that any product liability litigation may have upon the brand image, reputation and marketability of Lion’s products could have a material adverse impact on Lion’s business, results of operations or financial condition.

Although Lion maintains insurance with respect to future claims in amounts it believes to be appropriate, no assurance can be given that material product liability claims will not be made in the future against Lion, or that claims will not arise in the future in excess or outside the coverage of Lion’s indemnities and insurance. When required, Lion records provisions for known potential liabilities, but there is the possibility that actual losses may exceed these provisions and therefore negatively impact earnings. Also, Lion may not be able in the future to obtain adequate product liability insurance or the cost of doing so may be prohibitive. Adverse determinations of material product liability claims made against Lion could also harm its reputation and cause it to lose customers and could have a material adverse effect on its business, results of operations or financial condition.

63

Lion is highly dependent on the services of Marc Bedard, its CEO—Founder and the rest of its senior management team. Lion’s inability to retain Mr. Bedard or attract and retain management or other employees who possess specialized market knowledge and technical skills could affect its ability to compete, manage or scale operations effectively or develop new products or otherwise materially adversely affect its business, results of operations or financial condition.

Lion’s success depends, in part, on its ability to retain its key personnel, in particular management and other employees who possess specialized market knowledge and technical skills. Lion is highly dependent on the services of Marc Bedard, its CEO—Founder and second largest shareholder. Mr. Bedard is the source of many of the innovative ideas driving Lion and their execution. If Mr. Bedard were to discontinue his service for Lion due to death, disability or any other reason, Lion could be significantly disadvantaged. The unexpected loss of or failure to retain one or more of Lion’s key employees could adversely affect Lion’s business, results of operations or financial condition. Lion does not currently maintain key man life insurance policies with respect to Mr. Bedard or any other officer.

Lion’s business plans, including the ramp-up of its manufacturing operations at its Saint-Jerome facility, its Joliet Facility and its Battery Plant, are highly dependent on the Company’s continuing ability to identify, hire, attract, train, develop and retain additional employees across all divisions, including highly qualified personnel with specialized market knowledge and technical skills. Experienced and highly skilled employees are in high demand and competition for these employees can be intense, and Lion’s ability to hire, attract and retain them depends on Lion’s ability to provide competitive compensation. Lion may not be able to attract, assimilate, develop or retain qualified personnel in the future, and Lion’s failure to do so could materially adversely affect its business, results of operations or financial condition. In addition, global labor shortages have exacerbated and may continue to exacerbate in the future Lion’s exposure to such risk.Any failure by Lion’s management team and employees to perform as expected may have a material adverse effect on its business, results of operations or financial condition.

Any deterioration in the labor environment or relationships with Lion’s employees, work stoppage or similar difficulties could have a material adverse effect on Lion’s business, results of operations or financial condition.

Although none of Lion’s employees are currently represented by a labor union, an election to determine whether the International Association of Machinists and Aerospace Workers will represent certain of the Joliet Facility employees is ongoing as further discussed in section 6.12 of the Company’s Annual Information Form for fiscal 2023 entitled “Employees”. It is common throughout the vehicle manufacturing industry for employees to belong to a union, which could result in increased employee costs, operational restrictions and potential disruptions to operations. The maintenance of a productive and efficient labor environment and, in the event of unionization of employees, the successful negotiation of a collective bargaining agreement, cannot be assured. A deterioration in relationships with employees or in the labor environment could result in work interruptions or other disruptions, or cause management to divert time and resources from other aspects of Lion’s business, any of which could have a material adverse effect on Lion’s business, results of operations or financial condition. The Company may also directly and indirectly depend upon other companies with unionized work forces, such as parts suppliers and trucking and freight companies, and work stoppages or strikes organized by such unions could have a material adverse impact on Lion’s business, results of operations or financial condition.

The terms of Lion’s debt instruments contain, and the terms of its future indebtedness may contain, certain covenants that restrict its ability to engage in certain transactions.

The instruments governing Lion’s indebtedness contain restrictive covenants that may limit its discretion with respect to certain business matters and require it to meet certain financial ratios and financial condition tests. Lion may also incur future indebtedness that might subject it to additional covenants and restrictions that could affect its financial and operational flexibility. The restrictions in the instruments governing Lion’s indebtedness may prevent it from taking actions that it believes could be in the best interest of its business and may make it difficult for it to execute its business strategy successfully or effectively compete with companies that are not similarly restricted. Such restrictions may include

64

restrictions relating to Lion’s ability to engage in certain transactions, including potential mergers, acquisitions, or other change of control transactions, which could limit its ability to pursue strategic opportunities. Further, the IQ Loan, the SIF Loan, the Convertible Debentures and the Non-Convertible Debentures contain certain affirmative and negative covenants, including, as applicable as further described in section 9 of the Company’s Annual Information Form for fiscal 2023 entitled “Description of Material Indebtedness”, certain covenants relating to Lion’s workforce, operations, and R&D activities, and to the location of its head office, all of which could restrict Lion in the manner in which it wishes to conduct its business.

Lion’s ability to comply with the covenants and restrictions contained in the instruments governing its indebtedness may be affected by economic, financial and industry conditions beyond its control. A breach of any of these covenants or restrictions could result in a default under the applicable debt instrument that would permit applicable lender(s) to declare all amounts outstanding thereunder to be due and payable, together with accrued and unpaid interest, or cause cross-defaults under Lion’s other debt instruments. If Lion is unable to repay its indebtedness, or otherwise defaults under its indebtedness, lenders could intent proceedings or proceed against the collateral securing any debt. In any such case, Lion may be unable to borrow under the agreements under which such other indebtedness is issued, which could have a material adverse effect on its business, results of operations or financial condition.

Fluctuations in foreign currency exchange rates could result in declines in reported sales and net earnings.

Lion reports its financial results in U.S. dollars and a material portion of its sales and operating costs are realized in currencies other than the U.S. dollar. For the year ended December 31, 2023, approximately 65% of Lion’s revenues were realized in Canada. Lion is also exposed to other currencies such as the Euro, and may in the future be exposed to other currencies. If the value of any currencies in which sales are realized, particularly the Canadian dollar, depreciates relative to the U.S. dollar, Lion’s foreign currency revenue will decrease when translated to U.S. dollars for reporting purposes. In addition, any depreciation in foreign currencies could result in higher local prices, which may negatively impact local demand and have a material adverse effect on Lion’s business, results of operations or financial condition. Alternatively, if the value of any of the currencies in which operating costs are realized appreciates relative to the U.S. dollar, Lion’s operating costs will increase when translated to U.S. dollars for reporting purposes. Although these risks may sometimes be naturally hedged by a match in sales and operating costs denominated in the same currency, fluctuations in foreign currency exchange rates, particularly the U.S.-Canadian dollar exchange rate, could create discrepancies between Lion’s sales and operating costs in a given currency that could have a material adverse effect on its business, results of operations or financial condition. Fluctuations in foreign currency exchange rates could also have a material adverse effect on the relative competitive position of Lion’s products in markets where it faces competition from manufacturers who are less affected by such fluctuations in exchange rates, especially in the U.S. market.

While Lion actively manages its exposure to foreign-exchange rate fluctuations and may enter into hedging contracts from time to time, such contracts hedge foreign-currency denominated transactions and any change in the fair value of the contracts could be offset by changes in the underlying value of the transactions being hedged. Furthermore, Lion currently does not have foreign-exchange hedging contracts in place with respect to all currencies in which it does business. As a result, there can be no assurance that Lion’s approach to managing its exposure to foreign-exchange rate fluctuations will be effective in the future or that Lion will be able to enter into foreign-exchange hedging contracts as deemed necessary on satisfactory terms.

Natural disasters, unusually adverse weather, epidemic or pandemic outbreaks, boycotts and geo-political events could materially adversely affect Lion’s business, results of operations or financial condition.

The occurrence of one or more natural disasters, such as hurricanes and earthquakes, unusually adverse weather, epidemic or pandemic outbreaks, such as the COVID-19 pandemic, boycotts and geo-

65

political events, such as civil unrest and acts of terrorism, military conflicts or similar disruptions could materially adversely affect Lion’s business, results of operations or financial condition. Some of these events could result in physical damage to property, an increase in energy prices and raw materials, potential supply chain disruptions, temporary or permanent closure of one or more of Lion’s current or planned facilities, temporary lack of an adequate workforce in a market, temporary or long-term disruption in the supply of raw materials, product parts and components, temporary disruption in transport from overseas, or disruption to Lion’s information systems. Lion may incur expenses or delays relating to such events outside of its control, which could have a material adverse impact on its business, operating results and financial condition.

Lion has limited experience servicing a large fleet of trucks. Lion’s inability to address the servicing requirements of its customers and leverage vehicle and customer data could materially adversely affect its business, results of operations or financial condition.

Lion has limited experience in servicing a large fleet of trucks and it expects to be required to increase its servicing capabilities as it scales its operations and continues to grow. Lion may have to build new experience centers in the United States and in Canada and expand services and coverage at its current experience centers to increase such servicing capabilities. In addition, as Lion increases deliveries and Lion vehicles are operated in additional locations in Canada in the United States, Lion will increasingly be required to provide servicing capabilities in locations where it does not have an experience center, including, in certain instances, remote locations.

Lion has partnered, and may from time to time in the future partner, with third-parties, where possible, to perform some or all of the servicing on its vehicles, and there can be no assurance that Lion will be able to enter into effective arrangement with any such third-party provider. Although such servicing partners may have experience in servicing other vehicles, they will initially have limited experience in servicing Lion vehicles. There can be no assurance that service arrangements with third-parties will adequately address the service requirements of Lion’s customers to their satisfaction, or that Lion and its servicing partners will have sufficient resources, experience or inventory to meet these service requirements in a timely manner.

Servicing electric vehicles is different than servicing vehicles with internal combustion engines and requires specialized skills, including high voltage training and servicing techniques. Although Lion believes the experience it has gained servicing its electric buses and in the initial deliveries of urban trucks positions it well to service its urban trucks and future products, Lion has limited after-sale experience of maintaining and servicing a large fleet of urban trucks for its customers, including with respect to charging infrastructure solutions and there is no guarantee Lion will be able to do so. Failure to address the servicing requirements of its customers could harm Lion’s reputation or materially adversely affect its business, results of operations or financial condition. If the Company experiences delays in adding such servicing capacity or servicing its vehicles efficiently, or experience unforeseen issues with the reliability of its vehicles, particularly higher-volume and relatively newer additions to its product offering, it could overburden its servicing capabilities and parts inventory.

Lion’s customers will also depend on Lion’s customer support team to resolve technical and operational issues relating to the software integrated in its vehicles. Lion’s ability to provide effective customer support is largely dependent on its ability to attract, train and retain qualified personnel with experience in supporting customers on platforms such as Lion’s platform. As it continues to grow, additional pressure may be placed on Lion’s customer support team, and Lion may be unable to respond quickly enough to accommodate short-term increases in customer demand for technical support. Lion may also be unable to modify the future scope and delivery of its technical support to compete with changes in the technical support provided by its competitors. Increased customer demand for support, without corresponding revenue, could increase costs and negatively affect Lion’s results of operation. If Lion is unable to successfully address the servicing requirements of its customers or establish a market perception that it maintains high-quality support, it may be subject to claims from its customers, including

66

for loss of revenue or damages, and its business, results of operations or financial condition may be materially and adversely affected.

In addition, Lion relies on data collected from the use of its fleet of vehicles, including vehicle data and data related to battery usage statistics. Lion uses this data in connection with the servicing and normal course software updates of its products, its software algorithms and the research, development and analysis of its vehicles. Lion’s inability to obtain this data or the necessary rights to use this data or Lion’s inability to properly analyze or use this data could result in Lion’s inability to adequately service its vehicles or delay or otherwise negatively impact its research and development efforts. Any of the foregoing could materially adversely affect Lion’s business, results of operations or financial condition.

Lion’s future growth is dependent upon the trucking and busing industries’ and Lion’s other customers’ willingness to adopt all-electric vehicles and specifically Lion’s vehicles.

Lion’s future growth is highly dependent upon the adoption by the commercial trucking and busing industries and Lion’s other target customers of, and Lion is subject to an elevated risk of any reduced demand for, alternative fuel vehicles in general and electric vehicles in particular. If the market for electric vehicles does not develop at the rate or in the manner or to the extent that Lion expects, or if critical assumptions Lion has made regarding the efficiency of its vehicles are incorrect or incomplete, Lion’s business, results of operations or financial condition may be adversely materially affected. The market for alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing customer demands and behaviors. Factors that may influence the adoption of alternative fuel vehicles, and specifically electric vehicles, include:

•perceptions about electric vehicle quality, safety (in particular with respect to lithium-ion battery cells, modules and packs), design, performance and cost;

•perceptions about vehicle safety in general, including the use of advanced technology, such as vehicle electronics, alternative fuel and regenerative braking systems;

•the limited range over which electric vehicles may be driven on a single battery charge;

•the decline of an electric vehicle’s range resulting from deterioration over time in the battery’s ability to hold a charge or short-term declines resulting from adverse weather conditions;

•the availability of service and charging stations for electric vehicles;

•concerns about electric grid capacity and reliability, which could derail past, present and future efforts to promote electric vehicles as a practical solution to vehicles which require gasoline;

•the availability of alternative fuel vehicles;

•improvements in the fuel economy of the internal combustion engine;

•the introduction of other alternative fuel vehicles or other technologies;

•the environmental consciousness of the trucking and busing industries and Lion’s other target customers;

•volatility in the cost of oil and gasoline;

•government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;

•the availability of tax and other governmental incentives to purchase and operate electric vehicles or future regulation;

•perceptions about and the actual cost of alternative fuel, as well as hybrid and electric vehicles; and

•macroeconomic factors.

It is unknown to what extent any possible decreases in the cost of diesel fuel or the introduction of new technologies may impact the market for all-electric vehicles. The battery electric vehicle industry and its technology are rapidly evolving and may be subject to unforeseen changes. Lion may be unable to keep up with changes in electric vehicle technology or alternatives to electricity as a fuel source and, as a result, its competitiveness may suffer. Developments in alternative or analogous technologies, such as advanced diesel, hydrogen, ethanol, fuel cells, or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, may harm Lion’s competitive position and growth prospects

67

or materially and adversely affect Lion’s business, results of operations or financial condition, including in ways which it currently does not anticipate. In addition, even if the trucking and busing industries and Lion’s other target customers adopt all-electric vehicles, Lion may be unable to maintain or improve its competitive position and market share, which could adversely affect Lion’s business, results of operations or financial condition.

Inadequate access to charging stations could impact the demand for all-electric vehicles, and failure by Lion to meet user expectations related to, or other difficulties in providing, charging solutions could harm Lion’s reputation or materially adversely affect its business, results of operations or financial condition.

Demand for Lion’s vehicles will depend in part upon the availability of a charging infrastructure. The Company markets its ability to provide its customers with comprehensive charging solutions. The Company has limited experience in the actual provision of its charging solutions to customers and providing these services is subject to challenges, which include:

•successful integration with existing third-party charging networks;

•inadequate capacity or over capacity in certain areas, security risks or risk of damage to vehicles charging equipment or real or personal property;

•access to sufficient charging infrastructure;

•availability of reliable and sufficient sources of electrical power;

•obtaining any required permits, land use rights and filings;

•the potential for lack of customer acceptance of Lion’s charging solutions; and

•the risk that government support for electric vehicles and infrastructure may not continue.

While the prevalence of charging stations generally has been increasing, charging station locations are significantly less widespread than gas stations. Some potential customers may choose not to purchase Lion’s vehicles because of the lack of a more widespread charging infrastructure. Further, to provide its customers with access to sufficient charging infrastructure, the Company will rely on the availability of, and successful integration of its vehicles with, third-party charging networks. Any failure of third-party charging networks to meet customer expectations or needs, including quality of experience, could impact the demand for all-electric vehicles, including Lion’s. In addition, given Lion’s limited experience in providing charging solutions, there could be unanticipated challenges, which may hinder its ability to provide its solutions or make the provision of its solutions costlier than anticipated. To the extent the Company is unable to meet user expectations or experience difficulties in providing charging solutions, its reputation could be harmed, and its business, results of operations or financial condition could be materially adversely affected.

Lion’s distribution model is different from the typical distribution model for most vehicle manufacturers and may limit Lion’s ability to sell its vehicles directly to customers in certain states in the United States or provide service from a location in every state.

Lion operates under a distribution model pursuant to which it sells vehicles directly to customers where possible. That said, certain U.S. states have laws that impose or may be interpreted to impose limitations on this direct-to-customer sales model for manufacturers such that Lion has in certain instances entered into distribution agreements with a select group of third-party dealers to abide by local laws and regulations in certain states requiring medium and heavy-duty vehicles to be sold through dealerships. The application of these state laws to Lion’s operations is complex and may be difficult to predict. Laws in some states may limit Lion’s ability to obtain dealer licenses from state motor vehicle regulators or to own or operate its own service centers. In addition, certain of the distribution agreements entered into with such third-party dealers may impose restrictions on the conduct of Lion's business in the applicable state, which could interfere with Lion's sales and marketing efforts in a particular state. As a result, the Company may not be able to sell directly to customers in each state in the United States or provide service from a location in every state. Continued regulatory limitations and other obstacles interfering with Lion’s ability to sell vehicles directly to customers could materially adversely affect Lion’s business, results of operations or financial condition.

68

Lion’s vehicles are subject to numerous mandated safety standards. Lion may be unable to comply with such safety standards, or could incur significant costs in order to do so, which could in each case materially adversely affect its business, results of operations or financial condition.

The vehicles that Lion manufactures and sells are subject to various and complex safety standards across jurisdictions where Lion operates. For example, in the United States, the National Traffic and Motor Vehicle Safety Act of 1966 regulates vehicles and vehicle equipment by prohibiting the sale of any new vehicle or equipment that does not conform to applicable vehicle safety standards established by the National Highway Transportation Safety Administration, while in Canada, the Motor Vehicle Safety Act regulates vehicles and Transport Canada develops and enforces Motor Vehicle Safety Standards which are generally harmonized with the standards in the United States. Meeting or exceeding such safety standards is costly and has continued to evolve alongside developments in technology and safety expectations. Although Lion continuously evaluates requirements for licenses, approvals, certificates and governmental authorizations necessary to manufacture, sell or service its vehicles in the United States and Canada, it may experience difficulties in obtaining or complying with various licenses, approvals, certifications and other governmental authorizations necessary to manufacture, sell or service its vehicles, especially for future vehicles. For example, in the United States, every class of heavy-duty engines or vehicles must receive Certificate of Conformity (“COCs”) from the EPA prior to being sold. These COCs must be obtained for each model year of production, and failure to obtain them prior to entering Lion’s vehicles into commerce may result in substantial fines or penalties. In addition, the EPA and California Air Resources Board (“CARB”) requires that every model year be zero-emission certified by executive order of the Company. Rigorous testing and the use of approved materials and equipment are among the requirements for achieving federal certification. Similar regulations exist in other jurisdictions, including Canada. Failure by Lion to maintain or obtain any necessary approval for, or otherwise satisfy motor vehicle standards with respect to, its existing or future electric vehicles, or the incurrence of material unexpected costs in connection therewith, could have a material adverse effect on Lion’s business, results of operations or financial condition.

In addition, certain governmental incentives or subsidies are conditional upon vehicles meeting certain standards and certifications. For example, the CARB certification is required to participate in California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP). Failure by Lion to maintain or obtain any necessary approval for, or otherwise satisfy motor vehicle standards with respect to, its existing or future electric vehicles could therefore result in the loss of governmental incentives or subsidies in respect to Lion products, including in certain instances in respect of existing orders, which could materially adversely affect Lion’s business, results of operations or financial condition.

Lion is subject to substantial laws, regulations and standards, including related to product safety, health and safety and environmental matters, each of which could impose substantial costs, legal prohibitions or unfavorable changes upon its operations or products, and any failure to comply with these laws, regulations or standards could materially adversely affect its business, results of operations and financial condition.

As a manufacturing company, including with respect to the Saint-Jerome facility, the Joliet Facility and the Battery Plant, Lion is subject to complex environmental, manufacturing, health and safety laws and regulations at numerous jurisdictional levels in the United States and Canada, including laws relating to the use, handling, storage, recycling, disposal and human exposure to hazardous materials and with respect to constructing, operating and maintaining its facilities. The costs of compliance, including remediating contamination if any is found on Lion’s properties, or at sites where Lion has sent wastes for disposal, and any changes to Lion’s operations mandated by new or amended laws, may be significant. Lion may also face unexpected delays in obtaining permits and approvals required by such laws in connection with its facilities, which would hinder operation of these facilities and Lion’s ability to operate its business or execute its growth strategy. Such costs and delays may materially adversely impact Lion’s business, results of operations or financial condition. Furthermore, any violations of these laws may result in substantial fines and penalties, remediation costs, third party damages, or a suspension or cessation of Lion’s operations. In addition, battery electric vehicles are subject to substantial regulation under

69

international, federal, state, provincial and local laws and implementing regulations, and these requirements are subject to change. For example, several jurisdictions have adopted, or are considering adopting, laws related to supply chain sustainability. Lion incurs significant costs in complying with applicable laws and regulations and may be required to incur additional costs to comply with any changes to such laws or regulations, and any failures to comply could result in significant expenses, delays or fines, or otherwise materially adversely affect Lion’s business, results of operations or financial condition.

Unfavorable changes in U.S. or Canadian laws or regulations and trade policy, including the imposition of tariffs or quotas, or changes in any free-trade arrangements such as the CUSMA could adversely affect Lion’s business, results of operations or financial condition.

While Lion began manufacturing vehicles at the Joliet Facility in November 2022, the majority of its vehicles are currently manufactured in, and distributed from, its Saint-Jerome facility. For the years ended December 31, 2023 and 2022, Lion’s total sales outside Canada represented approximately 35% and 13%, respectively, of its total sales, and Lion intends to continue to expand its operations and promote its brand and vehicles in the United States. The U.S. market has been and is expected to continue generating sales growth. Several factors, including weakened international economic conditions, the introduction of new trade restrictions, increased protectionism or changes in free-trade arrangements such as the Canada-United States-Mexico Agreement (CUSMA), tariffs or negative geo-political events could adversely affect such growth. The resulting environment could have a material adverse effect on Lion’s business, results of operations or financial condition.

Lion has incurred significant capital expenditures in connection with the construction of its Joliet Facility, which is expected to support the Company in addressing the increasing demand in the marketplace for “Made in America” zero-emission vehicles. Ramping up production at Lion’s Joliet Facility will require Lion to incur operational expenditures in the future, if and when it accelerates its production cadence at the Joliet Facility. If eligibility criteria for “Made in America” vehicles set forth in the Buy America Act were to change, or if other trade protection measures were to be implemented by the United States or any other jurisdiction in which the Company operates, Lion could have to incur significant cost to adjust its operations in order to ensure eligibility and compliance thereunder or Lion could potentially no longer be eligible under certain programs, which could result in a material adverse effect on Lion’s business, results of operations or financial condition.

Tax matters and changes in tax laws could materially adversely affect Lion’s business, results of operations or financial condition.

Lion conducts operations, directly and through its U.S. subsidiaries, in Canada and the United States and is therefore subject to income taxes in Canada and the United States. Lion’s effective income tax rate could be adversely affected by a number of factors, including changes in the valuation of deferred tax assets and liabilities, changes in tax laws, changes in accounting and tax standards or practices, changes in the composition of operating income by tax jurisdiction, changes in Lion’s operating results before taxes, and the outcome of income tax audits in Canada, the United States, or other jurisdictions. Lion regularly assesses all of these matters to determine the adequacy of its tax liabilities. If any of Lion’s assessments turn out to be incorrect, Lion’s business, results of operations, or financial condition could be materially adversely affected.

Lion generally conducts business in the United States through its U.S. subsidiaries. Due to the complexity of multinational tax obligations and filings, Lion may have a heightened risk related to audits or examinations by federal, state, provincial, and local taxing authorities in the jurisdictions in which it operates. Outcomes from these audits or examinations could have a material adverse effect on Lion’s business, results of operations, or financial condition.

The tax laws of Canada and the United States as well as potentially any other jurisdiction in which Lion may operate in the future, have detailed transfer pricing rules that require that all transactions with non-resident related parties satisfy arm’s length pricing principles. Although Lion believes that its transfer pricing policies have been reasonably determined in accordance with arm’s length principles, the taxation

70

authorities in the jurisdictions where Lion carries on business could challenge its transfer pricing policies. International transfer pricing is a subjective area of taxation and generally involves a significant degree of judgment. If any of these taxation authorities were to successfully challenge Lion’s transfer pricing policies, Lion could be subject to additional income tax expenses, including interest and penalties. Any such increase in Lion’s income tax expense and related interest and penalties could have a material adverse effect on its business, results of operations, or financial condition.

In addition, Lion is also entitled to claim certain expenses and tax credits, including research and development expenses and Scientific Research and Experimental Development tax credits. Although Lion believes that the claims or deductions have been reasonably determined, there can be no assurance that Canadian or other relevant foreign taxation authorities will agree. If a taxation authority were to successfully challenge the correctness of such expenses or tax credits claimed, or if a taxation authority were to reduce any tax credit either by reducing the rate of the grant or the eligibility of some research and development expenses in the future, Lion’s business, results of operations, or financial condition could be materially adversely affected.

Lion may also be adversely affected by changes in the relevant tax laws and tax rates, treaties, regulations, administrative practices and principles, judicial decisions, and interpretations thereof, in each case, possibly with retroactive effect. These changes could adversely affect Lion’s taxation, especially as Lion expands its relationships and operations internationally and could have a material adverse effect on Lion’s business, results of operations, or financial condition.

Lion’s employees and independent contractors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, which could have a material adverse effect on its business, results of operations or financial condition.

Lion is exposed to the risk that its employees, independent contractors or other parties it collaborates with may engage in misconduct or other illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct or other activities that violate laws and regulations, including production standards, federal, state and provincial fraud, abuse, data privacy and security laws, other similar laws or laws that require the true, complete and accurate reporting of financial information or data. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions Lion takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting it from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. In addition, Lion is subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against Lion and it is not successful in defending itself or asserting its rights, those actions could have a material adverse effect on its business, results of operations or financial condition, including, without limitation, by way of imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, integrity oversight and reporting obligations to resolve allegations of non-compliance, imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings and curtailment of its operations.

Lion is subject to information technology and cybersecurity risks, including potential breaches or interruptions to operational and security systems, infrastructure, software, and customer data processed by it or third-parties suppliers, and such risks may have a material adverse effect on Lion’s business, results of operations or financial condition.

Lion is at risk for interruptions, outages and breaches of: (i) operational systems, including business, financial, accounting, product development, data processing or production processes, owned by it or its third-party suppliers; (ii) facility security systems, owned by it or its third-party suppliers; (iii) transmission control modules or other in-product technology, owned by it or its third-party suppliers; (iv) the integrated software in Lion’s vehicles; or (v) customer or driver data that Lion processes or Lion’s third-party suppliers process on its behalf. Such cyber incidents could materially disrupt operational systems, result in loss of intellectual property, trade secrets or other proprietary or competitively sensitive information, compromise certain information of customers, employees, suppliers, drivers or others, jeopardize the

71

security of Lion’s facilities, or affect the performance of transmission control modules or other in-product technology and the integrated software in Lion’s vehicles. A cyber incident could be caused by disasters, insiders (through inadvertence or with malicious intent) or malicious third parties (including nation-states or nation-state supported actors or terrorist groups) using sophisticated, targeted methods to circumvent firewalls, encryption and other security defenses, including hacking, fraud, viruses, trickery, denial or degradation of service attacks, ransomware, social engineering schemes or other forms of deception. The techniques used by cyber attackers change frequently and may be difficult to detect for long periods of time.

Although Lion maintains information technology measures designed to protect it against intellectual property theft, data breaches and other cyber incidents, such measures will require updates and improvements, and there is no guarantee that such measures will be adequate to detect, prevent or mitigate cyber incidents. Any implementation, maintenance, segregation and improvement of Lion’s systems may require significant management time, support and cost. Moreover, there are inherent risks associated with developing, improving, expanding and updating current systems, including the disruption of Lion’s data management, procurement, production execution, finance, supply chain and sales and service processes. These risks may affect Lion’s ability to manage its data and inventory, procure parts or supplies or produce, sell, deliver and service its vehicles, adequately protect its intellectual property or achieve and maintain compliance with, or realize available benefits under, applicable laws, regulations and contracts. Lion cannot be sure that these systems upon which it relies, including those of its third-party suppliers, will be effectively implemented, maintained or expanded as planned. If Lion does not successfully implement, maintain or expand these systems as planned, its operations may be disrupted, Lion’s ability to accurately and timely report its financial results could be impaired, and deficiencies may arise in Lion’s internal control over financial reporting, which may impact Lion’s ability to certify its financial results. Moreover, Lion’s proprietary information or intellectual property could be compromised or misappropriated, and its reputation may be adversely affected. If these systems do not operate as expected, Lion may be required to expend significant resources to make corrections or find alternative sources for performing these functions.

A significant cyber incident could impact Lion’s manufacturing capacity or production capability, harm its reputation, cause Lion to breach its contractual arrangements with other parties or subject Lion to regulatory actions or litigation, any of which could materially affect its business, results of operations or financial condition. In addition, Lion’s insurance coverage for cyberattacks may not be sufficient to cover all the losses it may experience as a result of a cyber incident.

Lion also collects, uses, discloses, stores, transmits and otherwise processes customer, driver and employee and others’ data as part of its business and operations, which may include personal data or confidential or proprietary information. Lion also works with partners and third-party service providers that may in the course of their business relationship with Lion collect, store and process such data on Lion’s behalf and in connection with Lion’s products and services. There can be no assurance that any security measures that Lion or its third-party service providers or suppliers have implemented will be effective against current or future security threats. While Lion has developed systems and processes designed to protect the availability, integrity, confidentiality and security of Lion’s, Lion’s customers’, drivers’ and employees’ and others’ data, such security measures or those of its third-party service providers, suppliers could fail and result in unauthorized access to or disclosure, acquisition, encryption, modification, misuse, loss, destruction or other compromise of such data. If a compromise of such data were to occur, Lion may become liable under its contracts with other parties and under applicable law for damages and incur penalties and other costs to respond to, investigate and remedy such an incident.

Collection, use, disclosure, storage, transmission or other processing of Lion’s customers’, employees’ and others’ information in conducting Lion’s business may subject it to various legislative and regulatory burdens related to data privacy and security that could require notification of data breaches, restrict or impose burdensome conditions on Lion’s use of such information and hinder Lion’s ability to acquire new customers or market to existing customers. Laws in the United States and Canada require Lion to provide notice to individuals, customers, regulators and others when certain sensitive information

72

has been compromised as a result of a security breach or where a security breach creates a real risk of significant harm to an individual. Such laws are inconsistent and compliance in the event of a widespread data breach could have serious negative consequences for Lion’s business, including possible fines, penalties and damages, reduced customer demand for its vehicles and harm to its reputation and brand. Depending on the facts and circumstances of such an incident, these damages, penalties, fines and costs could be significant. Customers may also object to Lion’s or its third party service providers’ collection or processing of certain information, including personal data. Any such event could harm Lion’s reputation and result in litigation against it, or otherwise materially adversely affect its business, results of operations or financial condition.

Any unauthorized control or manipulation of the information technology systems in Lion’s vehicles could result in loss of confidence in Lion and its vehicles and harm its reputation, which could materially adversely affect its business, results of operations or financial condition.

Lion’s vehicles contain complex information technology systems and built-in data connectivity to accept and install periodic remote updates to improve or update functionality. Lion has designed, implemented and tested security measures intended to prevent unauthorized access to its information technology networks and its vehicles and related systems. However, hackers may attempt to gain unauthorized access to modify, alter and use such networks, vehicles and systems to gain control of or to change Lion’s solutions’ functionality, user interface and performance characteristics, or to gain access to data stored in or generated by the vehicles. Future vulnerabilities could be identified and Lion’s efforts to remediate such vulnerabilities may not be successful. Any unauthorized access to or control of Lion’s vehicles, or any loss of customer data, could result in legal claims or proceedings and remediation of such problems could result in significant, unplanned capital expenditures. In addition, regardless of their veracity, reports of unauthorized access to its technology systems or data, as well as other factors that may result in the perception that Lion’s vehicles, technology systems or data are capable of being “hacked,” could materially negatively affect Lion’s brand and harm Lion’s business, results of operations or financial condition.

Lion has and may in the future make strategic alliances, partnerships or investments or acquisitions, all of which could divert management’s attention, result in Lion incurring significant costs or operating difficulties and dilution to its shareholders and otherwise disrupt its operations and materially adversely affect its business, results of operations or financial condition.

As part of its growth strategy, Lion may from time to time explore or enter into strategic alliances, partnerships or investments or acquisitions and/or other inorganic growth opportunities. There are risks associated with the foregoing, including:

•the sharing of confidential information;

•the diversion of management’s time and focus from operating its business;

•the use of resources that are needed in other areas of its business;

•unforeseen costs or liabilities;

•adverse effects to Lion’s existing business relationships with partners and suppliers;

•litigation or other claims arising in connection with the acquired company, investment, partnership or joint venture;

•the possibility of adverse tax consequences;

•in the case of an acquisition, implementation or remediation of controls, procedures and policies of the acquired company;

•in the case of an acquisition, difficulty integrating the accounting systems and operations of the acquired company; and

•in the case of an acquisition, retention and integration of employees from the acquired company, and preservation of its corporate culture.

Lion may have limited ability to monitor or control the actions of any third party involved in any such transaction and, to the extent any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, Lion may also suffer negative publicity or harm to its

73

reputation by virtue of its association with any such third party. Participation in strategic alliances, partnerships or investments or acquisitions may also result in dilutive issuances of equity securities, which could adversely affect the price of the common shares of the Company, or result in issuances of securities with superior rights and preferences to the common shares of the Company or the incurrence of debt with restrictive covenants that limit Lion’s future uses of capital in pursuit of business opportunities. Lion may also not be able to identify opportunities for strategic partnerships or arrangements, acquisition or investments that meet its strategic objectives, or to the extent such opportunities are identified, may not be able to negotiate terms with respect to such opportunity that are acceptable to it. At this time Lion has made no commitments or agreements with respect to any such material transactions.

Lion’s vehicles, as well as the maintenance and repair services it offers to its customers, rely on software and hardware that is highly technical, and if these systems contain errors, bugs or vulnerabilities, or if Lion is unsuccessful in addressing or mitigating technical limitations in its systems, Lion’s business, results of operations or financial condition could be materially adversely affected.

Lion’s vehicles rely on software and hardware, including software and hardware developed or maintained by third parties, that is highly technical and complex and require modification and updates over the life of the vehicle. In addition, the performance of the software solutions included in Lion’s vehicles depends on the ability of such software and hardware to store, retrieve, process and manage immense amounts of data. Lion’s software and hardware may contain errors, bugs or vulnerabilities, and its systems are subject to certain technical limitations that may compromise Lion’s ability to meet its objectives. Some errors, bugs or vulnerabilities inherently may be difficult to detect and may only be discovered after the code has been released for external or internal use. Errors, bugs, vulnerabilities, design defects or technical limitations may be found within Lion’s software and hardware. Although Lion attempts to remedy any issues it observes in its vehicles and software as effectively and rapidly as possible, such efforts may not be timely, may hamper production or may not be to the satisfaction of Lion’s customers, and any deployment of software updates may result in significant costs to Lion. Additionally, if Lion is able to deploy updates to the software addressing any issues, but such updates cannot or are not installed by its customers, such customers’ software will be subject to these vulnerabilities until they install such updates. If Lion is unable to prevent or effectively remedy errors, bugs, vulnerabilities or defects in its software and hardware, Lion may suffer damage to its reputation, loss of customers, loss of revenue or liability for damages, any of which could materially adversely affect Lion’s business, results of operations or financial condition.

Lion relies on unpatented proprietary know-how, trade secrets and contractual restrictions, and not patents, to protect its intellectual and other proprietary rights. Failure to adequately protect, enforce or otherwise manage Lion’s intellectual and other proprietary rights may undermine its competitive position and could materially adversely affect its business, results of operations or financial condition.

Protection of proprietary technology, processes, methods and other intellectual property related to Lion is critical to its business. Lion relies on unpatented proprietary know-how, trade secrets, trademarks, copyrights and contractual restrictions to protect its intellectual property and other proprietary rights and Lion does not hold any patents related to its business. As a matter of course, Lion employs numerous measures to protect its intellectual property and other confidential information, including technical data. For instance, Lion has implemented procedures designed to make the proprietary technology incorporated in its vehicle systems very difficult to access and/or retrieve and imposes consequences for users that seek to obtain unauthorized access to such technology. In addition, Lion enters into confidentiality agreements with suppliers, vendors, service providers, customers and other third parties with whom it may share information about its business and operations, and Lion also requires all of its employees, consultants and other persons who work for it to enter into confidentiality and assignment of intellectual property agreements. However, failure to adequately protect Lion’s intellectual property rights could result in Lion’s competitors offering similar products, potentially resulting in the loss of some of

74

Lion’s competitive advantage and a decrease in revenue which would adversely affect Lion’s business, results of operations or financial condition.

As well, there can be no assurance that competitors and other third parties will not independently develop the know-how and trade secrets related to Lion’s proprietary technology, in which case Lion would not be able to prevent such third parties from using such know-how and trade secrets, or develop better products or manufacturing methods or processes than it.

Further, Lion may not be able to deter current and former employees, consultants, suppliers and customers as well as other parties from breaching confidentiality agreements and misappropriating proprietary information and it is possible that third parties may copy or otherwise obtain and use Lion’s information and proprietary technology without authorization or otherwise infringe on Lion’s intellectual property and other proprietary rights. Lion may in the future need to rely on litigation to enforce its intellectual property rights and contractual rights, and, if not successful, may not be able to protect the value of its intellectual property. Any litigation could be protracted and costly and have a material adverse effect on Lion’s business, results of operations or financial condition regardless of the outcome.

As well, in some cases the costs associated with such litigation could make enforcement impracticable. Further, intellectual property and contract laws vary throughout the world. Some foreign countries do not protect intellectual property rights to the same extent as do the laws of Canada. Policing the unauthorized use of Lion’s intellectual property in foreign jurisdictions may be difficult. Therefore, Lion’s intellectual property rights may not be as strong or as easily enforced outside of Canada. Failure to adequately enforce Lion’s intellectual property rights could result in its competitors offering similar products, potentially resulting in the loss of some of Lion’s competitive advantage and a decrease in its revenue, which would adversely affect its business, results of operations or financial condition.

Lion may need to defend itself against intellectual property infringement or trade secret misappropriation claims, which may be time-consuming, could cause it to incur substantial costs and could prevent Lion from developing or commercializing future products.

Companies, organizations or individuals, including Lion’s competitors, may own or obtain patents, trademarks or other intellectual property or proprietary rights that would prevent or limit Lion’s ability to make, use, develop or sell its vehicles or components, which could make it more difficult for Lion to operate its business. Lion may receive inquiries from owners of intellectual property rights inquiring whether it infringes their proprietary rights. Lion may also be the subject of allegations that it has misappropriated a third party’s trade secrets or other proprietary rights. Companies owning patents or other intellectual property rights relating to the operation of Lion’s business, including in respect of battery packs, electric motors, fuel cells or electronic power management systems may allege infringement or misappropriation of such rights. Some of these companies or competitors may be bigger than Lion and therefore have greater resources to dedicate to initiate or defend against those claims, whether founded or unfounded. In response to a determination that Lion has infringed or misappropriated upon a third party’s intellectual property rights, Lion may be required to do one or more of the following: (i) cease development, sales, or use of vehicles that incorporate the asserted intellectual property, (ii) establish and maintain alternative branding for its products and services, (iii) pay substantial damages, (iv) obtain a license from the owner of the asserted intellectual property right, which license may not be available on commercially reasonable terms or at all; or (v) redesign one or more aspects or systems of its vehicles.

Any litigation or claims against Lion, whether valid or invalid, could result in substantial costs and diversion of resources or otherwise materially adversely affect its business, results of operations and financial condition.

Lion also licenses patents and other intellectual property from third parties, including its third-party suppliers, and Lion may face claims that the use by it of this in-licensed technology infringes the intellectual property rights of others. In such cases, Lion would seek indemnification from its licensors. However, Lion’s rights to indemnification may be unavailable or insufficient to cover Lion’s costs and losses, which could materially adversely affect Lion’s business, results of operations and financial

75

condition. As well, Lion cannot be certain that such licensed intellectual property will afford protection against competitors with similar technology as the scope of protection of issued patent claims is often difficult to determine. The claims under any licensed patents may not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to the patented technology.

The share price of the Company’s common shares has been and may continue to be volatile.

In recent years, the securities markets have experienced a high level of price and volume volatility, and the market price of securities of many companies has experienced wide fluctuations, which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. The market price of the Company’s common shares and other listed securities has and could be further subject to significant fluctuations. Some of the factors that may cause the market price of the Company’s common shares to fluctuate include:

•volatility in the market price and trading volume of comparable companies;

•actual or anticipated changes or fluctuations in Lion’s operating results or in the expectations of market analysts;

•short sales, hedging and other derivative transactions in the Company’s common shares;

•publication of research reports or news stories about Lion, its competitors or its industry;

•litigation or regulatory action against Lion;

•positive or negative recommendations or withdrawal of research coverage by securities analysts;

•the impact of any public announcements made in regard to any transactions;

•adverse market reaction to any indebtedness it may incur or additional securities it may issue in the future;

•investors’ general perception of Lion and the public’s reaction to its press releases, other public announcements and filings with U.S. and Canadian securities regulators, including its financial statements;

•changes in general political, economic, industry and market conditions and trends;

•sales of the Company’s common shares by existing shareholders;

•recruitment or departure of key personnel;

•significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving Lion or its competitors; and

•the other risk factors described in this section of this MD&A

Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. Certain institutional investors may base their investment decisions on consideration of Lion’s environmental, governance and social practices and performance against such institutions’ respective investment guidelines and criteria, and failure to satisfy such criteria may result in limited or no investment in the Company’s common shares by those institutions, which could materially adversely affect the trading price of the Company’s common shares. There can be no assurance that fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue for a protracted period of time, Lion’s business, results of operations or financial condition and the trading price of Lion’s common shares may be materially adversely affected.

In addition, broad market and industry factors may harm the market price of the Company’s common shares. Hence, the price of the Company’s common shares could fluctuate based upon factors that have little or nothing to do with it, and these fluctuations could materially reduce the price of the Company’s common shares regardless of Lion’s operating performance. In the past, following a significant decline in the market price of a company’s securities, there have been instances of securities class action litigation having been instituted against that company. If Lion is involved in any similar litigation, it could incur substantial costs, its management’s attention and resources could be diverted and Lion’s business, results of operations and financial condition could be materially adversely affected.

76

The Business Combination with NGA increases the potential for shareholder litigation.

Lion went public via the Business Combination with NGA, a special purpose acquisition company (“SPAC”). Through the Business Combination, a wholly-owned affiliate of Lion merged with NGA, which resulted in NGA becoming a wholly-owned subsidiary of Lion. The popularity of going public in recent years via a merger with a SPAC has resulted in heightened regulatory, activist or other public scrutiny and a corresponding increase in the number of shareholder lawsuits. The Company is therefore subject to an increased risk of shareholder litigation relating to NGA’s directors and officers in connection with the Business Combination. For example, on November 1, 2023, a putative verified class action complaint (the “Complaint”) was filed in the Delaware Court of Chancery against the pre-Business Combination directors and officers of NGA, now a wholly-owned subsidiary of the Company, and Northern Genesis Sponsor, LLC, the sponsor of NGA’s special purpose acquisition company merger with a wholly-owned subsidiary of the Company in May 2021 alleging, among other things, that the director and officer defendants and NGA’s sponsor breached their fiduciary duties in connection with the Business Combination as well as a related claim for unjust enrichment as a result of the challenged Business Combination, as further described in section 13 of the Company’s Annual Information Form entitled “Legal Proceedings and Regulatory Actions.” These sorts of lawsuits, proceedings or other disputes, regardless of merit, can involve substantial costs, including the costs associated with investigation, litigation and possible settlement, judgment, penalty or fines. In addition, lawsuits and other legal proceedings may be time-consuming and cause management to divest time and attention from other aspects of Lion’s business, all of which could, alone or in combination with the impact on the Company's manufacturing operations described above, materially adversely affect Lion’s business, results of operations or financial condition.

Certain of Lion’s existing shareholders have significant influence over Lion.

As of February 28, 2024, PEC, directly or indirectly, owns or controls approximately 34.1% of Lion’s issued and outstanding common shares, and 9368-2672, directly or indirectly, owns or controls approximately 11.5% of Lion’s issued and outstanding common shares, in each case, on a non-diluted basis. Each of PEC and 9368-2672 may therefore have significant influence over Lion’s management and affairs, which could limit a shareholder’s ability to influence the outcome of matters submitted to shareholders for a vote, including election of directors and significant corporate transactions. In addition, Lion has entered into a Nomination Rights Agreement, pursuant to which, subject to the terms and conditions contained therein, each of PEC and 9368-2672 are granted certain rights to nominate members of Lion’s Board of Directors (including, in certain cases, members of committees of Lion’s Board of Directors) for so long as it holds a requisite percentage of the total voting power of Lion. See section 14 of the Company’s Annual Information Form for the year ended December 31, 2023 entitled “Interest of Management and Others in Material Transactions” for a summary description of the Nomination Rights Agreement. The market price of Lion’s common shares could be adversely affected due to the significant influence and voting power of PEC and 9368-2672. Moreover, the significant influence and voting interest of PEC and 9368-2672 may discourage transactions involving a change of control, including transactions in which an investor, as a holder of Lion’s common shares, might otherwise receive a premium for Lion’s common shares over the then-current market price, or discourage competing proposals if a going private transaction is proposed.

Additionally, PEC’s interests may not align with the interests of Lion’s other shareholders. PEC (or its affiliates or related entities) is in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with Lion. PEC (or its affiliates or related entities) may also pursue acquisition opportunities that may be complementary to Lion’s business, and, as a result, those acquisition opportunities may not be available to Lion.

Future sales (or the perception of future sales) of Lion’s securities by existing shareholders or by Lion could cause the market price of Lion’s common shares to drop significantly, even if its business is doing well.

The Company may issue additional securities to finance future activities. Sales of a substantial number of Lion’s common shares in the public market could occur at any time. These sales, or the

77

perception in the market that the holders of a large number of Lion’s common shares or securities convertible into Lion’s common shares intend or that Lion intends to sell common shares or securities convertible into common shares, could reduce the market price of Lion’s common shares. A decline in the market prices of the common shares could impair Lion’s ability to raise additional capital through the sale of securities should Lion desire to do so.

Lion entered into a registration rights agreement pursuant to which, subject to the terms and conditions contained therein, each of PEC, 9368-2672 and the Warrantholder were granted certain rights with respect to the registration or qualification by prospectus in the United States and/or Canada of the sale of common shares of the Company held by them.

The Specified Customer Warrant entitles the Specified Warrantholder to acquire, subject to the terms thereof (including applicable vesting conditions) up to 35,350,003 common shares of Lion at an exercise price of $5.66 per share, the whole as described in section 12.0 of this MD&A entitled “Components of Results of Operations”. In addition, as of February 28, 2024, the Company had outstanding 27,111,323 Business Combination Warrants, with each warrant entitling the holder thereof to acquire, subject to the terms thereof, one common share of Lion at an exercise price of $11.50 per share until May 6, 2026, 22,637,795 2022 Warrants, with each warrant entitling the holder thereof to acquire, subject to the terms thereof, one common share of Lion at an exercise price of $2.80 per share for a period of five years until December 16, 2027, and 22,500,000 July 2023 Warrants, with each warrant entitling the holder thereof to acquire, subject to the terms thereof, one common share of Lion at an exercise price of C$2.81 per share for a period of five years until July 14, 2023. The Company also issued in July 2023 approximately $74 million aggregate principal amount of Convertible Debentures, which Convertible Debentures will mature on July 19, 2028 and are convertible at the holders’ option into common shares of Lion at a conversion price of $2.58 per share. Any exercise by the Specified Warrantholder, any holder of Business Combination Warrants, the 2022 Warrants or the 2023 Warrants of its right to acquire common shares of the Company pursuant to the Specified Customer Warrant, the Business Combination Warrants, the 2022 Warrants or the July 2023 Warrants as applicable, or any exercise by any holder of Convertible Debentures of its right to convert its Convertible Debentures into common shares will dilute the ownership interests of Lion’s then-existing shareholders and reduce Lion’s earnings per share. In addition, any sales in the public market of any Lion’s common shares issuable upon the exercise of the Specified Customer Warrant, Business Combination Warrants, 2022 Warrants, or July 2023 Warrants or conversion of Convertible Debentures could adversely affect prevailing market prices of Lion’s common shares. Further, the Company cannot predict the size of future issuances of Lion’s common shares or the effect, if any, that future issuances and sales of Lion’s common shares will have on the market price of common shares. Sales of a substantial number of Lion’s common shares, or the perception that such sales could occur, may adversely affect prevailing market prices for Lion’s common shares.

If securities or industry analysts do not publish or cease publishing research or reports about Lion, its business or market, or if they change their recommendations regarding the Company’s common shares adversely, the price and trading volume of the Company’s common shares could decline.

The trading market for the Company’s common shares is influenced by the research and reports that industry or securities analysts publish about Lion, its business, its market or its competitors. If any of the analysts who cover Lion or may cover Lion in the future change their recommendation regarding the Company’s common shares adversely, or provide more favorable relative recommendations about its competitors, the price of the Company’s common shares would likely decline. If any analyst who covers Lion or may cover it in the future were to cease coverage of Lion or fail to regularly publish reports on it, Lion could lose visibility in the financial markets, which in turn could cause the price or trading volume of the Company’s common shares to decline.

Lion does not expect to declare any dividends in the foreseeable future.

The Company has never declared or paid any dividends on its common shares, and the Company anticipates reinvesting earnings to finance its business and its growth strategy, and does not anticipate

78

declaring any cash dividends to holders of Lion’s common shares in the foreseeable future. Consequently, investors may need to rely on sales of their shares after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

The payment of future dividends, if any, will be reviewed periodically by Lion’s Board of Directors and will depend upon, among other things, conditions then existing including earnings, financial conditions, cash on hand, financial requirements to fund our commercial activities, development and growth, and other factors that our board of directors may consider appropriate in the circumstances.

Lion is a foreign private issuer within the meaning of the SEC rules, and as such is exempt from certain provisions applicable to U.S. domestic public companies and is permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the NYSE Listed Company Manual.

Because Lion qualifies as a foreign private issuer under the Exchange Act, Lion is exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: the rules requiring domestic filers to issue financial statements prepared under U.S. GAAP; the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and the selective disclosure rules by issuers of material non-public information under Regulation FD. Lion is required to file an annual report on Form 40-F at the time of filing of its annual information form in Canada. In addition, Lion publishes its results on a quarterly basis as press releases distributed pursuant to the rules and regulations of the New York Stock Exchange. Press releases and disclosure documents prepared in accordance with Canadian requirements relating to financial results and material events are furnished to the SEC on Form 6-K. However, the information Lion is required to file with or furnish to the SEC may be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, holders of the Company’s common shares may not be afforded the same protections or information that would be made available to them were they investing in a U.S. domestic issuer.

In addition, as a corporation incorporated under the Business Corporations Act (Quebec) listed on the NYSE, Lion is subject to the NYSE Listed Company Manual. However, the NYSE Listed Company Manual permits a foreign private issuer like Lion to follow certain of the corporate governance practices of its home country. Certain corporate governance practices in Canada, which is Lion’s home country, may differ significantly from the NYSE Listed Company Manual. Lion may rely on home country practice with respect to its corporate governance, and Lion is currently doing so with respect to certain corporate governance requirements. As a result, holders of the Company’s common shares may be afforded less protection than they otherwise would enjoy under the NYSE Listed Company Manual applicable to U.S. domestic issuers.

Any issuance of preferred shares could make it difficult for another company to acquire Lion or could otherwise adversely affect holders of the Company’s common shares, which could depress the price of the Company’s common shares.

Lion’s Board of Directors has the authority to issue preferred shares of the Company and to determine the preferences, limitations and relative rights of such preferred shares and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by its shareholders. Any such preferred shares of the Company could be issued with liquidation, dividend and other rights superior to the rights of the Company’s common shares. The potential issuance of preferred shares may delay or prevent a change in control of Lion, discourage bids for the Company’s common shares at a premium over the market price and adversely affect the market price and other rights of the holders of the Company’s common shares.

79

Lion’s constating documents and certain Canadian legislation contain provisions that may have the effect of delaying or preventing certain change in control transactions or shareholder proposals.

Certain provisions of Lion’s By-laws (as defined below) and certain Canadian legislation, together or separately, could discourage or delay certain change in control transactions or shareholder proposals. Lion’s By-laws contain provisions that establish certain advance notice procedures for nomination of candidates for election as directors at shareholders’ meetings. The Business Corporations Act (Quebec) requires that any shareholder proposal that includes nominations for the election of directors must be signed by one or more holders of shares representing in the aggregate not less than 5% of the shares or 5% of the shares of a class or series of shares of the corporation entitled to vote at the meeting to which the proposal is to be presented. The Investment Canada Act requires that a non-Canadian must file an application for review with the Minister responsible for the Investment Canada Act and obtain approval of the Minister prior to acquiring control of a “Canadian business” within the meaning of the Investment Canada Act, where prescribed financial thresholds are exceeded. Furthermore, limitations on the ability to acquire and hold common shares of the Company may be imposed by the Competition Act (Canada). This legislation permits the Commissioner of Competition, or Commissioner, to review any acquisition or establishment, directly or indirectly, including through the acquisition of shares, of control over or of a significant interest in Lion. Any of these provisions may discourage a potential acquirer from proposing or completing a transaction that may have otherwise presented a premium to Lion’s shareholders.

Lion’s constating documents provide that any derivative actions, actions relating to breach of fiduciary duties and other matters relating to its internal affairs will be required to be litigated in Canada, other than complaints asserting a cause of action arising under the Securities Act or the Exchange Act, and that the U.S. federal district courts will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or the Exchange Act, which could limit shareholders’ ability to obtain a favorable judicial forum for disputes with Lion

Lion’s By-laws include a forum selection provision that provides that, unless Lion consents in writing to the selection of an alternative forum, the Superior Court of Justice of the Province of Quebec, Canada and the appellate courts therefrom, will be the sole and exclusive forum for (i) any derivative action or proceeding brought on Lion’s behalf; (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of Lion’s directors, officers, or other employees to Lion; (iii) any action or proceeding asserting a claim arising pursuant to any provision of the Business Corporations Act (Quebec) or Lion’s By-laws; or (iv) any action or proceeding asserting a claim otherwise related to the relationships among Lion, its affiliates and their respective shareholders, directors and/or officers, but excluding claims related to Lion’s business or such affiliates. The forum selection provision also provides that Lion’s securityholders are deemed to have consented to personal jurisdiction in the Province of Quebec and to service of process on their counsel in any foreign action initiated in violation of the foregoing provisions.

In addition, Lion’s By-laws provide that the U.S. federal district courts will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the U.S. Securities Act of 1933, as amended (the “Securities Act”) and the Exchange Act. The enforceability of similar exclusive forum provisions (including exclusive federal forum provisions for actions, suits or proceedings asserting a cause of action arising under the Securities Act) in other companies’ organizational documents has been challenged in legal proceedings, and there is uncertainty as to whether courts would enforce the exclusive forum provisions in Lion’s By-laws. Additionally, Lion’s securityholders cannot waive compliance with the U.S. federal securities laws and the rules and regulations thereunder. The forum selection provision may impose additional litigation costs on shareholders in pursuing any such claims. Additionally, the forum selection provision may limit shareholders’ ability to bring a claim in a judicial forum that they find favorable for disputes with Lion or its directors, officers or employees, which may discourage the filing of lawsuits against Lion and its directors, officers and employees, even though an action, if successful, might benefit its shareholders. The courts of the Province of Quebec may also reach different judgments or results than would other courts, including courts where a shareholder considering an action may be

80

located or would otherwise choose to bring the action, and such judgments may be more or less favorable to Lion than to its shareholders. If a court were to find either choice of forum provision contained in Lion’s By-laws to be inapplicable or unenforceable in an action, Lion may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect Lion’s business, results of operations and financial condition.

Investors may be subject to adverse U.S. federal income tax consequences if the Company is or becomes a passive foreign investment company for U.S. federal income tax purposes.

A non-U.S. corporation will be considered a passive foreign investment company (“PFIC”), for U.S. federal income tax purposes in any taxable year in which either (i) 75% or more of its gross income is passive income or (ii) the average percentage of the value of its assets that produce or are held for the production of passive income is at least 50 percent.

Based on Lion’s financial statements and its expectations about the nature and amount of its income, assets and activities and the market value of its equity, Lion does not believe that it was a PFIC for its taxable year ended December 31, 2023. No assurance can be given that Lion will not be a PFIC for the current or any future taxable year. If Lion is a PFIC for any taxable year during which a U.S. Holder (as defined under “Certain United States Federal Income Tax Considerations” in section 19 of the Company's Annual Information Form for the year ended December 31, 2023 entitled “Certain United States Federal Income Tax Considerations”) holds common shares of the Company, the U.S. Holder might be subject to increased U.S. federal income tax liability and to additional reporting obligations. See “Passive Foreign Investment Company Status” in section 19 of the Company's Annual Information Form for the year ended December 31, 2023 entitled “Certain United States Federal Income Tax Considerations”. Prospective investors are encouraged to consult their own tax advisors regarding the applicability of the PFIC rules to their purchase, ownership and disposition of common shares or warrants.

Additional Information

Additional information relating to Lion is available on SEDAR+ at www.sedarplus.ca and on Edgar at www.sec.gov.

81

EX-99.3

The Lion Electric Company

Consolidated Financial Statements

December 31, 2023 and December 31, 2022

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 1232)	2
Consolidated Statements of Financial Position	2
Consolidated Statements of Earnings (Loss) and Comprehensive Loss	3
Consolidated Statements of Changes in Equity	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6 - 71

Report of Independent Registered Public Accounting Firm

To the Shareholders and Directors of

The Lion Electric Company

Opinion on the consolidated financial statements

We have audited the accompanying consolidated statements of financial position of The Lion Electric Company (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of earnings (loss) and comprehensive loss, changes in equity and cash flows for the years then ended and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board (hereafter "IFRS Accounting Standards").

Basis for opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2014.

/s/ Raymond Chabot Grant Thornton LLP

Montréal, Canada

February 28, 2024

2

The Lion Electric Company

Consolidated Statements of Financial Position

As at December 31, 2023 and December 31, 2022

(In US dollars)

	Notes	December 31, 2023	December 31, 2022
		$	$
ASSETS
Current
Cash		29,892,966	88,266,985
Accounts receivable	4	75,641,780	62,971,542
Inventories	5	249,606,756	167,191,935
Prepaid expenses and other current assets		1,553,276	5,067,513
Current assets		356,694,778	323,497,975
Non-current
Other non-current assets	24	6,994,815	1,073,226
Property, plant and equipment	6, 24	198,536,683	160,756,328
Right-of-use assets	7, 24	89,663,139	60,508,354
Intangible assets	8, 24	175,703,257	151,364,023
Contract asset	14, 24	13,528,646	13,211,006
Non-current assets		484,426,540	386,912,937
Total assets		841,121,318	710,410,912
LIABILITIES
Current
Trade and other payables	10	92,424,961	75,222,042
Deferred revenue and other deferred liabilities	11	18,267,139	634,971
Current portion of long-term debt and other debts	12	27,056,476	24,713
Current portion of lease liabilities	7	7,984,563	5,210,183
Current liabilities		145,733,139	81,091,909
Non-current
Long-term debt and other debts	12	197,885,889	110,648,635
Lease liabilities	7	83,972,023	58,310,032
Share warrant obligations	14	29,582,203	23,243,563
Conversion options on convertible debt instruments	13	25,034,073	—
Non-current liabilities		336,474,188	192,202,230
Total liabilities		482,207,327	273,294,139
SHAREHOLDERS’ EQUITY
Share capital	23	489,362,920	475,950,194
Contributed surplus		139,569,185	134,365,664
Deficit		(255,746,097)	(151,979,960)
Cumulative translation adjustment		(14,272,017)	(21,219,125)
Total shareholders’ equity		358,913,991	437,116,773
Total shareholders’ equity and liabilities		841,121,318	710,410,912

The accompanying notes are an integral part of the consolidated financial statements.

3

The Lion Electric Company

Consolidated Statements of Earnings (Loss) and Comprehensive Loss

For the years ended December 31, 2023 and 2022

(In US dollars)

		Year ended
	Notes	December 31, 2023	December 31, 2022
Revenue	24	253,495,601	139,914,470
Cost of sales		259,020,001	152,861,775
Gross loss		(5,524,400)	(12,947,305)
Administrative expenses		51,479,445	44,843,042
Selling expenses		19,650,125	22,973,972
Restructuring costs	17	1,426,487	—
Impairment of intangible assets and property, plant and equipment	6,8	35,998,123	—
Operating loss		(114,078,580)	(80,764,319)
Finance costs	18	17,892,444	955,422
Foreign exchange (gain) loss		(2,259,539)	1,972,679
Change in fair value of conversion options on convertible debt instruments and interest paid in kind	13	(4,982,236)	—
Change in fair value of share warrant obligations	14	(20,963,112)	(101,468,186)
Earnings (loss) before income taxes		(103,766,137)	17,775,766
Income taxes	19	—	—
Net earnings (loss)		(103,766,137)	17,775,766
Other comprehensive income (loss)
Item that will be subsequently reclassified to net earnings (loss)
Foreign currency translation adjustment		6,947,108	(18,309,729)
Comprehensive loss		(96,819,029)	(533,963)
Earnings (loss) per share
Basic earnings (loss) per share	20	(0.46)	0.09
Diluted earnings (loss) per share	20	(0.46)	0.09

The accompanying notes are an integral part of the consolidated financial statements.

4

The Lion Electric Company

Consolidated Statements of Changes in Equity

For the year ended December 31, 2023 and 2022
(In US dollars, except for number of shares)

	Notes	Number of shares	Share capital	Contributed surplus	Deficit	Cumulative translation adjustment	Total equity
			$	$	$	$	$
Balance at January 1, 2023		218,079,962	475,950,194	134,365,664	(151,979,960)	(21,219,125)	437,116,773
Share-based compensation	16	—	—	5,203,521	—	—	5,203,521
Shares issued pursuant to exercise of stock options and warrants		—	33,149	—	—	—	33,149
Issuance of shares through "at-the-market" equity program	23	4,894,060	8,580,405	—	—	—	8,580,405
Issuance of shares through the December 2022 Offering	23	2,952,755	4,175,836	—	—	—	4,175,836
Issuance of shares related to closing fee of convertible debenture financing	12	258,155	623,336	—	—	—	623,336
Net loss		—	—	—	(103,766,137)	—	(103,766,137)
Other comprehensive loss
Foreign currency translation adjustment		—	—	—	—	6,947,108	6,947,108
Balance at December 31, 2023		226,184,932	489,362,920	139,569,185	(255,746,097)	(14,272,017)	358,913,991
Balance at January 1, 2022		190,002,712	418,709,160	122,637,796	(169,755,726)	(2,909,396)	368,681,834
Share-based compensation	16	—	—	12,349,758	—	—	12,349,758
Shares issued pursuant to exercise of stock options and warrants		45,421	625,688	(621,890)	—	—	3,798
Issuance of shares through "at-the-market" equity program		8,346,789	29,351,308	—	—	—	29,351,308
Issuance of shares through the December 2022 Offering		19,685,040	27,264,038	—	—	—	27,264,038
Net earnings		—	—	—	17,775,766	—	17,775,766
Other comprehensive loss
Foreign currency translation adjustment		—	—	—	—	(18,309,729)	(18,309,729)
Balance at December 31, 2022		218,079,962	475,950,194	134,365,664	(151,979,960)	(21,219,125)	437,116,773

The accompanying notes are an integral part of the consolidated financial statements.

5

The Lion Electric Company

Consolidated Statements of Cash Flows

For the years ended December 31, 2023 and 2022
(In US Dollars)

		Year ended
	Notes	December 31, 2023	December 31, 2022
OPERATING ACTIVITIES
Net earnings (loss)		(103,766,137)	17,775,766
Non-cash items:
Depreciation and amortization	21	26,074,572	11,492,473
Write-down of inventory	5	12,022,984	478,889
Impairment of intangible assets and property, plant and equipment	6, 8	35,998,123	—
Share-based compensation	16	5,203,521	12,362,070
Accretion expense	12	5,663,365	—
Accretion and revaluation expense on balance of purchase price payable related to the acquisition of the dealership rights	18	—	82,850
Gain on derecognition of the balance of purchase price payable related to the acquisition of the dealership rights	18	—	(2,130,583)
Non-cash issuance of closing fee shares through 2023 Debentures Financing	12	623,336	—
Change in fair value of conversion options on convertible debt instruments and interest paid in kind	13	(4,982,236)	—
Change in fair value of share warrant obligations	14	(20,963,112)	(101,468,186)
Unrealized foreign exchange loss (gain)		(4,106,220)	821,424
Finance costs attributable to 2023 Debenture financing		(3,829,850)	—
Net change in non-cash working capital items	21	(57,974,652)	(58,967,500)
Cash flows used in operating activities		(110,036,306)	(119,552,797)
INVESTING ACTIVITIES
Acquisition of property, plant and equipment		(78,291,978)	(129,573,638)
Addition to intangible assets		(75,173,685)	(78,284,126)
Disposition of property, plant and equipment		—	24,413
Government assistance related to property, plant and equipment and intangible assets		9,452,796	3,226,696
Net proceeds from Mirabel battery building sale-leaseback	7	20,506,589	—
Cash flows used in investing activities		(123,506,278)	(204,606,655)
FINANCING ACTIVITIES
Increase in long-term debt and other debts		171,687,491	111,576,513
Repayment of long-term debt and other debts		(148,305,458)	(10,348,894)
Payment of lease liabilities	7	(6,512,231)	(4,977,183)
Proceeds from issuance of shares through "at-the-market" equity program, net of issuance costs	23	8,580,405	29,351,308
Proceeds from the issuance of warrants through the December 2022 Offering	14	2,907,226	19,913,196
Proceeds from the issuance of units through the December 2022 Offering - Common Shares, net of issuance costs	23	4,175,836	27,264,038
Proceeds from the 2023 Debentures Financing	12	142,920,845	—
Proceeds from the issuance of shares through exercise of stock options and warrants		—	23,173
Cash flows from financing activities		175,454,114	172,802,151
Effect of exchange rate changes on cash held in foreign currency		(285,549)	(2,077,744)
Net decrease in cash		(58,374,019)	(153,435,045)
Cash, beginning of year		88,266,985	241,702,030
Cash, end of year		29,892,966	88,266,985
Other information on cash flows related to operating activities:
Interest paid		11,119,136	2,386,930
Interest paid on obligations under lease liabilities		4,656,033	3,162,932

The accompanying notes are an integral part of the consolidated financial statements.

6

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

1 - REPORTING ENTITY AND NATURE OF OPERATIONS

The principal activities of The Lion Electric Company ("Lion" or the "Company") and its subsidiaries (together referred to as the "Group") include the design, development, manufacturing and distribution of purpose-built all-electric medium and heavy-duty urban vehicles including battery systems, chassis, bus bodies and truck cabins. The Group also distributes truck and bus parts and accessories.

The Company is incorporated under the Business Corporations Act (Quebec) and is the Group’s ultimate parent company. Its registered office and principal place of business is 921, chemin de la Riviere-du-Nord, Saint-Jerome, Quebec, Canada. These audited consolidated financial statements ("consolidated financial statements") are as at December 31, 2023 and December 31, 2022 and for the fiscal years ended December 31, 2023 and 2022 and include the accounts of the Company and its subsidiaries. The Company is a publicly listed entity, and its shares are traded on the Toronto Stock Exchange and New York Stock Exchange under the symbol LEV.

2 - BASIS OF PRESENTATION AND STATEMENT OF COMPLIANCE WITH IFRS

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (“IASB”) and are expressed in United States ("US") dollars for reporting purposes.

These consolidated financial statements have been approved for issue by the Board of Directors on February 28, 2024.

3 - SUMMARY OF ACCOUNTING POLICIES

3.1 Overall considerations

The consolidated financial statements have been prepared using the material accounting policies and measurement bases that are in effect at December 31, 2023, as summarized below. These were used throughout all years presented in the consolidated financial statements.

3.2 Basis of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as of December 31, 2023 and 2022. All subsidiaries have a reporting date of December 31. Subsidiaries are all entities over which the Group has the power to control the financial and operating policies. The Group obtains and exercises control when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

All transactions and balances between Group companies are eliminated on consolidation, including unrealized gains and losses on transactions between Group companies. Where unrealized losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective.

7

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.2 Basis of consolidation (continued)

Amounts reported in the consolidated financial statements of the subsidiary have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

The Company’s principal subsidiaries, their jurisdiction of incorporation, and the Company’s percentage ownership share of each are as follows:

Subsidiary	Jurisdiction of Incorporation	Ownership percentage
Lion Holding USA Inc.	Delaware	100%
The Lion Electric Co USA Inc.	Delaware	100%
Lion Electric Manufacturing USA Inc.	Delaware	100%

3.3 Foreign currency translation

Functional and presentation currency

The consolidated financial statements are presented in US dollars. The functional currency of the parent company and its subsidiaries is the Canadian dollar, except for The Lion Electric Co USA Inc. and Lion Electric Manufacturing USA Inc., whose functional currencies are the US dollar. The functional currency of the entities in the Group has remained unchanged during the reporting periods.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at year-end exchange rates are recognized in the consolidated statements of earnings (loss) and comprehensive loss.

Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.

The Group’s Canadian dollar financial statements are translated to US dollars as follows: assets and liabilities are translated at the closing rate in effect at the reporting date and income and expenses are translated at the average exchange rate for the period. The share capital account is translated at rates in effect at the time of issuance/redemptions. Exchange gains or losses resulting from the translation of the Group’s accounts into the reporting currency are reported as foreign currency translation adjustment within other comprehensive income (loss) and presented as a separate component of shareholders’ equity under cumulative translation adjustment.

8

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.4 Revenue

The Group’s principal sources of revenue are the sale of all-electric medium and heavy-duty urban vehicles. The Group also enters into sales contracts for other products including energy infrastructure, vehicle parts, and related services.

To determine whether to recognize revenue, the Group follows a 5-step process:

–identifying the contract with a customer;

–identifying the performance obligations;

–determining the transaction price;

–allocating the transaction price to the performance obligations; and

–recognizing revenue when/as performance obligation(s) are satisfied.

The Group recognizes revenue in the amount of consideration it will receive for delivering a product or a service to a customer. Revenue is recognized at a point in time, when the Group satisfies its performance obligations by transferring control of the goods to its customers or provides the service, which generally occurs when the goods are delivered to the customers and when the customer confirms acceptance.

Control is generally transferred when the customer has the ability to direct the use and obtain substantially all of the remaining benefit, which is upon shipment, or when the product has been completed, is ready for delivery, and title has transferred to the customer.

The Group provides a warranty for its products against defects for periods varying from one year to eight years for certain components. An allowance for warranty expense is recorded when the revenue for the related product is recognized. The allowance is based upon the terms of the warranty, the Group’s historical experience and management estimates of future expenses for replacement or repairs. The corresponding expense is recorded in cost of sales.

3.5 Cost of sales and gross profit

Cost of sales includes all raw material costs, direct parts, material and labor costs, manufacturing conversion costs, including depreciation costs of manufacturing equipment such as tooling and machinery, inter-facility transportation and logistic costs, amortization of product development costs, outbound freight to customers, and reserves for estimated warranty expenses. Cost of sales also includes the cost of purchasing finished goods for resale, costs relating to purchasing, receiving and inspection activities, warehousing costs, product engineering costs, insurance related to manufacturing activities, customs and duties, adjustments to warranty expense, as well as charges to write down the carrying value of inventory when it exceeds its estimated net realizable value and to provide for obsolete and on-hand inventory in excess of forecasted demand. Gross loss is the result of revenue less cost of sales.

9

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.6 Administrative expenses

Administrative expenses consist of share-based compensation, as well as employee benefits for management, information technology, human resources, accounting, legal, investor relations, and other general administrative functions. Administrative expenses also include professional fees, non-manufacturing depreciation expense, and non-manufacturing related insurance costs (including director and officer insurance). Administrative expenses are recognized in the consolidated statements of earnings (loss) and comprehensive loss upon utilization of the service or at the date of their origin.

3.7 Selling expenses

Selling expenses consist of salaries and other similar expenses related to Lion’s bus and truck sales force and employee benefits costs, sales commissions, share-based compensation, business development, aftermarket sales, non-manufacturing depreciation expense, and advertising, marketing, and communications. Selling expenses are recognized in the consolidated statements of earnings (loss) and comprehensive loss upon utilization of the service or at the date of their origin.

3.8 Employee benefits

Employee benefits include wages, salaries, fringe benefits, commissions, compensated absences, and bonuses. These short-term benefits are recognized in cost of sales, administrative expenses, and selling expenses as the services are provided.

3.9 Restructuring costs

Restructuring costs include employee severance costs, employee benefits and employee transitions costs when payments are probable and amounts are reliably estimable. Other restructuring related costs are recognized as incurred.

3.10 Finance costs

Finance costs consists primarily of interest paid on Lion’s outstanding debts, legal and other costs related to long-term debts and other debts and share warrant financing activities, interest on lease liabilities, interest on convertible and non-convertible debt instruments as well as non-cash accretion on convertible and non-convertible debt instruments, long-term debts and other debts and revaluation expenses on the balance of purchase price payable related to the acquisition of dealership rights.

3.11 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. Capitalization of borrowing costs ceases when the asset is completed and available for use. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs.

10

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.12 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short- term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. As at December 31, 2023 and 2022, the Company only held cash.

3.13 Accounts receivable

Accounts receivable include amounts due from customers in the normal course of business as well as refundable tax credits and grants under government programs. The payments are generally received within a year.

Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost, less impairment. The Group maintains an allowance for expected credit loss based on collection history and customer specific credit risk in accordance with the expected credit loss model. Trade accounts receivables are presented net of an allowance for credit losses.

3.14 Inventories

Finished goods, work in process, and raw material inventories are valued at the lower of cost and net realizable value. Cost is determined using the specific identification cost method for finished goods and work in process, while the cost of raw materials is determined using the weighted average cost method. Supplier rebates are deducted to determine the cost of purchase.

The cost of inventories includes all purchase, conversion and other costs incurred to bring the inventories to their present location and condition and include the purchase price and other costs directly related to the acquisition of raw materials and the cost of purchased finished goods. Inventory costs also include the costs directly related to the conversion of materials to finished goods, such as direct labor, and a systematic allocation of fixed and variable production overhead, including manufacturing depreciation expense.

The allocation of fixed production overhead to the cost of inventories is based on the normal capacity of the production facilities. Costs incurred as a result of operating below the normal capacity of the production facilities are excluded from the carrying value of inventories and charged directly to cost of sales. Normal capacity is the average production expected to be achieved during the fiscal year, under normal circumstances.

The net realizable value represents the estimated selling price in the normal course of business less the estimated costs necessary to make the sale. Raw materials and work in progress inventories are not written down if the finished products in which they will be incorporated are expected to be sold at or above cost.

The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the year the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, is recognized as a reduction in the amount of inventories recognized as an expense in the year in which the reversal occurs.

11

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.15 Property, plant and equipment

Property, plant and equipment are initially recorded at cost, net of government grants, and are subsequently carried at cost less accumulated depreciation and any accumulated impairment losses. The costs of an item of property, plant, and equipment includes any expenditures directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of self-constructed assets includes the cost of materials and direct labor, site preparation costs, initial delivery and handling costs, installation and assembly costs, and any other costs directly attributable to bringing the assets to the location and condition necessary for the assets to be capable of operating in the manner intended by management.

Property, plant and equipment, less their estimated residual values, are depreciated over their estimated useful lives using the straight-line method. The following estimated useful lives are applied:

Leasehold improvements	Earlier of useful life or remaining lease term
Machinery and equipment	7,000 units produced or 5 years
Rolling stock	5 years
Computer equipment	5 years
Furniture and office equipment	10 years
Production moulds	1,250 units produced
Master patterns and templates	7,000 units produced
Prototypes	3 years

The Group begins to depreciate property, plant and equipment when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

Consequently, construction in progress is not amortized and is subject to impairment testing if there is any indication that it may be impaired (see Note 3.18). The estimated residual values, estimated useful lives and depreciation methods are reviewed annually by the Company and any change resulting from this evaluation is applied as a change in estimate and is accounted for on a prospective basis.

3.16 Leased assets

At the inception of contracts, the Group assesses whether a contract is, or contains a lease by assessing if the contract, or part of the contract, conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. To determine if this is achieved, the Group assesses the following key factors:

– whether the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group;

– whether the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract;

12

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.16 Leased assets (continued)

– whether the Group has the right to direct the use (how and for what purpose) of the identified asset throughout the period of use.

Measurement and recognition of leases as a lessee

Short-term or low value leases

The Group has elected to recognize leases that have a lease term of 12 months or less and leases of low-value assets as an expense on a straight-line basis over the lease term.

All other leases

At a lease commencement date, the Group recognizes a right-of-use asset and a lease liability on the consolidated statements of financial position.

The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received). The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist in accordance with IAS 36 Impairment of assets.

The lease liability is measured at the present value of the remaining lease payments at the date of recognition, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The incremental borrowing rate is the estimated rate that the Group would have to pay to borrow the same amount over a similar term, and with similar security to obtain an asset of equivalent value. This rate is adjusted should the lessee entity have a different risk profile to that of the Group.

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in-substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee, and payments arising from options reasonably certain to be exercised.

The lease liability is subsequently measured by reducing the carrying amount to account for payments made and increasing the carrying amount to account for accretion expense. The accretion expense is presented within finance costs in the consolidated statements of earnings (loss) and comprehensive loss over the lease period.

The lease liability is remeasured when there are changes to the lease terms resulting from a change in the Group’s assessment of whether the Group will exercise a purchase, extension, or termination option, or when there is a change in the future lease payments resulting from a change in an index or rate, or change in the Group’s estimate of the amount expected to be payable under residual value guarantees.

13

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.16 Leased assets (continued)

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or consolidated statements of earnings (loss) and comprehensive loss if the right-of-use asset is already fully depreciated.

3.17 Intangible assets

Initial recognition

Dealership rights with an indefinite useful life

Dealership rights with an indefinite useful life are recorded initially at cost and are not amortized. As the acquisition of dealership rights was based on future sales of a specific product, the Group has elected to measure the cost based on a financial liability model, whereby the fair value of all variable payments under the contract is recorded on initial recognition of the asset with a corresponding liability. Any re-measurements of the related liability are recognized in earnings (loss) and comprehensive loss. The cost also includes any directly attributable costs of acquisition. Directly attributable costs include professional fees arising directly from bringing the asset to its working conditions.

Dealership rights are subject to asset impairment testing as described below. The useful life is reviewed each period to determine whether events and circumstances continue to support an indefinite useful life assessment.

Acquired Software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and install the specific software.

Internally developed intangible assets

Expenditures on the research phase are recognized as an expense as incurred. Costs that are directly attributable to an electric vehicle project’s development phase and costs incurred on software development projects are recognized as intangible assets, provided they meet the following recognition requirements:

– the development costs can be measured reliably;

– the project is technically and commercially feasible;

– the Group intends to and has sufficient resources to complete the project;

– the Group has the ability to use or sell the intangible assets; and

– the intangible assets will generate probable future economic benefits.

Development costs not meeting these criteria for capitalization are expensed as incurred. Directly attributable costs include employee benefits costs incurred along with an appropriate portion of relevant overheads and subcontractors’ fees.

14

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.17 Intangible assets (continued)

Subsequent measurement

All finite-live intangible assets are stated at cost, less accumulated amortization and impairment losses. Finite-life intangible assets, less their estimated residual value, are amortized over their estimated useful lives using the straight-line method. The following estimated useful lives are applied:

Software	5 years
Development costs	7,000 units produced

The estimated residual values, estimated useful lives and amortization methods are reviewed annually by the Group and any change resulting from this evaluation applied as a change in estimates accounted on a prospective basis. In addition, they are subject to impairment testing as described below.

3.18 Impairment testing of intangible assets, property, plant and equipment and right-of-use assets

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at the cash-generating unit level. Cash-generating units to which intangible assets with indefinite useful lives have been allocated (determined by the Group’s management as being equivalent to its operating segments) are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognized for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganizations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect management’s assessment of respective risk profiles, such as market and asset-specific risks factors.

Impairment losses for cash-generating units are charged pro rata to the assets in the cash-generating unit. All assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount.

3.19 Government incentive and assistance

Government incentives and assistance related to current expenses is accounted for as a reduction of related expenses while incentive and assistance related to the acquisition of non-current assets is accounted for as a reduction of the related non-current assets.

15

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.19 Government incentive and assistance (continued)

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an non-current asset, it is accounted for as a reduction of the related non-current assets and it is recognised as income in equal amounts over the expected useful life of the related asset.

3.20 Research and development tax credits

Tax credits related to current expenses are accounted for as a reduction of related expenses while tax credits related to the acquisition or development of non-current assets are accounted for as a reduction of the related non-current assets.

Reimbursable tax credits are accrued in the year in which the expenditures are incurred, provided that the Group is reasonably certain that the credits will be received. The tax credits must be examined and approved by the tax authorities and it is possible that the amounts subsequently granted will differ from the amounts initially recorded.

3.21 Financial instruments

Recognition and derecognition

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires.

Financial Assets

Classification and initial measurement of financial assets

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

Financial assets, are classified into the following categories:

– amortized cost;

– fair value through profit or loss (FVTPL);

– fair value through other comprehensive income (FVOCI).

In the years presented, the Group does not have any financial assets categorized as FVTPL or FVOCI.

The classification is determined by both:

– the entity’s business model for managing the financial asset;

– the contractual cash flow characteristics of the financial asset.

16

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.21 Financial instruments (continued)

Classification and initial measurement of financial assets (continued)

All income and expenses relating to financial assets that are recognized in the consolidated statements of earnings (loss) and comprehensive loss are presented within finance costs, except for the impairment of trade receivables which is presented within administrative expenses.

Subsequent measurement of financial assets

Financial assets at amortized cost

Financial assets are measured at amortized cost if the assets meet the following conditions (and are not designated as FVTPL):

– they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows;

– the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, these are measured at amortized cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. Cash, trade receivables and incentives and other government assistance receivable are classified within this category.

Impairment of financial assets

The Group uses the expected credit losses impairment model with respect to its financial assets carried at amortized cost. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since the initial recognition of the respective financial instrument.

The Group accounts for the expected credit losses using the simplified approach over the life of financial assets measured at amortized cost. Expected credit losses over the life of the asset are expected credit losses for all of the default events that a financial instrument may experience over its expected life. The assessment of expected credit losses reflects reasonable and justifiable information about past events, current circumstances and forecasts of events and economic conditions and takes into account the factors specific to the account receivable, the general condition of the economy and a current as well as expected appreciation of the condition prevailing at the statements of financial position date, including the time value of the money, if any.

Classification and measurement of financial liabilities - amortized cost

The Group’s financial liabilities measured at amortized cost include trade and other payables (excluding non-financial liabilities) and long-term debt and other debts. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortized cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL.

17

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.21 Financial instruments (continued)

Classification and measurement of financial liabilities - amortized cost (continued)

All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in the consolidated statements of earnings (loss) and comprehensive loss are included within finance costs.

Classification and measurement of financial liabilities - FVTPL - warrants

The Group determined that the warrants, including the warrants issued to a customer, the public warrants and the private warrants issued as part of a business combination transaction, the public warrants issued as part of the December 2022 Offering, and the warrants issued as part of the 2023 Debenture Financing (as defined in Note 12.7) are derivative instruments and should be classified as a liability in accordance with IAS 32 - Financial Instruments: Presentation and IFRS 9 - Financial Instruments and are measured at FVTPL. Derivative and financial liabilities designated at FVTPL are carried subsequently at fair value with gains or losses recognized in the consolidated statements of earnings (loss) and comprehensive loss.

Warrants issued to a customer

The vested portion of the warrants issued to a customer is initially recorded at fair value and then revalued at each reporting date with a corresponding contract asset recognized at inception. The corresponding contract asset is amortized as a reduction of revenues on a percentage per dollar of revenue generated with the customer and its affiliates.

The unvested portion of the warrants represents a retrospective volume discount based on specified levels of spending by the customer and its affiliates. Revenues will be recognized based on the prices specified in the work orders, net of the estimated value of the volume discount based on the portion of the warrant expected to vest using the fair value at inception. At each reporting date, the Group will review experience, current information on expected orders from the customer and its affiliates and the potential impact of other reasonably foreseen constraints will be used to estimate and provide for the discount, using the expected value method, and revenue will only be recognized to the extent that it is highly probable that a significant reversal will not occur.

Private and public warrants

The warrants are initially recorded at fair value and then revalued at each reporting date. Estimating fair value requires determining the most appropriate valuation model which captures the significant features of the financial instruments. This estimate also requires the determination of the most appropriate inputs to the valuation model including the expected life of the warrants, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating such warrants are disclosed in Note 14.

3.22 Convertible debt instruments

The Group reviewed the terms of the convertible debentures to determine whether there are component parts of compound financial instruments that are required to be separated and accounted for as individual financial instruments.

18

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.22 Convertible debt instruments (continued)

Conversion option features that have economic characteristics and risks that do not meet the "Fixed for Fixed" criteria or are not closely related to those of the host instrument should be classified as embedded derivatives and separated from the host contract. The Group determined that the conversion options on the convertible debt instruments are derivative instruments that should be separated from the host contract and classified as a liability in accordance with IAS 32 - Financial Instruments: Presentation and IFRS 9 - Financial Instruments due to the variability in the cash flows.

At inception, the Group allocated the proceeds first to the fair value of the conversion options on the convertible debt instruments and the remaining proceeds are allocated to the convertible debenture host contract. The conversion options on the convertible debt instruments designated at fair value through profit or loss ("FVTPL") are carried subsequently at fair value with gains or losses recognized in the consolidated statements of earnings (loss) and comprehensive loss. The convertible debenture host contract is measured at amortized cost, using the effective interest method until extinguished upon conversion or at the instrument’s maturity date. The effective interest expense is classified as accretion expense under finance costs in the consolidated statements of earnings (loss) and comprehensive loss.

Transaction costs related to the issue of convertible debt instruments are allocated to the components in proportion to the initial carrying amounts. Transaction costs relating to conversion options on the convertible debt instruments are recognized as finance costs in the consolidated statements of earnings (loss) and comprehensive loss as incurred. Transaction costs relating to the convertible debentures component are included in the carrying amount and are amortized over the term of the convertible debt instruments using the effective interest method.

3.23 Share-based employee remuneration

Stock options and restricted share units

Stock options and restricted share units ("RSUs") are equity settled share-based payments, which are measured at fair value at the grant date. For stock options, the compensation cost is measured using the Black-Scholes option pricing model and is expensed over the award’s vesting period. For RSUs, compensation cost is measured at the fair value of the underlying common share at the grant date and is expensed over the award’s vesting period. RSUs can be settled in cash based on the Company’s share price on the vesting date, or through the delivery of common shares issued from treasury or purchased on the open market, at the Company’s option. RSUs are expected to be settled in common shares purchased on the open market.

Compensation expense is recognized in net earnings (loss) and comprehensive loss with a corresponding increase in contributed surplus. The measurement of compensation expense for stock options and RSUs is net of estimated forfeitures. Any consideration paid by plan participants on the exercise of stock options is credited to share capital. Upon the exercise of stock options or the vesting of RSUs, the corresponding amounts previously credited to contributed surplus are transferred to share capital. Stock options and RSUs that are dilutive are considered in the calculation of diluted earnings per share, as per Note 20 to these consolidated financial statements.

19

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.23 Share-based employee remuneration (continued)

Deferred share unit plan

The Company has a deferred share unit plan for independent members of the Company’s Board of Directors, who receive a portion of their compensation in the form of deferred share units (“DSUs”). These DSUs are equity settled awards and are fully recognized in net earnings (loss) and comprehensive loss based on the fair value of the underlying common shares at the grant date.

3.24 Provisions, contingent assets and contingent liabilities

Provisions for product warranties, legal disputes, onerous contracts or other claims are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Restructuring provisions are recognized only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan’s main features to those affected by it. Provisions are not recognized for future operating losses.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in a settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material. Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provision. In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognized.

3.25 Income taxes

Tax expense recognized in the consolidated statements of earnings (loss) and comprehensive loss comprises the sum of deferred tax and current tax not recognized directly in equity. The calculation of current tax and deferred tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the balance sheet liability method.

Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income. This is assessed based on the Group’s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.

Deferred tax liabilities are generally recognized in full, although IAS 12, Income Taxes, specifies limited exemptions. As a result of these exemptions the Group does not recognize deferred tax on temporary differences relating to goodwill, or to its investments in subsidiaries. The Group does not offset deferred tax assets and liabilities unless it has a legally enforceable right to do so and intends to settle on a net basis.

20

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.26 Share Capital

Common shares are classified as share capital within equity. Incremental costs directly attributable to the issuance of share are recognized as a deduction from share capital, net of any tax effect.

Contributed surplus is used to record the accumulated compensation expense related to equity-settled share-based compensation transactions. Upon the exercise of stock options and the vesting of RSUs and DSUs, the corresponding amounts previously credited to contributed surplus are transferred to share capital.

Deficit includes all current and prior year losses. All transactions with owners of the parent company are recorded separately within equity. Cumulative translation adjustment comprises foreign currency translation differences arising from the translation of the consolidated financial statements of the Group into the US dollar, the presentation currency.

3.27 Earnings per share

Basic earnings (loss) per share ("EPS") are calculated by dividing the net earnings (loss) available to common share shareholders by the weighted average number of shares outstanding during the year.

Diluted earnings (loss) per share are calculated by adjusting the weighted average of shares outstanding during the year to include the weighted average number of shares that would be issued upon the conversion of all potential dilutive warrants, stock options, RSUs, and DSUs into common shares.

3.28 Segment reporting

The Group has only one operating segment: the manufacturing and sale of electric vehicles in Canada and the United States. The Group has one operating segment based on Lion’s operational structure and decision process for allocation of resources.

3.29 Significant management judgements in applying accounting policies and estimation uncertainty

Significant management judgements

The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the consolidated financial statements.

Capitalization of internally developed intangible assets

Distinguishing the research and development phases of a new customized project and determining whether the recognition requirements for the capitalization of development costs are met require judgement. After capitalization, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalized costs may be impaired.

Recognition of deferred tax assets

The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Group’s future taxable income against which the deferred tax assets can be utilized.

21

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.29 Significant management judgements in applying accounting policies and estimation uncertainty (continued)

Recognition of deferred tax assets (continued)

In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.

Estimation uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

Tax credits receivable

The calculation of the Group’s tax credits receivable involves a degree of estimation and judgement in respect of certain items whose tax treatment cannot be finally determined until a notice of assessment has been issued by the relevant taxation authority and payment has been received or applied against income taxes otherwise payable.

Impairment of non-financial assets

Management estimates the recoverable amount of each asset or cash-generating units based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.

Leases

Recognizing leases requires judgement and use of estimates and assumptions. Judgement is used to determine whether there is reasonable certainty that a lease extension or cancellation option will be exercised. Furthermore, management estimates are used to determine the lease terms and the appropriate interest rate to establish the lease liability.

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utility of certain software and computer equipment. Technical obsolescence also can affect development costs as technology evolves.

Inventories

Management estimates the net realizable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices.

22

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.29 Significant management judgements in applying accounting policies and estimation uncertainty (continued)

Fair value measurement

Management uses various valuation techniques to determine the fair value of financial instruments, where active market quotes are not available. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case, management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.

Share-based compensation and private share warrant obligation

Management assesses the fair value of stock options and the private share warrant obligation using the Black-Scholes valuation model. The Black-Scholes model requires management to make estimates and assumptions with respect to inputs including the risk-free interest rate, volatility and expected option or warrant life.

3.30 Initial and early application of new accounting standards and interpretations in the reporting standards

Amendments to IAS 1, Presentation of Financial Statements and IFRS Practice Statement 2, Making Materiality Judgements

On February 11, 2021, the IASB issued amendments to IAS 1, Presentation of Financial Statements and IFRS Practice Statement 2, Making Materiality Judgements, to provide guidance in determining which accounting policies to disclose. The amendments require entities to disclose material accounting policies rather than significant policies. The amendments clarify that accounting policy information is material if users of an entity’s financial statements would need it to understand other material information in the financial statements. In assessing the materiality of accounting policy information, entities need to consider both size of the transaction, other events or conditions and the nature of them, even if the related amounts are immaterial. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IAS 8, Accounting Policies, Change in Accounting Estimates and Errors

On February 11, 2021, the IASB issued amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, to clarify how to distinguish changes in accounting policies, which must be applied retrospectively, from changes in accounting estimate, which are accounted for prospectively. The amendments clarify the definition of accounting estimates as "monetary amounts in the financial statements that are subject to measurement uncertainty". The amendments clarify that a change in accounting estimate is a change in input or a change in a measurement technique used to develop an accounting estimate, if they do not result in the correction of a prior period error. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

23

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.30 Initial and early application of new accounting standards and interpretations in the reporting standards (continued)

Amendments to IAS 12, Income Taxes

On May 6, 2021, the IASB released Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12). The amendment relates to the recognition of deferred tax when an entity accounts for transactions, such as leases or decommissioning obligations, by recognizing both an asset and a liability. The objective of this amendment is to narrow the initial recognition exemption in paragraphs 15 and 24 of IAS 12, so that it would not apply to transactions that give rise to both taxable and deductible temporary differences, to the extent the amounts recognized for the temporary differences are the same. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IFRS 16, Leases

On September 22, 2022, the IASB issued an amendment to IFRS 16, Leases to clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. The amendment requires a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. The early adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IAS 7, Statement of Cash Flow and IFRS 7, Financial Instruments : Disclosures

On May 25, 2023, the IASB issued an amendment to IAS 7, Statement of Cash Flow and IFRS 7, Financial Instruments: Disclosures to add qualitative and quantitative disclosure requirements to allow users to assess how supplier finance arrangements affect an entity’s liabilities, cash flows and liquidity risk. The amendments to IAS 7 will become effective for annual reporting periods beginning on or after January 1, 2024 and the amendments to IFRS 7 when it applies the amendments to IAS 7. Earlier application is permitted. The Company made the election to early adopt the amendments as of June 30, 2023 and disclose the additional information in the Company's financial statements.

3.31 Standards, amendments and Interpretations to existing Standards that are not yet effective and have not been adopted early by the Group

At the date of authorization of these consolidated financial statements, several other new, but not yet effective, standards and amendments to existing standards, and interpretations have been published by the IASB. None of these standards or amendments to existing standards have been adopted early by the Company.

Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New standards, amendments and interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Company’s consolidated financial statements.

24

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

4 - ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Trade receivables, gross	41,777,117	25,935,309
Allowance for credit losses	(1,155,120)	(250,439)
Trade receivables, net	40,621,997	25,684,870
Incentives and other government assistance receivable (Note 4.1)	26,625,156	25,312,738
Financial assets	67,247,153	50,997,608
Commodity taxes receivable	4,028,472	4,557,779
Research and development tax credits receivable	4,366,155	7,416,155
Non-financial assets	8,394,627	11,973,934
	75,641,780	62,971,542

All amounts are considered short-term. The net carrying value of trade receivables is considered a reasonable approximation of their fair value.

As of December 31, 2023, amounts owing from one customer represented 13.4% of the total trade accounts receivable (two customers represented 19.2% and 15.2%, respectively, as of December 31, 2022).

25

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

4 - ACCOUNTS RECEIVABLE (CONTINUED)

4.1 Incentives and other government assistance receivable

Incentives and other government assistance receivable consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Transport Canada Medium and Heavy-duty Zero-Emission Vehicles ("iMHZEV") Program	3,702,540	5,020,673
U.S. Environmental Protection Agency ("EPA") School Bus Program	—	3,767,713
Government of Quebec Ecocamionnage program	4,376,726	4,118,060
Ministry of Transportation of Quebec Programme d'électrification du transport scolaire ("PETS")	17,820,959	11,425,724
Other government assistance and incentives receivable	724,931	980,568
	26,625,156	25,312,738

5 - INVENTORIES

Inventories consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Raw materials	173,404,495	135,656,954
Work in process	28,105,877	22,809,755
Finished goods	48,096,384	8,725,226
	249,606,756	167,191,935

The cost of inventories recognized as expense during the year totals $243,927,490 ($144,405,153 in 2022) and was recognized in the cost of sales in the consolidated statements of earnings (loss) and comprehensive loss.

For the year ended December 31, 2023, cost of sales include an expense of $12,022,984 ($478,889 in 2022) related to the write-down of inventory to net realizable value, including $9,808,973 in 2023 related to raw material inventory as a result of the decision to delay the start of commercial production of the LionA and LionM minibuses.

26

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

6 - PROPERTY, PLANT AND EQUIPMENT

	Leasehold improvements	Machinery and equipment	Rolling stock	Computer equipment	Furniture and office equipment	Production moulds	Master patterns and templates	Prototypes	Building	Construction in progress		Total
	$	$	$	$	$	$	$	$	$	$		$
GROSS CARRYING AMOUNT
Balance at January 1, 2023	52,688,714	58,166,555	2,531,772	7,470,595	1,010,711	3,304,058	1,327,362	202,172	—	42,110,058		168,811,997
Additions	16,166,380	22,470,851	3,728,406	2,132,104	2,484,595	1,189,208	180,450	4,273,619	11,984,946	4,518,943		69,129,502
Additions - Borrowing costs (Note 18)	—	1,371,166	—	—	—	—	—	—	1,359,161	—		2,730,327
Transfers	894,216	—	—	—	—	—	—	—	43,592,543	(44,486,759)		—
Disposals and write-offs	—	(1,487,289)	(28,205)	—	(184,839)	(353,564)	—	(139,531)	(23,813,344)	—		(26,006,772)
Impairmenta	—	(1,025,686)	(291,420)	—	—	—	—	(308,346)	—	—		(1,625,452)
Foreign currency translation adjustment	(42,698)	798,124	45,625	140,834	21,963	74,452	30,288	65,399	753,451	487,652	—	2,375,090
Balance at December 31, 2023	69,706,612	80,293,721	5,986,178	9,743,533	3,332,430	4,214,154	1,538,100	4,093,313	33,876,757	2,629,894		215,414,692
ACCUMULATED DEPRECIATION
Balance at January 1, 2023	2,814,583	1,840,519	437,616	1,464,667	146,952	1,073,708	139,988	137,636	—	—		8,055,669
Depreciation	2,347,584	3,267,855	1,449,581	1,001,617	218,077	1,470,615	170,750	894,363	—	—		10,820,442
Disposals and write-offs	—	(1,487,289)	(43,763)	—	(184,839)	(273,951)	—	(102,980)	—	—		(2,092,822)
Impairmenta	—	(38,301)	(99,210)	—	—	—	—	(68,521)	—	—		(206,032)
Foreign currency translation adjustment	92,418	58,560	9,091	51,767	3,063	58,253	7,052	20,548	—	—		300,752
Balance at December 31, 2023	5,254,585	3,641,344	1,753,315	2,518,051	183,253	2,328,625	317,790	881,046	—	—		16,878,009
Carrying amount December 31, 2023	64,452,027	76,652,377	4,232,863	7,225,482	3,149,177	1,885,529	1,220,310	3,212,267	33,876,757	2,629,894		198,536,683
GROSS CARRYING AMOUNT
Balance at January 1, 2022	17,054,605	6,421,141	1,308,726	2,992,982	513,344	1,462,683	965,937	78,709	—	5,301,919		36,100,046
Additions	35,455,356	52,807,971	1,317,358	4,745,673	529,882	1,978,942	433,228	135,627	—	38,118,683		135,522,720
Additions - Borrowing Costs	—	515,919	—	—	—	—	—	—	—	1,034,749		1,550,668
Transfer	462,435	67,455	—	—	—	—	—	—	—	(529,890)		—
Disposal	—	—	(83,130)	—	—	—	—	—	—	—		(83,130)
Foreign currency translation adjustment	(283,682)	(1,645,931)	(11,182)	(268,060)	(32,515)	(137,567)	(71,803)	(12,164)	—	(1,815,403)		(4,278,307)
Balance at December 31, 2022	52,688,714	58,166,555	2,531,772	7,470,595	1,010,711	3,304,058	1,327,362	202,172	—	42,110,058		168,811,997
ACCUMULATED DEPRECIATION
Balance at January 1, 2022	1,618,691	343,839	224,406	758,100	96,809	246,449	64,885	78,709	—	—		3,431,888
Depreciation	1,339,208	1,581,078	278,078	781,479	57,878	864,400	81,543	54,428	—	—		5,038,092
Disposal	—	—	(58,142)	—	—	—	—	—	—	—		(58,142)
Foreign currency translation adjustment	(143,316)	(84,398)	(6,726)	(74,912)	(7,735)	(37,141)	(6,440)	4,499	—	—		(356,169)
Balance at December 31, 2022	2,814,583	1,840,519	437,616	1,464,667	146,952	1,073,708	139,988	137,636	—	—		8,055,669
Carrying amount December 31, 2022	49,874,131	56,326,036	2,094,156	6,005,928	863,759	2,230,350	1,187,374	64,536	—	42,110,058		160,756,328

27

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

6 - PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

a.In the fourth quarter of 2023, the Company made a strategic decision to indefinitely delay the start of commercial production of the LionA all-electric mini school bus and LionM all-electric minibus in order to prioritize development and commercialization efforts on other all-electric vehicles, and as a result a non-cash impairment charge of $1,419,420 was recognized in the consolidated statements of earnings (loss) and comprehensive loss as a reduction of property, plant and equipment related to prototypes and related machinery and equipment. The recoverable amount of the LionA all-electric mini school bus and LionM all-electric minibus was determined on the basis of value in use, which was nil.

Incentives and other government assistance in the amount of $3,849,847 ($3,063,476 in 2022) was recognized during the year as a reduction of property, plant and equipment, respectively, $2,475,331 related to machinery and equipment and $1,374,516 relates to construction in progress ($1,931,179 and $1,132,297, respectively, in 2022).

Depreciation was recognized as follows in the consolidated statements of earnings (loss) and comprehensive loss:

	2023	2022
	$	$
Cost of sales	6,028,565	2,581,448
Administrative expenses	3,986,583	2,456,644
Selling expenses	805,294	—
	10,820,442	5,038,092

7 - RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS

The Group has entered into leases agreements for the rental of premises, rolling stock and equipment. The leases have an initial term of 1 to 40 years and some have a renewal option after their initial term. The lease terms are negotiated individually and encompass a wide range of different terms and conditions.

Right-of-use assets

	Premises	Rolling stock	Equipment	Total
	$	$	$	$
Balance at January 1, 2023	59,375,131	1,133,223	—	60,508,354
Additions	29,560,843	956,364	9,363,281	39,880,488
Modifications	(2,401,574)	(31,868)	5,353	(2,428,089)
Depreciation expense	(7,766,903)	(468,994)	(882,686)	(9,118,583)
Foreign currency translation adjustment	799,545	21,424	—	820,969
Balance at December 31, 2023	79,567,042	1,610,149	8,485,948	89,663,139

28

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

7 - RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS (CONTINUED)

Right-of-use assets (continued)

	Premises	Rolling stock	Equipment	Total
	$	$	$	$
Balance at January 1, 2022	60,297,423	604,939	—	60,902,362
Additions	6,661,404	740,287	—	7,401,691
Modifications	(450,567)	10,670	—	(439,897)
Depreciation expense	(6,497,931)	(186,833)	—	(6,684,764)
Foreign currency translation adjustment	(635,198)	(35,840)	—	(671,038)
Balance at December 31, 2022	59,375,131	1,133,223	—	60,508,354

On February 2, 2023, the Group completed a sale-leaseback transaction with BTB Real Estate Investment Trust for its battery manufacturing building located in Mirabel, Quebec for a total sale price of $20,909,566 (C$28,000,000), and net proceeds of $20,506,589 after the deduction of selling and legal fees of $484,994. The sale of the building resulted in a difference between the carrying value and net proceeds of $3,306,755 which was recognized as an increase to the right-of-use asset related to the lease agreement entered into with BTB Real Estate Investment Trust for the Mirabel battery manufacturing building concurrent with the sale, which has an initial 20-year term and subsequent renewal options.

Depreciation was recognized as follows :

	2023	2022
	$	$
Cost of sales	6,248,180	1,348,589
Administrative expenses	459,161	278,995
Selling expenses	1,330,000	1,826,769
Capitalized to property, plant and equipment	1,081,242	3,230,411
	9,118,583	6,684,764

29

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

7 - RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS (CONTINUED)

Lease liabilities

	$
Balance at January 1, 2023	63,520,215
Additions	36,573,733
Lease payments	(6,512,231)
Modifications	(2,456,531)
Foreign currency translation adjustment	831,400
Balance at December 31, 2023	91,956,586
Current portion	7,984,563
Non-current portion	83,972,023

Balance at January 1, 2022	62,209,317
Additions	7,401,691
Lease payments	(4,977,183)
Modifications	(439,897)
Foreign currency translation adjustment	(673,713)
Balance at December 31, 2022	63,520,215
Current portion	5,210,183
Non-current portion	58,310,032

Amounts recognized in administrative expenses in the consolidated statements of earnings (loss) and comprehensive loss are as follows:

	2023	2022
	$	$
Expense relating to variable lease payments, short-term leases and low-value assets not included in lease liabilities	4,309,208	1,159,705

See Notes 18 and 21 for information on interest expense on lease liabilities and Note 25.4 for contractual undiscounted payments related to lease liabilities.

Variable payments

Some leases for premises require repayment of a portion of the lessor’s payments for property taxes, insurance and operating expenses such as power, maintenance, administration and security; these amounts vary based on the use and wear and tear of the space. The final lease payments are determined each year.

30

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

7 - LEASE OBLIGATIONS (CONTINUED)

Lease liabilities (continued)

Renewal and termination options

Some leases include renewal or termination options that can be exercised at the Group’s option. These options are used to maximize the operational flexibility of the Group’s activities. These options are not reflected in measuring lease liabilities in many cases because the options are not reasonably certain to be exercised by the Group. The Group’s practice is to ensure that space, rolling stock or equipment meets its needs, which evolve over time.

Residual value guarantee

The residual value guarantee expected to be payable as well as those not expected to be payable have been excluded from the lease liability calculation as they were not significant.

Purchase Options

Some leases include a purchase option that can be exercised at the Group’s option. These options are reflected in measuring the lease liability when they are reasonably certain to be exercised by the Group.

8 - INTANGIBLE ASSETS

Details of the Group’s intangible assets and their carrying amounts are as follows:

	Software	Development costs (a)	Dealership rights (b)	Total
	$	$	$	$
GROSS CARRYING AMOUNT
Balance at January 1, 2023	10,137,374	140,917,328	5,222,629	156,277,331
Additions, separately acquired	6,393	—	—	6,393
Additions, internally developed	726,027	57,516,017	—	58,242,044
Additions, borrowing costs (Note 18)	—	3,805,274	—	3,805,274
Impairment (c)	—	(34,578,703)	—	(34,578,703)
Foreign currency translation adjustment	243,580	4,091,097	—	4,334,677
Balance at December 31, 2023	11,113,374	171,751,013	5,222,629	188,087,016

31

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

8 - INTANGIBLE ASSETS (CONTINUED)

	Software	Development costs (a)	Dealership rights (b)	Total
	$	$	$	$
ACCUMULATED AMORTIZATION
Balance at January 1, 2023	2,506,338	2,406,970	—	4,913,308
Amortization	2,095,740	5,121,049	—	7,216,789
Foreign currency translation adjustment	103,387	150,275	—	253,662
Balance at December 31, 2023	4,705,465	7,678,294	—	12,383,759
Carrying amount December 31, 2023	6,407,909	164,072,719	5,222,629	175,703,257

	Software	Development costs (a)	Dealership rights (b)	Total
	$	$	$	$
GROSS CARRYING AMOUNT
Balance at January 1, 2022	4,217,288	74,279,002	5,535,707	84,031,997
Additions, separately acquired	5,178,497	—	—	5,178,497
Additions, internally developed	1,258,813	70,331,615	—	71,590,428
Additions, borrowing costs (Note 18 )	—	3,542,538	—	3,542,538
Foreign currency translation adjustment	(517,224)	(7,235,827)	(313,078)	(8,066,129)
Balance at December 31, 2022	10,137,374	140,917,328	5,222,629	156,277,331
ACCUMULATED AMORTIZATION
Balance at January 1, 2022	1,177,575	954,592	—	2,132,167
Amortization	1,451,393	1,548,635	—	3,000,028
Foreign currency translation adjustment	(122,630)	(96,257)	—	(218,887)
Balance at December 31, 2022	2,506,338	2,406,970	—	4,913,308
Carrying amount December 31, 2022	7,631,036	138,510,358	5,222,629	151,364,023

32

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

8 - INTANGIBLE ASSETS (CONTINUED)

a.Incentives and other government assistance in the amount of $5,602,949 ($2,373,217 in 2022) was recognized during the year as a reduction of development costs.

b.During the year ended December 31, 2019, in order to acquire dealership rights in certain territories in the United States, the Group entered into an agreement with a private company. As of the termination date, May 7, 2022, the Group paid a cumulative amount of $3,778,203 under the agreement.

Dealership rights with an indefinite useful life are expected to provide economic benefits to the Group indefinitely as it allows the Group to sell to end customers in certain territories in the United States, conditional to yearly renewals of the dealer licenses. Management intends to renew its dealer licenses indefinitely.

c.In the fourth quarter of 2023, the Company made a strategic decision to indefinitely delay the start of commercial production of the LionA all-electric mini school bus and LionM all-electric minibus in order to prioritize development and commercialization efforts on other all-electric vehicles, and as a result a non-cash impairment charge of $34,578,703 was recognized in the consolidated statements of earnings (loss) and comprehensive loss as a reduction of intangible assets related to development costs. The recoverable amount of the LionA all-electric mini school bus and LionM all-electric minibus was determined on the basis of value in use, which was nil.

Amortization has been allocated as follows in the consolidated statements of earnings (loss) and comprehensive loss :

	2023	2022
	$	$
Cost of sales	5,121,049	1,548,636
Administrative expenses	2,095,740	1,451,392
	7,216,789	3,000,028

33

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

9 - FINANCIAL ASSETS AND LIABILITIES

9.1 Categories of financial assets and financial liabilities

The classification of financial instruments is summarized as follows:

	Classifications	December 31, 2023	December 31, 2022
		$	$
FINANCIAL ASSETS
Cash	Amortized cost	29,892,966	88,266,985
Trade receivables	Amortized cost	40,621,997	25,684,870
Incentives and other government assistance receivable	Amortized cost	26,625,156	25,312,738
FINANCIAL LIABILITIES
Trade and other payables	Amortized cost	71,856,894	62,383,813
Long-term debt and other debts	Amortized cost	224,942,365	110,673,348
Conversion options on convertible debt instruments	FVTPL	25,034,073	–
Share warrant obligations	FVTPL	29,582,203	23,243,563

9.2 Fair value of financial instruments

Current financial instruments that are not measured at fair value on the consolidated statements of financial position are represented by cash, trade receivables, incentives and other government assistance receivable, and trade and other payables (financial liabilities). Their carrying values are considered to be a reasonable approximation of their fair value because of their short-term maturity and / or the contractual terms of these instruments.

As of December 31, 2023 and December 31, 2022, the fair values of long-term debt and other debts based on discounted cash flows were not materially different from their carrying values because there were no material changes in the assumptions used for fair value determination at inception, with the exception of the loan from Strategic Innovation Fund of the Government of Canada (Note 12.3) and from Investissement Quebec (Note 12.2). The combined carrying value of Strategic Innovation Fund of the Government of Canada and Investissement Quebec loans amounted to $38,697,354 (December 31, 2022: $16,571,800) while their combined fair value amounted to $27,744,314 (December 31, 2022: $15,026,548).

As of December 31, 2023 and December 31, 2022, the fair values of the warrants issued to a customer, the private Business Combination warrants, the warrants issued as part of 2023 Debenture Financing (as defined in Note 12.7) and the conversion options on convertible debt instruments were determined using the Black-Scholes or the binomial option pricing model and the fair value of the public Business Combination warrants and December 2022 warrants (see Note 14) was determined using their market value.

34

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

9 - FINANCIAL ASSETS AND LIABILITIES (CONTINUED)

9.2 Fair value of financial instruments (continued)

As at December 31, 2023, the impact of a 5.0% increase in the value of the Company’s share price would have an impact of increasing the fair values of the private share warrants, the warrants issued to a customer and the warrants issued as part of 2023 Debenture Financing (as defined in Note 12.7) with a corresponding increase in consolidated loss of $1,694,344 (December 31, 2022: decrease in consolidated net earnings by $398,922) and a 5.0% decrease in the value would have an impact of decreasing the loss by $1,654,197 (December 31, 2022: increase in consolidated net earnings by $374,263).

As at December 31, 2023, the impact of a 5.0% increase or decrease in the value of the Company’s share price would have an impact of $473,190 on the fair value of the public warrants, with a corresponding impact on the consolidated loss (December 31, 2022: $1,007,825).

As at December 31, 2023, the impact of a 5.0% increase in the value of the Company’s share price would have an impact of increasing the fair value of the conversion options on convertible debt instruments with a corresponding increase in consolidated loss of $2,080,274 (December 31, 2022: nil) and a 5.0% decrease in the value would have an impact of decreasing the loss by $2,034,988 (December 31, 2022: nil).

9.3 Fair Value Hierarchy

Fair value measurements are categorized in accordance with the following levels:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or

liability; and

Level 3: Inputs are unobservable inputs for the asset or liability.

The Group’s financial instruments are categorized as follows on the fair value hierarchy:

	Fair Value Hierarchy
FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE
Share warrant obligations- public	Level 1
Share warrant obligations- private	Level 2
Share warrant obligations- warrants issued to a customer	Level 3
Share warrant obligations- July 2023 warrants	Level 2
Conversion options on convertible debt instruments	Level 3
FINANCIAL INSTRUMENTS MEASURED AT AMORTIZED COST
Long-term debt and other debts	Level 2

See Note 14 for share warrants obligation, Note 13 for the conversion options on convertible debt instrument and Note 12 for long-term debt and other debts for additional information related to the inputs used in the fair value calculation and the reconciliation between opening and closing balances.

35

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

10 - TRADE AND OTHER PAYABLES

Trade and other payables consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Trade accounts	54,351,734	46,355,352
Accrued liabilities payable (also refer to Note 17)	17,505,160	16,028,461
Financial liabilities	71,856,894	62,383,813

Allowance for warranties	6,439,324	2,752,398
Salaries and vacations payable	10,197,794	7,267,172
Deductions at source	1,942,437	1,384,223
Sales taxes payable	1,988,512	1,434,436
Non-financial liabilities	20,568,067	12,838,229
	92,424,961	75,222,042

11 - DEFERRED REVENUE AND OTHER DEFERRED LIABILITIES

Deferred revenue and other deferred liabilities consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Deferred revenue related to the U.S. Environmental Protection Agency ("EPA") Clean School Bus Program (Note 11.1)	16,293,067	—
Deferred liabilities related to the non-repayable financial contribution under Project Innovation Program for the Development of a Mobilizing Project (Note 11.2)	1,622,433	—
Other deferred liabilities	351,639	634,971
	18,267,139	634,971

36

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

11 - DEFERRED REVENUE AND OTHER DEFERRED LIABILITIES (CONTINUED)

11.1 U.S. Environmental Protection Agency (EPA) Clean School Bus Program (the "EPA Program")

In May 2022, the EPA announced the availability of $500 million under the first round of funding of the EPA Program, which amount was subsequently increased to $945 million. On April 25, 2023, the EPA announced an additional $400 million through the 2023 grant round under the EPA Program, and on September 28, 2023 the EPA announced an additional $500 million through the 2023 rebate round under the EPA Program. Lion all-electric school buses are eligible under the EPA Program.

Under the first funding round of the EPA Program in which Lion participated directly and indirectly through school districts, once the EPA has reviewed the payment request and confirmed that all required information was included, the EPA issued a rebate payment to the selectee such that payments made under the EPA Program were generally made before delivery of the applicable school bus.

11.2 Non-repayable financial contribution under Project Innovation Program for the Development of a Mobilizing Project

On March 20, 2023, the Company entered into a non-repayable financial contribution agreement under the Project Innovation Program for the Development of a Mobilizing Project. The agreement provides for financing of up to C$26,991,772 until December 31, 2026. On April 21, 2023, the Company received an advance of government assistance of $7,013,566 (C$9,446,572) from Investissement Quebec relating to future vehicle development project costs, of which $5,391,133 of qualifying related expenditures have been incurred as at December 31, 2023 and recorded as a reduction of intangible assets.

37

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

12- LONG-TERM DEBT AND OTHER DEBTS

	December 31, 2023	December 31, 2022
	$	$
Credit Agreement with Banking Syndicate, secured, maturing August 11, 2025 (Note 12.1)	70,000,000	71,916,716
Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.2)	23,573,074	10,381,986
Strategic Innovation Fund of the Government of Canada unsecured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.3)	15,124,280	6,189,814
Loans on research and development tax credits and subsidies receivable (Note 12.4)	22,682,595	22,150,030
Secured loans for the acquisition of rolling stock, maturing between December 2023 and August 2024 (Note 12.5)	10,361	34,802
Credit facility for the supplier payment program (Note 12.6)	4,363,520	—
Non-Convertible Debentures issued as part of 2023 Debenture Financing (Note 12.7, Note 12.7.1)	44,532,212	—
Convertible Debentures issued as part of 2023 Debenture Financing (Note 12.7, Note 12.7.2)	44,656,323	—
	224,942,365	110,673,348
Current portion of long-term debt and other debts	27,056,476	24,713
Long-term portion of long-term debt and other debts	197,885,889	110,648,635

12.1 Credit Agreement with Banking Syndicate

On August 11, 2021, Lion entered into a new credit agreement with a syndicate of lenders represented by National Bank of Canada, as administrative agent and collateral agent, and including Bank of Montreal and Federation des Caisses Desjardins du Quebec (the “Revolving Credit Agreement”). The Revolving Credit Agreement was amended on January 25, 2022 to increase the maximum principal amount that may become available from time to time under the revolving credit facility, subject to the borrowing base and compliance with the covenants contained under the Revolving Credit Agreement from $100,000,000 to $200,000,000. The Revolving Credit Agreement was further amended on July 19, 2023 ("the July 2023 Amendment") to permit the incurrence of the 2023 Debenture Financing (as defined in Note 12.7), extend the maturity of the Revolving Credit Agreement by one year to August 11, 2025, and provide for an availability block and the establishment of an interest reserve account. The credit facility under the Revolving Credit Agreement is available for use to finance working capital and for other general corporate purposes, and available to be drawn subject to a borrowing base comprised of eligible accounts (including insured or investment grade accounts) and eligible inventory, in each case, subject to customary eligibility and exclusionary criteria, advance rates and reserves.

38

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

12- LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.1 Credit Agreement with Banking Syndicate (continued)

The credit facility under the Revolving Credit Agreement currently bears interest at a floating rate by reference to the Canadian prime rate or pursuant to banker’s acceptance based on the Canadian Dollar Offered Rate ("CDOR") rate, if in Canadian dollars, or the US base rate or Term Secured Overnight Financing Rate ("SOFR"), if in US dollars, as applicable, plus the relevant applicable margin.

As at December 31, 2023, the weighted average all-in interest rate was 6.96%, including stamping fees and spread, divided as follows:

	Repricing date	Interest Rate
Loans in the amount of US$70,000,000	January 2024	6.94%- 6.98%, including spread of 1.50%

As at December 31, 2022, the weighted average all-in interest rate was 5.46%, including stamping fees and spread, divided as follows:

	Repricing date	Interest Rate
Loans in the amount of C$50,000,000	January 2023	3.67% - 4.71% plus 1.50% stamping fee
Loans in the amount of US$35,000,000	January 2023	4.42% - 5.80%, including spread of 1.50%

The Revolving Credit Agreement matures on August 11, 2025. The obligations under the Revolving Credit Agreement are secured by a first priority security interest, hypothec and lien on substantially all of Lion’s and certain of its subsidiaries’ movable property and assets (subject to certain exceptions and limitations). The Revolving Credit Agreement includes certain customary affirmative covenants, restrictions and negative covenants on Lion’s and its subsidiaries’ activities, subject to certain exceptions, baskets and thresholds. The Revolving Credit Agreement also provides for customary events of default, in each case, subject to customary grace periods, baskets and materiality thresholds. Finally, the Revolving Credit Agreement also requires Lion to maintain certain financial ratios and namely, an all times tangible net worth test and a springing fixed charge coverage ratio based on a minimum availability test which may, from time to time, impact the maximum amount available under the revolving credit facility. Further, in accordance with the July 2023 Amendment, the amount available under the revolving credit facility provided under the Revolving Credit Agreement is subject to an availability block of C$10,000,000 which, upon availability dropping below 30% and so long as no default then exist or would result therefrom, may become available and be drawn to fund an interest reserve account to be made subject to the control of the administrative agent and collateral agent under the Revolving Credit Agreement. Such interest reserve account amounts can be used to pay interest under the Non-Convertible Debentures if no default or event of default shall have occurred and be continuing or shall result therefrom.

39

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

12- LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.2 Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center

On July 1, 2021, the Company entered into an interest-bearing secured loan agreement with Investissement Quebec (the “IQ Loan”) relating to the construction of the battery manufacturing plant (the "Battery Plant") and innovation center (the "Innovation Center" and collectively with the Battery Plant, the "Lion Campus"). The IQ Loan provides for financing of up to C$50,000,000. On July 19, 2023, in connection with the 2023 Debenture Financing (as defined in Note 12.7), the IQ Loan was amended (the "IQ Loan 2023 Amendment") to allow holders of the Non-Convertible Debentures to benefit from a second-priority hypothec on substantially all movable/personal property of the Company, subject to certain exceptions in regards to excluded assets, and a first-rank hypothec on each of the immovable/real rights related to the Company’s Innovation Center facility located in Mirabel, Quebec and battery factory equipment financed by Investissement Quebec.

As part of the IQ Loan 2023 Amendment, the potential forgiveness of up to 30% of the IQ Loan subject to certain criteria tied to the Company and to the operations of the facilities, including the creation and maintenance of workforce and certain minimum spending related to R&D activities was replaced with certain financial penalties of up to C$3,000,000 and/or C$15,000,000 for the Company, pro-rated based on the proportion of criteria achieved and the borrowing amount relative to the C$50,000,000 maximum. Funds will be provided to the Company by way of reimbursement of a predetermined percentage of qualified expenditures incurred by the Company, such that the ultimate amount to be received by the Company from Investissement Quebec is dependent upon qualified expenditures being made by the Company in connection with the Lion Campus. The Company will conduct work, incur expenses and fund all costs from its own capital resources, and then submit claims to Investissement Quebec for reimbursement of a predetermined percentage of eligible qualified expenditures up to C$50,000,000. Disbursement by Investissement Quebec is conditional upon, among other things, the Company’s compliance with certain affirmative and negative covenants as set out in the IQ Loan, including covenants relating to Company’s creation and maintenance of workforce, operations and R&D activities.

The IQ Loan bears interest at a fixed rate of 4.41%, and will be repayable over a ten-year term, beginning in June 2027. The IQ Loan contains certain affirmative and negative covenants, including covenants relating to the Company’s workforce, operations and research and development activities and to the location of its head office in the Province of Quebec, as well as certain financial covenants. Following the IQ Loan 2023 Amendment, and the purchase of the equipment used in the battery factory of the Company, the obligations under the IQ Loan will be secured by a second-priority hypothec on the Company’s immovable (real) property rights related to the Innovation Center facility located on the Lion Campus and the equipment used in connection with the battery factory of the Company, and a hypothec on substantially all of the Company’s other movable property and assets (subject to certain exceptions and limitations in regards to excluded assets) ranking after those securing the Revolving Credit Agreement, the Non-Convertible Debentures and the Finalta-CDPQ Loan Agreement.

40

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.3 Strategic Innovation Fund of the Government of Canada unsecured loan related to Battery Plant and Innovation Center

On August 19, 2021, the Company entered into an unsecured non-interest bearing loan agreement with the Strategic Innovation Fund of the Government of Canada relating to the construction of the Lion Campus (the “SIF Loan”). The SIF Loan provides for financing of up to C$49,950,000, of which up to 30% is expected to be forgiven subject to the satisfaction of certain criteria tied to the Company and to the operations of the facilities, including the creation and maintenance of workforce and certain minimum spending related to research and development activities. The SIF Loan is repayable over a 15-year term beginning in April 2026. The SIF Loan contains certain affirmative and negative covenants, including relating to the Company’s workforce, operations and research and development activities and to the location of its head office. As at December 31, 2023, the SIF Loan has a nominal value of $21,982,156 (December 31, 2022: $9,358,929) and is discounted at the rate of 4.03%. As at December 31, 2023, the difference between the proceeds received and the fair value of the debt of $7,329,216 (December 31, 2022: $3,226,695) was accounted as a government grant and recorded as a reduction of property, plant and equipment in the amount of $3,849,847 (December 31, 2022: $3,063,476) and intangible assets in the amount of $310,311 (December 31, 2022: $163,219).

The Group has recognized the following related to the SIF Loan:

	December 31, 2023
	$
Beginning balance	6,189,814
Addition	8,903,080
Accretion expense	403,408
Foreign currency translation adjustment	(372,022)
Balance at December 31, 2023	15,124,280

12.4 Loans on research and development tax credits and subsidies receivable

Finalta-CDPQ Loan Agreement

On November 8, 2022, Lion entered into the Finalta-CDPQ Loan Agreement with Finalta, as lender and administrative agent, and Caisse de dépôt et placement du Québec (through one of its subsidiaries), as lender, to finance certain refundable tax credits and grants under government programs. The Finalta-CDPQ Loan Agreement provides for a loan facility of up to a principal amount of C$30,000,000 and bears interest at the rate of 10.95% per annum.

The obligations thereunder are secured by a first priority security interest, hypothec and lien in certain tax credits and government grants and a subordinate security interest, hypothec and lien in substantially all other movable property and assets. The Finalta-CDPQ Loan Agreement matures on November 6, 2024.

41

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.4 Loans on research and development tax credits and subsidies receivable (continued)

The Finalta-CDPQ Loan Agreement includes certain customary restrictions and negative covenants on Lion’s and its subsidiaries’ activities, subject to certain exceptions, baskets, and thresholds. The Finalta-CDPQ Loan Agreement also provides for customary events of default, in each case, subject to customary grace periods, baskets and materiality thresholds. Upon the occurrence and during the continuance of an event of default, the lenders would be entitled to demand the immediate repayment of all amounts owing to them under the Finalta-CDPQ Loan Agreement and/or the lenders may exercise their other rights, remedies and/or recourses. An aggregate amount of $22,233,751 (C$30,000,000) was advanced under the Finalta-CDPQ Loan Agreement on November 8, 2022 upon entering into the agreement and is outstanding as of the date hereof.

12.5 Secured loans for the acquisition of rolling stock

As of December 31, 2023, the Group had an outstanding secured loan, maturing in August 2024, related to the financing of the acquisition of rolling stock in the amount of $10,361. As of December 31, 2022, the Group had an outstanding secured loan, maturing from December 2023 to August 2024, related to the financing of the acquisition of rolling stock in the amount of $34,802. The loan has an interest rate of 2.35% (December 31, 2022: varying from 2.35% to 4.25%) and was secured by the asset financed having a net carrying value of $19,283 (December 31, 2022: $41,472).

12.6 Credit facility for the supplier payment program

On February 8, 2023, the Company entered into a revolving credit facility with National Bank of Canada (the "Credit Facility") to finance the Company’s accounts payable related to good or services purchased in the normal course of its operations. The Credit Facility is insured by Export Development Canada ("EDC") and provides for financing of up to $5,000,000. Each term loan tranche has a period of minimum 30 days and a maximum of 120 days. Each advance expires at the later of the expiry date of the invoice payable or the date indicated as the expiry date on the term note and accepted by the National Bank of Canada and cannot be prepaid in whole or in part. The Credit Facility is subject to an annual review and may be cancelled by National Bank of Canada at any time. The Credit Facility bears interest at a floating rate by reference to the SOFR for a comparable period, plus the relevant credit adjustment spread of 1.5%.

As at December 31, 2023, the credit facility for the supplier payment program was divided as follows:

	December 31, 2023
	$
Carrying amount
Presented in long-term debts and other debts of which suppliers has not received payments	—
Presented in long-term debts and other debts of which suppliers has received payments	4,363,520
Presented in long-term debts and other debts	4,363,520

42

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.6 Credit facility for the supplier payment program (continued)

	December 31, 2023
Range of payment due date
Liabilities that are part of the arrangements	119 - 120 days after invoice date
Comparable trade payables that are not part of the arrangements	Net 30 days

12.7 2023 Debenture Financing

On July 19, 2023, the Company closed concurrent financing transactions for aggregate gross proceeds for the Company of $142,920,845 (the “2023 Debenture Financing”).

The 2023 Debenture Financing consists of:

i.the issuance by way of private placement of senior unsecured convertible debentures (the “Convertible Debentures”) for gross proceeds of $74,005,000. The Group allocated proceeds in the amount of $30,342,059 to the fair value of the conversion options on the convertible debt instruments (refer to Note 13) and $43,662,941 to the Convertible Debentures (refer to Note 12.7.2).

ii.the issuance by way of private placement of senior secured non-convertible debentures (the “Non-Convertible Debentures”) and the issuance by way of private placement to the holders of Non-Convertible Debentures of a number of common share purchase warrants (the "July 2023 Warrants") for gross proceeds of $68,915,845 (C$90,900,000). The Group allocated proceeds in the amount of $24,767,843 to the fair value of the July 2023 Warrants (refer to Note 14.4) and $44,148,002 to the Non-Convertible debentures (refer to Note 12.7.1).

Transactions costs of $6,235,509 were incurred as part of the 2023 Debenture Financing. An amount of $2,405,659 was recognized as finance costs in the consolidated statements of earnings (loss) and comprehensive loss, $1,919,701 were netted against the proceeds received from the Convertible Debenture and $1,910,149 were netted against the proceeds received from the Non-Convertible Debenture.

12.7.1 Non-Convertible Debentures issued as part of 2023 Debenture Financing

The Non-Convertible Debentures with a principal amount of $68,915,845 (C$90,900,000) bear interest at the rate of 11% per annum and are payable in cash quarterly. The Non-Convertible Debentures will mature on July 19, 2028. The Company will have the right, at any time after January 19, 2024, upon 30-day notice, to redeem all or part of the principal amount thereunder, without penalty, at a price equal to one hundred per cent (100%) of the principal amount so redeemed, plus accrued and unpaid interest on the principal amount so repaid, accruing to the date of such redemption.

43

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.7.1 Non-Convertible Debentures issued as part of 2023 Debenture Financing (continued)

The Non-Convertible Debentures contain customary covenants for an instrument of its nature, including covenants relating to compliance with the financial ratios and negative covenants included in the Revolving Credit Agreement (as defined below) (provided (i) that any amendment to the financial ratios to which the lenders under the Revolving Credit Agreement consent will automatically be incorporated in the Non-Convertible Debentures, and (ii) that a default shall only occur under the Non-Convertible Debentures if a financial ratio default occurs and is continuing on the date that is fifteen business days following the delivery of the Company’s consolidated financial statements evidencing such event of default, and only if the lenders under the Revolving Credit Agreement have not waived or tolerated such event of default before the expiry of this fifteen business day period), in addition to certain covenants relating to maintaining the current headquarters, employees and facilities of the Company in the province of Québec.

The Non-Convertible Debentures contain customary events of default for an instrument of its nature, including, among other things, (i) the occurrence of an event of default under the Revolving Credit Agreement if such default results in the acceleration of the payments owed thereunder and (ii) the occurrence of an event of default under any other debt instrument of the Company with a principal amount exceeding US$15,000,000 if such default permits the acceleration of the payment of such debt. The Non-Convertible Debentures constitute senior secured obligations of the Company and will be secured by a hypothec and other liens on substantially all of the Company’s and certain of its subsidiaries’ movable/personal property as well as on the immovable/real rights related to the Company’s Innovation Center facility located in Mirabel, Québec and guaranteed by such subsidiaries.

The Non-Convertible Debentures were recorded at the estimated fair value of $42,237,853 using an effective interest rate of 22.54% per annum at the time of issuance, representing proceeds received from the issuance of the Non-Convertible Debenture of $44,148,002, less an amount of $1,910,149 incurred as a direct cost in the closing of the financing.

The Group has recognized the following related to the Non-Convertible debenture:

	December 31, 2023
	$
Beginning balance at July 19, 2023	42,237,853
Accretion expense	2,346,874
Foreign currency translation adjustment	(52,515)
Balance at December 31, 2023	44,532,212

44

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.7.2 Convertible Debentures issued as part of 2023 Debenture Financing

The Convertible Debentures, with a principal amount of $74,005,000 bear interest at the rate of 13% per annum, compounded monthly on the last day of each month. Prior to any accrual date, the Company has the right, at its discretion, to make an election to pay interest accrued on the principal for the applicable month in cash (in which case any interest so paid shall not be compounded).The Convertible Debentures will mature on July 19, 2028. The Convertible Debentures contain customary covenants and events of default for an instrument of its nature, including covenants relating to compliance with the financial ratios and negative covenants included in the Revolving Credit Agreement (as defined below) (provided (i) that any amendment to the financial ratios to which the lenders under the Revolving Credit Agreement consent will automatically be incorporated in the Convertible Debentures, and (ii) that a default shall only occur under the Convertible Debentures if a financial ratio default occurs and is continuing on the date that is fifteen business days following the delivery of the Company’s consolidated financial statements evidencing such event of default, and only if the lenders under the Revolving Credit Agreement have not waived or tolerated such event of default before the expiry of this fifteen business day period).

The Convertible Debentures also include certain covenants relating to maintaining the current headquarters, employees and facilities of the Company in the province of Québec and certain covenants limiting the incurrence of capital expenditures over the term of the Convertible Debentures, including limits on capital expenditures towards increasing production capacity at the Company’s manufacturing facilities beyond certain capacity as well as limits on the incurrence of maintenance and other capital expenditures.

The Convertible Debentures contain customary events of default for an instrument of its nature, including, among other things, the occurrence of an event of default under any other debt of the Company with a principal amount exceeding US$15,000,000 if such default results in the acceleration of the amounts owed thereunder.

Upon the occurrence of an event of default under the Convertible Debentures or, if later, at the expiry of any agreed-upon period for curing an event of default, as the case may be, holders of Convertible Debentures will have the right, upon giving written notice to the Company, to (i) require the Company to redeem all of their Convertible Debentures, or (ii) require that the principal amount of the Convertible Debentures, plus any accrued, compounded and unpaid interest, be converted into Common Shares, with the number of Common Shares issuable upon such conversion being subject to a grid-based “make-whole” adjustment as set forth below.

In connection with the Financing, the Company issued 258,155 Common Shares in the aggregate (the “Closing Fee Shares”) to the holders of Convertible Debentures, representing 0.75% of the principal amount of Convertible Debentures, based on the 5-day volume weighted average price (“VWAP”) of the Common Shares on the NYSE on July 14, 2023.

Pursuant to applicable Canadian securities laws, the Convertible Debentures (and any Common Shares issuable upon conversion) and the Closing Fee Shares are subject to a hold period expiring on November 20, 2023.

45

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.7.2 Convertible Debentures issued as part of 2023 Debenture Financing (continued)

The Convertible Debentures were recorded at the estimated fair value of $41,743,240 using an effective interest rate of 21.02% per annum at the time of issuance, representing the proceeds received from the issuance of the Convertible Debenture of $43,662,941, less an amount of $1,919,701 incurred as a direct cost in the closing of the financing.

The Group has recognized the following related to the Convertible debenture:

	December 31, 2023
	$
Beginning balance at July 19, 2023	41,743,240
Accretion expense	2,913,083
Balance at December 31, 2023	44,656,323

For the years ended December 31, 2023 and 2022, the Company was in compliance with all the covenants and financial ratios included in its long-term debt and other debts above.

13 - CONVERSION OPTIONS ON CONVERTIBLE DEBT INSTRUMENTS

The Convertible Debentures are convertible at the holders’ option into Common Shares at a conversion price of US$2.58 per Common Share (reflecting a 20% premium over the 5-day VWAP for the Common Shares on the New York Stock Exchange (“NYSE”) calculated on July 14, 2023, the last trading day prior to announcement of the 2023 Debenture Financing). The conversion price is subject to customary adjustments, including for share splits or consolidation, share dividends, rights offerings, asset or other distributions and above market repurchases of shares (including above market exchanges or tender offers), in each case in compliance with the rules and requirements of the TSX relating to anti-dilution mechanisms.

Upon the occurrence of a “fundamental change”, including a change of control of the Company or the Company failing to comply with the covenants to maintain the current headquarters, employees and facilities of the Company in the province of Québec, holders of Convertible Debentures will either (i) convert all of their Convertible Debentures, with the number of Common Shares issuable upon such conversion being subject to a grid-based “make-whole” adjustment, or (ii) require the Company to repurchase for cash all of their Convertible Debentures at a repurchase price equal to 150% of the principal amount and the accrued, compounded and unpaid interest. In the event holders of Convertible Debentures elect to convert their Convertible Debentures upon a fundamental change or an event of default, the number of Common Shares issuable upon such conversion will be subject to a grid-based “make-whole” adjustment pursuant to which the conversion rate determining the number of Common Shares issuable will be increased by a number of additional Common Shares (the “Additional Shares”), (i) in the case of a conversion in connection with a fundamental change, based on a reference price on the date on which the fundamental change occurs or becomes effective, or (ii) in the case of a conversion following an event of default, based on a reference price on the date on which the holder exercises its conversion right.

46

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

13 - CONVERSION OPTIONS ON CONVERTIBLE DEBT INSTRUMENTS (CONTINUED)

The fair value of the conversion options on convertible debt instruments was determined using the Black-Scholes or the binomial option pricing model taking into account the following assumptions:

	December 31, 2023	July 19, 2023
Exercise price ($)	2.58	2.58
Share price ($)	1.77	2.12
Volatility (%)	57%	57%
Risk-free interest rate (%)	3.28%	3.76%
Expected warrant life (years)	4.54	5.00

The expected volatility was determined by reference to historical data of comparable share prices over the expected life of the conversion options on convertible debt instruments .

The Group has recognized the following conversion options on convertible debt instruments:

	December 31, 2023
	$
Beginning balance at July 19, 2023	30,342,059
Paid in kind interest	3,551,316
Fair value adjustment	(8,533,552)
Foreign currency translation adjustment	(325,750)
Ending balance	25,034,073

During the year ended December 31, 2023, transaction costs of $1,334,030 were recognized as finance costs in the consolidated statements of earnings (loss) and comprehensive loss.

14 - SHARE WARRANT OBLIGATIONS

14.1 Warrants issued to a customer

On July 1, 2020, in connection with the entering into of a master purchase agreement and a work order (collectively, the “MPA”) with Amazon Logistics, Inc., the Company issued warrants to purchase common shares of the Company (the “Warrant”) to Amazon.com NV Investment Holdings LLC (the “Warrantholder”) which vests, subject to the terms and conditions contained therein, based on the aggregate amount of spending by Amazon.com, Inc. and its affiliates on the Group’s products or services.

47

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

14 - SHARE WARRANT OBLIGATIONS (CONTINUED)

14.1 Warrants issued to a customer (continued)

At the election of the Warrantholder, any vested portion of the Warrant can be exercised either on a cash basis by the payment of the applicable exercise price or on a net issuance basis based on the in-the-money value of the Warrant. The exercise price of the Warrant corresponds to $5.66 per share. The Warrant grants the Warrantholder the right to acquire up to 35,350,003 common shares of the Company.

There was an initial vesting of a portion of the Warrant which was exercisable for 5,302,511 common shares as at December 31, 2023 and December 31, 2022. The remaining portion of the Warrant vests in three tranches based on the aggregate amount of spending by Amazon.com, Inc. and its affiliates on Group products or services.

The Warrant has a term of 8 years. Full vesting of the Warrant requires spending of at least $1.2 billion on Group products or services over the term of the Warrant, subject to accelerated vesting upon the occurrence of certain events, including a change of control of the Group or a termination of the MPA for cause.

The fair value of the Warrant was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	December 31, 2023	December 31, 2022
Exercise price ($)	5.66	5.66
Share price ($)	1.77	2.24
Volatility (%)	57%	43%
Risk-free interest rate (%)	3.30%	3.38%
Expected warrant life (years)	4.50	5.50

The Group has recognized the following contract asset and share warrant obligation:

	December 31, 2023	December 31, 2022
	$	$
Contract asset
Beginning Balance	13,211,006	14,113,415
Foreign currency translation adjustment	317,640	(902,409)
Ending Balance	13,528,646	13,211,006

48

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

14 - SHARE WARRANT OBLIGATIONS (CONTINUED)

14.1 Warrants issued to a customer (continued)

Share warrant obligation
Beginning Balance	2,172,269	30,871,444
Fair value adjustment	(262,569)	(28,281,579)
Foreign currency translation adjustment	(11,909)	(417,596)
Ending Balance	1,897,791	2,172,269

14.2 Warrants issued as part of the business combination transaction

Upon completion of the business combination transaction on May 6, 2021, each outstanding warrant to purchase shares of Northern Genesis Acquisition Corp. (“NGA”)’s common stock was converted into a warrant to acquire one common share of the Company at a price of $11.50 per share. A total of 27,111,741 NGA warrants were converted into 27,111,741 Business Combination Warrants, 15,972,672 of which are publicly traded and 11,139,069 of which are private. As at December 31, 2023 and December 31, 2022 , there were 27,111,323 Business Combination Warrants outstanding of which 15,972,364 are publicly traded and 11,138,959 are private.

Each Business Combination Warrant entitles the holder to acquire one common share at an exercise price of $11.50 per share until May 6, 2026, subject to adjustment in certain customary events. The public Business Combination Warrants may be redeemed by the Company, in whole at a price of $0.01 per public Business Combination Warrant, provided that the last reported sales price of the Company’s common shares equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period commencing once the public Business Combination Warrants become exercisable and ending on the third trading day prior to the date on which the Company gives proper notice of such redemption.

The fair value of the public warrants was determined using their market trading price as follows:

	December 31, 2023	December 31, 2022
Warrant price ($)	0.05	0.45

Each private Business Combination Warrant may not be redeemed by the Company so long as they are held by Northern Genesis Sponsor LLC or any of its permitted transferees. Once transferred to any person that is not Northern Genesis Sponsor LLC or any of its permitted transferees, a private Business Combination Warrant becomes treated as a public Business Combination Warrant.

49

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

14 - SHARE WARRANT OBLIGATIONS (CONTINUED)

14.2 Warrants issued as part of the business combination transaction (continued)

The fair value of the private warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	December 31, 2023	December 31, 2022
Exercise price ($)	11.50	11.50
Share price ($)	1.77	2.24
Volatility (%)	53%	50%
Risk-free interest rate (%)	3.81%	3.68%
Expected warrant life (years)	2.33	3.33

The expected volatility was determined by reference to historical data of comparable share prices over the expected life of the warrants.

The Group has recognized the following warrant obligations:

	Public warrants	Private warrants	Total
	$	$	$
Beginning balance at January 1, 2023	7,075,767	914,881	7,990,648
Fair value adjustment	(6,173,511)	(727,873)	(6,901,384)
Foreign currency translation adjustment	3,481	(9,825)	(6,344)
Balance at December 31, 2023	905,737	177,183	1,082,920

	Public warrants	Private warrants	Total
	$	$	$
Beginning balance at January 1, 2022	42,961,675	32,392,815	75,354,490
Fair value adjustment	(35,011,131)	(31,200,119)	(66,211,250)
Exercised	(348)	—	(348)
Foreign currency translation adjustment	(874,429)	(277,815)	(1,152,244)
Balance at December 31, 2022	7,075,767	914,881	7,990,648

50

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

14 - SHARE WARRANT OBLIGATIONS (CONTINUED)

14.3 Warrants issued as part of the December 2022 Offering

On December 16, 2022, the Company closed the "December 2022 Offering", pursuant to which the Company issued of 19,685,040 "2022 Warrants". On January 17, 2023, the Company announced the exercise and closing of the underwriters’ over-allotment option with respect to the offering of units closed in December 2022, pursuant to which the Company issued 2,952,755 2022 Warrants. Each whole 2022 Warrant entitles the holder to purchase one common share for a price of $2.80 per share for a period of five years ending on December 15, 2027, subject to adjustment in certain customary events.

The over-allotment option aggregate gross proceeds of $2,907,226 were allocated to the warrants, representing the fair value of the warrants on the day of issuance. Issuance fees of $247,586 were recognized in administrative expenses in the consolidated statements of earnings (loss) and comprehensive loss and related to legal and other professional costs ($58,916) and net commissions paid to the agents ($188,670). As at December 31, 2023 and December 31, 2022, all warrants are outstanding.

The fair value of the warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	January 17, 2023	December 16, 2022
Exercise price ($)	2.80	2.80
Share price ($)	2.49	2.54
Volatility (%)	45%	44%
Risk-free interest rate (%)	2.95%	3.07%
Expected warrant life (years)	5.00	5.00

The expected volatility was determined by reference to historical data of comparable share prices over the expected life of the warrants.

The fair value of the 2022 Warrants was determined using their market trading price as follows:

	December 31, 2023	December 31, 2022
Warrant price ($)	0.41	0.70

51

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

14 - SHARE WARRANT OBLIGATIONS (CONTINUED)

14.3 Warrants issued as part of the December 2022 Offering (continued)

The Group has recognized the following warrant obligation:

	December 31, 2023	December 31, 2022
	$	$
Beginning balance	13,080,646	19,913,196
Additions	2,907,226	—
Fair value adjustment	(7,378,042)	(6,975,357)
Foreign currency translation adjustment	(51,764)	142,807
Ending balance	8,558,066	13,080,646

14.4 July 2023 Warrants issued as part of 2023 Debenture Financing

In connection with the 2023 Debenture Financing, the Company issued Warrants to holders of Non-Convertible Debentures (refer to Note 12.7) entitling them to purchase, at any time after six (6) months following the issuance

thereof until July 19, 2028, 22,500,000 Common Shares in the aggregate at an exercise price of C$2.81 per Common Share (representing the 5-day VWAP of the Common Shares on the Toronto Stock Exchange ("TSX") as of July 14, 2023). The exercise price of the Warrants is subject to customary adjustments, including for share splits or consolidation, share dividends, rights offerings, asset or other distributions and above market repurchases of shares (including above market exchanges or tender offers), in each case in compliance with the rules and requirements of the TSX relating to anti-dilution mechanisms.

Upon a change of control of the Company, the Company will have the right to redeem and cancel all of the outstanding Warrants for a cash purchase price based on the remaining term of the Warrants and the value of the consideration offered or payable per Common Share in the transaction constituting the change of control. In addition, upon a change of control of the Company resulting in (or which is reasonably anticipated to result in) the Common Shares ceasing to be listed on a stock exchange, the holders of Warrants may require the Company to redeem and cancel all Warrants at the Redemption Price subject to and on the date such transaction resulting in a change of control is completed. Pursuant to applicable Canadian securities laws, the Warrants (and any Common Shares issuable upon exercise) will be subject to a hold period expiring on November 20, 2023.

52

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

14 - SHARE WARRANT OBLIGATIONS (CONTINUED)

14.4 July 2023 Warrants issued as part of 2023 Debenture Financing (continued)

The fair value of the warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	December 31, 2023	July 19, 2023
Exercise price (C$)	2.81	2.81
Share price (C$)	2.36	2.78
Volatility (%)	57%	57%
Risk-free interest rate (%)	3.28%	3.76%
Expected warrant life (years)	4.54	5.00

The expected volatility was determined by reference to historical data of comparable share prices over the expected life of the warrants. The Group has recognized the following warrant obligation:

	December 31, 2023
	$
Beginning balance at July 19, 2023	24,767,843
Fair value adjustment	(6,421,117)
Foreign currency translation adjustment	(303,300)
Ending balance	18,043,426

During the year ended December 31, 2023, transaction costs of $1,071,629 were recognized as finance costs in the consolidated statements of earnings (loss) and comprehensive loss.

15 - EMPLOYEE BENEFITS EXPENSE

The following table summarizes the employee benefits expense recorded and included in administrative and selling expenses during the year ended December 31, 2023, and 2022:

	2023	2022
	$	$
Wages and salaries	56,381,455	35,576,358
Share-based compensation (Note 16)	5,203,521	12,362,070
	61,584,976	47,938,428

The compensation of key management personnel is further disclosed in Note 22.

53

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

16 - SHARE-BASED COMPENSATION

16.1 Stock options

The Group has a stock option plan (the "Plan") for its key employees, officers and consultants under which it has authorized the grant of options for the purchase of its common shares for a maximum of 10% of outstanding common shares.

The Board of Directors determines the stock option term, which shall be no more than 10 years. Under the terms of the plan, the exercise price of each option cannot be below the fair value of the common shares on the grant date. Unless otherwise determined by the Board of Directors, the options granted under the plan vest within four years, beginning on the first anniversary of the date of granting.

The following table summarizes the outstanding options as at December 31, 2023 and 2022 and changes during the years then ended:

	2023		2022
	Number of stock options	Weighted average exercise price	Number of stock options	Weighted average exercise price
		C$		C$
Outstanding, beginning of year	9,547,185	2.11	9,072,149	1.82
Granted	1,921,151	2.78	558,697	6.94
Exercised(a)	—	—	(45,121)	0.93
Forfeited	(708,753)	10.79	(38,540)	6.91
Outstanding, end of year	10,759,583	1.65	9,547,185	2.11
Exercisable, end of year	8,746,808	1.19	7,615,432	1.25

a. Stock options exercised during the year ended December 31, 2022 had a weighted average share price of C$3.42 at the date of exercise.

54

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

16 - SHARE-BASED COMPENSATION (CONTINUED)

16.1 Stock options (continued)

The following table summarizes the information relating to stock options outstanding:

	As at December 31, 2023
	Number of stock options	Remaining contractual life (years)	Number of stock options exercisable
Exercise price
C$0.93 (issued in 2018)	4,747,277	3.96	4,747,277
C$0.93 (issued in 2019)	3,664,907	5.76	3,664,907
C$6.90 (issued in 2020)	289,023	6.71	216,767
C$15.45 (issued in 2021)	26,389	7.65	13,195
C$23.02 (issued in 2021)	10,013	7.49	5,007
C$13.29 (issued in 2021)	14,600	7.94	7,300
C$6.92 (issued in 2022)	304,335	8.36	76,084
C$7.05 (issued in 2022)	65,083	8.38	16,271
C$2.75 (issued in 2023)	1,260,598	9.22	—
C$2.89 (issued in 2023)	377,358	9.70	—
	10,759,583		8,746,808

	As at December 31, 2022
	Number of stock options	Remaining contractual life (years)	Number of stock options exercisable
Exercise price
C$0.93 (issued in 2018)	4,747,277	4.96	4,747,277
C$0.93 (issued in 2019)	3,664,907	6.76	2,649,930
C$6.90 (issued in 2020)	289,023	7.71	144,512
C$15.45 (issued in 2021)	26,389	8.65	6,597
C$23.02 (issued in 2021)	253,865	8.49	63,466
C$13.29 (issued in 2021)	14,600	8.94	3,650
C$6.92 (issued in 2022)	486,041	9.36	—
C$7.05 (issued in 2022)	65,083	9.38	—
	9,547,185		7,615,432

55

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

16 - SHARE-BASED COMPENSATION (CONTINUED)

16.1 Stock options (continued)

For share options granted during the year ended December 31, 2023, the weighted average fair value of those options at the measurement date is $1,755,912 (December 31, 2022: $1,428,004). Stock options granted during the year ended December 31, 2023 had a weighted average fair value price of $0.91 at the date of the grant.

The following table summarizes the weighted average values for the assumptions used in the Black-Scholes option pricing model for the stock option grants during the years ended December 31, 2023 and 2022:

	2023	2022
Expected dividends per share (C$)	—	—
Exercise price (C$)	2.78	6.94
Share price (C$)	2.78	6.94
Expected Volatility (%)	40%	40%
Risk-free interest rate (%)	3.19%	2.78%
Expected option life (years)	6.25	7.50

Compensation expense related to the share-based compensation was recognized in the consolidated statements of earnings (loss) and comprehensive loss as follows:

	2023	2022
	$	$
Administrative expenses	3,414,925	8,296,836
Selling expenses	240,720	2,765,645
	3,655,645	11,062,481

The expected volatility was determined by reference to historical data of comparable companies share prices over the expected life of the stock options.

16.2 Restricted share units

In June 2021, the Company approved a restricted share unit (“RSU”) plan for officers and other key employees of the Group. A RSU represents the right of an individual to receive one common share of the Company on the vesting date without any monetary consideration being paid to the Company. All RSUs vest within a maximum three-year vesting period and they can be settled in cash based on the Company’s share price on the vesting date, or through the delivery of common shares issued from treasury or purchased on the open market, at the Company’s option. RSUs are expected to be settled in common shares purchased on the open market.

Compensation cost for RSUs is measured at the fair value of the underlying common share at the grant date and is expensed over the award’s vesting period.

56

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

16 - SHARE-BASED COMPENSATION (CONTINUED)

16.2 Restricted share units (continued)

	2023		2022
	Number of restricted share units	Weighted average exercise price	Number of restricted share units	Weighted average exercise price
		C$		C$
Outstanding, beginning of year	297,658	8.35	36,247	18.59
Granted	811,458	2.75	276,584	6.93
Forfeited	(211,876)	5.39	(15,173)	6.92
Outstanding, end of year	897,240	3.99	297,658	8.35
Vested, end of year	—	—	—	—

All RSUs have an average remaining contractual life of approximately 1.8 years as at December 31, 2023 (December 31, 2022 : 1.9 years).

Compensation expense related to the RSUs was recognized in the consolidated statements of earnings (loss) and comprehensive loss as follows:

	2023	2022
	$	$
Administrative expenses	680,938	399,812
Selling expenses	(49,443)	123,063
	631,495	522,875

The corresponding increase is recorded in contributed surplus. When the underlying shares are issued, the amounts previously credited to contributed surplus are transferred to share capital. The Group elects to account for forfeitures as they occur and reverse compensation costs previously recognized in the period the award is forfeited.

16.3 Deferred share units

In June 2021, the Company approved a deferred share unit (“DSU”) plan for officers and other key employees of the Group. A DSU represents the right of an individual to receive one common share of the Company on the vesting date without any monetary consideration being paid to the Company. All DSUs vest on the date of the grant, except otherwise determined by the Board of Directors, and they can be settled in cash based on the Company’s share price on the vesting date, through the delivery of common shares issued from treasury or purchased on the open market, at the Company’s option or a combination of both.

57

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

16 - SHARE-BASED COMPENSATION (CONTINUED)

16.3 Deferred share units (continued)

Compensation cost for DSUs is measured at the fair value of the underlying common share at the grant date and is expensed over the award’s vesting period.

	2023		2022
	Number of deferred share units	Weighted average exercise price	Number of deferred share units	Weighted average exercise price
		C$		C$
Outstanding, beginning of year	301,091	4.23	18,755	14.07
Granted	478,884	2.58	284,362	3.65
Settled	—	—	(2,026)	14.07
Outstanding, end of year	779,975	3.21	301,091	4.23
Vested, end of year	779,975	3.21	301,091	4.23

Compensation expense related to the DSUs was recognized in administrative expenses in the statements of consolidated earnings (loss) and comprehensive loss as follows with a corresponding increase in contributed surplus:

	2023	2022
	$	$
Administrative expenses	916,381	776,714

When the underlying shares are issued, the amounts previously credited to contributed surplus are transferred to share capital.

58

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

17 - RESTRUCTURING COSTS

In November 2023, the Company announced a restructuring consisting of a workforce reduction aimed at rationalizing the Company’s cost structure and improving its ability to reach its profitability objectives. The restructuring is completed as at December 31, 2023.

During the year ended December 31, 2023, the Company incurred $1,426,487 of expenses in connection with the restructuring, related to employee transition, severance payments and employee benefits:

The following table summarizes the activities related to the restructuring for the year ended December 31, 2023:

	2023
	$
Expenses	1,426,487
Payments	(714,865)
Liability as of December 31, 2023	711,622

The liability as of December 31, 2023 for restructuring costs is included in trade and other payables on the consolidated statements of financial position, as it is expected to be paid within 12 months.

59

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

18 - FINANCE COSTS

Finance costs for the reporting years consist of the following:

	2023	2022
	$	$
Interest on long-term debt and other debtsa	7,097,927	280,491
Interest on lease liabilitiesa	2,141,641	284,631
Accretion expense	5,663,365	—
Accretion and revaluation expense on balance of purchase price payable related to the acquisition of the dealership rights	—	82,850
Gain on derecognition of the balance of purchase price payable related to the acquisition of the dealership rightsb	—	(2,130,583)
Financing cost	3,752,505	2,489,123
Other	(762,994)	(51,090)
	17,892,444	955,422

a.Net of capitalized borrowing costs of $6,535,601 (Notes 6 and 8) for the year ended December 31, 2023 (December 31, 2022: $5,093,206), $4,021,208 included in interest on long-term debt and other debts and $2,514,393 in interest on lease liability, respectively (December 31, 2022: $2,214,906 included in interest on long-term debt and other debts,$2,878,300 in interest on lease liability, respectively). The weighted average interest rate used to capitalize the borrowing costs is 7.35% in 2023 (2022: 5.68%).

b.On May 7, 2022, the agreement with a private company relating to the previous acquisition of dealership rights in certain territories in the United States matured and the related financial liability was derecognized. The carrying amount of $2,130,583 was recognized as a gain under finance costs in the consolidated statements of earnings (loss) and comprehensive loss.

60

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

19 - INCOME TAXES

The reconciliation of the effective tax rate is as follows:

	2023	2022
	$	$
Net earnings (loss) before income taxes	(103,766,137)	17,775,766
Combined statutory income tax rate in Canada	26.50%	26.50%
Expected income tax expense (recovery)	(27,498,026)	4,710,578
Non-deductible share-based employee remuneration	1,386,071	3,275,949
Change in fair value of share warrant obligations	(7,097,660)	(26,889,069)
Non-deductible accretion expense	1,525,199	16,529
Change in unrecognized deferred tax assets	31,505,502	18,596,751
Impact of US tax rate applicable to the subsidiary	173,834	173,323
Non-deductible expenses	62,703	114,518
Other	(57,623)	1,421
	—	—

The components of the deferred income tax assets and (liabilities) are as follows:

	December 31, 2023	December 31, 2022
	$	$
Property, plant and equipment	2,138,000	(16,438,000)
Right-of-use assets	(24,258,000)	(16,202,000)
Intangible assets	(46,162,000)	(37,151,000)
Lease liabilities	23,681,000	16,051,000
Non-capital losses carry-forward	36,632,000	50,100,000
Deferred financing cost	(203,000)	(282,000)
Financing fees and other	8,172,000	3,922,000
	—	—

61

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

19 - INCOME TAXES (CONTINUED)

The Group has accumulated unrecognized deductible temporary differences, unused tax losses and unused research and development expenditures as follows:

	December 31, 2023	December 31, 2022
	$	$
Deductible temporary differences	5,486,000	6,059,000
Non-capital losses carry-forward	152,505,000	73,623,000
Research and development expenditures carry-forward	104,680,000	65,710,000
	262,671,000	145,392,000

The Group has accumulated unrecognized unused tax credits as follows:

	December 31, 2023	December 31, 2022
	$	$
Canadian Federal investment tax credits	16,000,000	10,307,000
Québec investment and innovation tax credit	437,000	64,000
	16,437,000	10,371,000

As at December 31, 2023, the Group has unused research and development expenditures of $104,680,000 (December 31, 2022: $65,710,000) and non-capital losses carry-forward of $152,505,000 (December 31, 2022: $73,623,000) for which deferred tax assets have not been recognized. Of these amounts, $104,680,000 (December 31, 2022: $65,710,000) of research and development expenditures as well as $111,132,000 (December 31, 2022: $47,545,000) of non-capital losses carried forward are for the Group’s Canadian subsidiaries, and $41,373,000 (December 31, 2022: $26,077,000) of tax losses are for its subsidiaries in the United States. Research and development expenditures can be carried forward indefinitely, and the Group’s non-capital loss carry-forwards for its Canadian subsidiaries expire between 2032 and 2043. The Group’s tax loss carry-forwards for its subsidiaries in the United States can be carried forward indefinitely.

In addition, the Group has access to federal non-refundable investment tax credits for which the benefits have not been recognized in the amount of $16,000,000 (December 31, 2022: $10,307,000) expiring between 2036 and 2043.

62

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

20 - EARNINGS PER SHARE

	2023	2022
	$	$
Net earnings (loss)	(103,766,137)	17,775,766
Basic weighted average number of common shares outstanding	224,311,227	193,113,983
Basic earnings (loss) per share	(0.46)	0.09
Basic weighted average number of common shares outstanding	224,311,227	193,113,983
Plus dilutive impact of stock options, RSUs, DSUs, and warrants	—	7,477,680
Diluted weighted average number of common shares outstanding	224,311,227	200,591,663
Diluted earnings (loss) per share	(0.46)	0.09

Excluded from the above calculations for the years ended December 31, 2023 and 2022 are all outstanding stock options, share warrant obligations, convertible debentures, RSUs, and DSUs, which are deemed to be anti-dilutive.

21 - SUPPLEMENTAL CASH FLOW DISCLOSURE

The depreciation and amortization is detailed as follows:

	2023	2022
	$	$
Depreciation – property, plant and equipment	10,820,442	5,038,092
Depreciation – right-of-use assets	8,037,341	3,454,353
Amortization – intangible assets	7,216,789	3,000,028
	26,074,572	11,492,473

See Note 7 for additional information related to the depreciation of right-of-use assets.

The net change in non-cash working capital is detailed as follows:

	2023	2022
	$	$
Inventories	(90,063,714)	(61,739,634)
Accounts receivable	(13,351,335)	(24,369,277)
Prepaid expenses	3,818,496	(940,816)
Trade and other payables (1)	24,056,908	27,926,974
Deferred revenue and other deferred liabilities	17,564,993	155,253
	(57,974,652)	(58,967,500)

63

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

21 - SUPPLEMENTAL CASH FLOW DISCLOSURE (CONTINUED)

(1)The net change in trade and other payables excludes trade and other payables as at December 31, 2023 related to the following non-cash working capital items: $634,331 related to the additions of intangible assets and $11,750,398 related to the acquisition of property, plant and equipment and includes trade and other payables as at December 31, 2022 related to the additions of intangible assets of $4,757,926 and related to the acquisition of property, plant and equipment of $16,229,912.

There were $554,310 outstanding payables related to the additions of intangible assets and $8,797,575 related to the acquisition of property, plant and equipment as at December 31, 2021.

The changes in the Group’s liabilities arising from financing activities can be classified as follows:

	Share warrant obligations	Conversion options on convertible debt instruments	Long-term debt and other debts	Lease liabilities	Total
Balance at January 1, 2023	23,243,563	—	110,673,348	63,520,215	197,437,126
Cash flows :
Repayment	—	—	(148,305,458)	(6,512,231)	(154,817,689)
Proceeds	27,675,069	30,342,059	259,498,434	—	317,515,562
Finance costs attributable to 2023 Debenture financing	—	—	(3,829,850)	—	(3,829,850)
Non-cash :
Accretion expense	—	—	5,663,365	—	5,663,365
Non-monetary additions (net of modification)	—	—	—	34,117,202	34,117,202
Change in fair value of share warrant obligations	(20,963,112)	—	—	—	(20,963,112)
Change in fair value of conversion options on convertible debt instruments and interest paid in kind	—	(4,982,236)	—	—	(4,982,236)
Unrealized foreign exchange gain	—	—	(2,568,295)	—	(2,568,295)
Foreign currency translation adjustment	(373,317)	(325,750)	3,810,821	831,400	3,943,154
Balance at December 31, 2023	29,582,203	25,034,073	224,942,365	91,956,586	371,515,227

64

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

21 - SUPPLEMENTAL CASH FLOW DISCLOSURE (CONTINUED)

	Share warrant obligations	Long-term debt and other debts	Lease liabilities	Total
Balance at January 1, 2022	106,225,934	13,077,670	62,209,317	181,512,921
Cash flows :
Repayment	—	(10,348,894)	(4,977,183)	(15,326,077)
Proceeds	19,913,196	111,576,513	—	131,489,709
Non-cash :
Accretion expense	—	82,850	—	82,850
Non-monetary additions (net of modification)	—	—	6,961,794	6,961,794
Gain on derecognition of dealership rights	—	(2,130,583)	—	(2,130,583)
Change in fair value of share warrant obligations	(101,468,186)	—	—	(101,468,186)
Contributed surplus	(3,798)	—	—	(3,798)
Unrealized foreign exchange loss	—	516,401	—	516,401
Foreign currency translation adjustment	(1,423,583)	(2,100,609)	(673,713)	(4,197,905)
Balance at December 31, 2022	23,243,563	110,673,348	63,520,215	197,437,126

22- RELATED PARTY TRANSACTIONS

Transactions with key management personnel

Key management personnel includes those individuals that have authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, and is comprised of the members of the executive management team and the Board of Directors. Key management personnel remuneration includes the following expenses:

	2023	2022
	$	$
Salaries including bonuses	3,633,112	3,368,388
Share-based payments	3,737,017	8,878,755
Total remuneration	7,370,129	12,247,143

65

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

23 - SHARE CAPITAL

23.1 Authorized

The authorized share capital is as follows:

–Unlimited number of common shares, bearing one voting right per share, participating, without par value.

–Unlimited number of preferred shares, issuable in one or more series.

23.2 Issued

All issued and outstanding common shares are fully paid.

23.3 ATM Program

On June 17, 2022, the Company established an "at-the-market" equity program (the "ATM Program") that allowed the Company to issue and sell, from time to time through a syndicate of agents, newly issued common shares of the Company, for an aggregate offering amount of up to $125,000,000 (or the Canadian dollar equivalent). On July 19, 2023, the Company terminated its ATM Program which was set to expire in July 2024.

During the year ended December 31, 2023, the Company issued 4,894,060 common shares pursuant to the ATM Program (December 31, 2022: $8,346,789) at an average price of $1.93 per share (December 31, 2022: $3.74) for aggregate gross proceeds of $9,430,894, and for aggregate net proceeds of $8,580,405 after the deduction of equity issuance fees of $850,489 (December 31, 2022: net proceeds of $29,351,308). Equity issuance fees for the year ended December 31, 2023 were mainly related to net commissions paid ($141,462) to the agents under the ATM Program and legal fees ($709,027).

23.4 December 2022 Offering

On January 17, 2023, the Company closed the over-allotment option with respect to the December 2022 Offering in full, to purchase an additional 2,952,755 Units at a price of $2.54 per unit with respect to the December 2022 Units Offering. This resulted in aggregate gross proceeds to the Group of $7,499,998, and for aggregate net proceeds of $6,835,476 after the deduction of underwriting commission and offering costs of $664,522.

Each Unit consisted of one common share in the capital of the Company and one common share purchase warrant. The allocation of the proceeds between the warrants and the common shares at the issuance date was based on allocating the fair value of the warrants based on the Black-Scholes option pricing model (refer to Note 14.3), with the residual value allocated to the common shares.

Pursuant to the December 2022 Offering over-allotment, the Company issued 2,952,755 common shares of which gross proceeds of $4,592,772 were allocated to the shares, and for net proceeds of $4,175,836 after the deduction of equity issuance fees of $416,936. Equity issuance fees were mainly related to legal costs ($114,294) and net commissions paid to the agents ($302,642).

66

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

24 - ENTITY-WIDE DISCLOSURES

The Group has one reportable operating segment, the manufacturing and sales of electric vehicles in Canada and in the United States.

The Group’s revenue from external customers is divided into the following geographical areas:

	2023	2022
Revenue from external customers	$	$
Canada	165,650,421	121,086,499
United States	87,845,180	18,827,971
	253,495,601	139,914,470

During the year ended December 31, 2023, there was no reliance on a single customer representing more than 10% of revenue (December 31, 2022: 35% of the Group’s revenue depended on one customer).

The Group’s non-current assets are allocated to geographic areas as follows:

	December 31, 2023
	Canada	United States	Total
	$	$	$
Other non-current assets	6,812,370	182,445	6,994,815
Property, plant and equipment	94,684,032	103,852,651	198,536,683
Right-of-use assets	35,469,879	54,193,260	89,663,139
Intangible assets	167,106,057	8,597,200	175,703,257
Contract asset	13,528,646	—	13,528,646
	317,600,984	166,825,556	484,426,540

	December 31, 2022
	Canada	United States	Total
	$	$	$
Other non-current assets	708,440	364,786	1,073,226
Property, plant and equipment	81,602,840	79,153,488	160,756,328
Right-of-use assets	10,836,851	49,671,503	60,508,354
Intangible assets	144,213,010	7,151,013	151,364,023
Contract asset	13,211,006	—	13,211,006
	250,572,147	136,340,790	386,912,937

Geographical areas are determined according to where the sales take place and according to the location of the long-term assets.

67

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

25 - FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT

25.1 Financial risk management objectives and policies

Based on the Group’s activities and as a result of holding financial instruments, the group is exposed to various financial risks. The main types of risks are market risk, credit risk and liquidity risk.

The Group’s financial assets and liabilities by category are summarized in Note 9.

The Group’s risk management is coordinated at its headquarters, in close cooperation with the Board of Directors, and focuses on actively securing the Group’s short to medium-term cash flows by minimizing the exposure to financial markets.

The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed are described below.

25.2 Market risk

The Group’s financial instruments expose it to market risks, in particular, currency risk and interest rate risk, resulting from its operating, investing and financing activities:

Foreign currency

In 2023 and 2022, the majority of the Group’s transactions are in Canadian dollars in its Canadian entities and in US dollars in its US entities. Currency risk results from the Group’s sales denominated in foreign currency which are primarily in US dollars and purchases which are in US dollars, Euro and British pound for the Canadian entities and purchases made in Canadian dollars or Euros for the US entities.

The Group is exposed to currency risk due to cash, trade and other receivables, trade and other payables and long-term debt and other debts denominated in foreign currencies.

Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those reported to key management, in US dollars:

	December 31, 2023		December 31, 2022
	Assets	Liabilities	Assets	Liabilities
	$	$	$	$
Cash	2,334,652	—	34,192,889	—
Trade and other payables	—	3,074,771	—	6,094,084
Long-term debt and other debts	—	119,019,843	—	35,000,000
	2,334,652	122,094,614	34,192,889	41,094,084

68

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

25 - FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT (CONTINUED)

25.2 Market risk (continued)

Foreign currency (continued)

The impact on comprehensive loss and shareholders’ equity of a 10% increase or decrease in foreign currencies on the Group’s financial instruments based on balances at December 31, 2023 would be approximately $11,735,536 ($718,280 as at December 31, 2022).

Interest rate sensitivity

The Group is exposed to interest rate risk with respect to financial assets and liabilities bearing fixed and variable interest rates. Some long-term debts and other debts bear interest at a fixed rate and the Group is, therefore, exposed to the risk of changes in fair value resulting from interest rate fluctuations.

Some long-term debts and other debts bear interest at variable rates and the Group is, therefore, exposed to the cash flow risks resulting from interest rate fluctuations. The Group analyzes its cash flow exposure and interest fluctuations on an ongoing basis.

Based on balances as at December 31, 2023, sensitivity to a plus or minus 1% change in interest rates would affect the profit or loss and equity by $2,250,000 (approximately $1,107,000 as at December 31, 2022).

25.3 Credit risk analysis

Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to this risk for various financial instruments, for example by granting receivables to customers. The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognized on the consolidated statements of financial position.

The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only with creditworthy counterparties.

The Group’s management considers that all the financial assets that are not impaired or past due for each of the reporting dates presented are of good credit quality. The Group has never experienced any significant credit losses. Consequently, credit risk is not considered material. The Group considers the credit risk not material considering the current and forwarding looking macroeconomic factors affecting the customer’s ability to settle the amount outstanding and that the Group has never experienced any significant credit losses.

25.4 Liquidity risk analysis

In the normal course of business, the Group enters into contractual obligations that will require the Group to disburse cash over future periods. Liquidity risk is that the Group might be unable to meet its contractual obligations.

69

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

25 - FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT (CONTINUED)

25.4 Liquidity risk analysis (continued)

The Group’s liquidity and operating results may be adversely affected if the Group’s access to the equity market is hindered, whether as a result of a downturn in the economic conditions generally or related to matters specific to the Group. Over the years, the Group generated cash flows from its financing activities and from its sales. The Group mitigates liquidity risk through the implementation of its capital management policy by managing its capital expenditures, forecast, budget and operational cash flows, and by maintaining adequate lines of credit, if needed.

All commitments have been reflected in the Group’s consolidated statements of financial position except for purchase obligations, which are included in the table of contractual obligations below.

The following tables set forth the maturity of the Group’s contractual obligations (including interest payments where applicable) as at December 31, 2023 and as at December 31, 2022:

	December 31, 2023
	Carrying amount		Undiscounted contractual cash flows	Less than 1 year		Between 1 and 3 years		Between 4 and 5 years		More than 5 years
	$		$	$		$		$		$
Trade and other payables	71,856,894		71,856,894	71,856,894		—		—		—
Long-term debt and other debts	224,942,365		322,891,324	37,571,684		85,120,218		154,644,192		45,555,230
Purchase and other obligations	—	—	72,781,793	58,681,793	—	14,100,000	—	—	—	—
Lease obligations	91,956,586		133,666,965	12,902,616		23,300,865		25,084,501		72,378,983
Total contractual obligations	388,755,845		601,196,976	181,012,987		122,521,083		179,728,693		117,934,213

70

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

25 - FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT (CONTINUED)

25.4 Liquidity risk analysis (continued)

	December 31, 2022
	Carrying amount		Undiscounted contractual cash flows	Less than 1 year		Between 1 and 3 years		Between 4 and 5 years		More than 5 years
	$		$	$		$		$		$
Trade and other payables	62,383,813		62,383,813	62,383,813		—		—		—
Long-term debt and other debts	110,673,348		118,341,134	2,450,141		96,150,078		—		19,740,915
Purchase and other obligations	—	—	149,591,363	70,523,901	—	75,154,748	—	3,439,748	—	472,966
Lease obligations	63,520,215		89,985,860	8,320,131		15,454,284		16,693,337		49,518,108
Total contractual obligations	236,577,376		420,302,170	143,677,986		186,759,110		20,133,085		69,731,989

25.5 Capital management

The Group’s capital management objectives are to:

•Ensure the Group’s ability to continue as a going concern;

•Provide an adequate return to shareholders;

•Maintain an optimal capital structure which allows financing options to the Group to complete its projects.

The Group’s capital comprises total shareholders’ equity, cash/bank overdraft, credit facilities, long-term debt, convertible debt instruments and common shares retractable, as presented on the face of the consolidated statements of financial position.

As part of the management of its capital structure, the Group factors in the economic value of the stock option, restricted share units and deferred share units (Note 16).

The Group sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may issue new shares or debt, repurchase shares or sell assets to reduce debt.

The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Group’s management team to sustain the future development of the business.

71

The Lion Electric Company

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022
(In US dollars, except number of shares)

25 - FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT (CONTINUED)

25.5 Capital management (continued)

The amounts managed as capital by the Group for the reporting years under review are summarized as follows:

	December 31, 2023	December 31, 2022
	$	$
Long-term debt and other debts	224,942,365	110,673,348
Less: Cash	29,892,966	88,266,985
Total net indebtedness	195,049,399	22,406,363
Shareholders’ equity	358,913,991	437,116,773
Warrants issued as part of the business combination transaction, December 2022 Offering and 2023 Debenture Financing	27,684,412	21,071,294
Total net indebtedness	195,049,399	22,406,363
Total capitalization	581,647,802	480,594,430
Total net indebtedness to total capitalization ratio	34%	5%

As at December 31, 2023, the Company was in compliance with all of its obligations under the terms of its banking agreements (Note 12). Management reviews its capital management approach on an ongoing basis and believes that this approach is appropriate given the relative size of the Group. There were no changes in the Company’s approach to capital management during the years ended December 31, 2023 and 2022.

EX-99.4

CERTIFICATION

I, Marc Bedard, certify that:

1. I have reviewed the annual report on Form 40-F of The Lion Electric Company (''The Company");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: February 29, 2024

(s) Marc Bedard

Marc Bedard

Chief Executive Officer and Founder

EX-99.5

CERTIFICATION

I, Richard Coulombe, certify that:

1. I have reviewed the annual report on Form 40-F of The Lion Electric Company (''The Company");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d- 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: February 29, 2024

(s) Richard Coulombe

Richard Coulombe

Chief Financial Officer

EX-99.6

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 40-F of The Lion Electric Company (the “Company”) for the year ended December 31, 2023 as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Marc Bedard, Chief Executive Officer and Founder of the Company, do hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 29, 2024

(s) Marc Bedard

Marc Bedard

Chief Executive Officer and Founder

EX-99.7

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 40-F of The Lion Electric Company (the “Company”) for the year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Richard Coulombe, Chief Financial Officer of the Company, do hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 29, 2024

(s) Richard Coulombe

Richard Coulombe

Chief Financial Officer

EX-99.8

Consent of Independent
Registered Public Accounting Firm

We have issued our report dated February 28, 2024, with respect to the consolidated financial statements included in the Annual Report of The Lion Electric Company on Form 40-F for the year ended December 31, 2023.

We hereby consent to the inclusion in this Annual Report of The Lion Electric Company on Form 40-F for the fiscal year ended December 31, 2023 of said report, which appears in Exhibit 99.3 in this Annual Report.

We also consent to the incorporation by reference of said report in the Registration Statement of The Lion Electric Company on Form F-10 (File No. 333-265627). We also consent to the reference to us under the heading “Interest of Experts”, which appears in the Annual Information Form included in Exhibit 99.1 to this Annual Report on Form 40-F, which is incorporated by reference in such Registration Statement.

/s/ Raymond Chabot Grant Thornton LLP

Montreal, Canada

February 29, 2024

EX-99.9

Clawback Policy 1 Purpose The purpose of this Policy is to describe the circumstances in which Executive Officers will be required to repay or return certain compensation to the Company. This Policy shall apply to, and be enforceable against, any Executive Officer and his or her successors (as specified in Section8 of this Policy) regardless of whether or not such Executive Officer has acknowledged in writing its existence and binding effect, and regardless of whether or not such Executive Officer is aware of his or her status as such. For purposes of this Policy, capitalized terms not otherwise defined herein shall have the meanings ascribed to them in Exhibit A. This Policy shall be effective as of the Effective Date. 2 Administration Except as specifically set forth herein, this Policy shall be administered by the Administrator. Subject to any limitation under applicable law, the Administrator may authorize and empower any officer or employee of the Company to take any actions necessary or appropriate to carry out the purpose and intent of this Policy (other than with respect to any recovery under this Policy involving such officer or employee). 3 Mandatory Clawback Resulting from Accounting Restatement In the event the Company is required to prepare an Accounting Restatement, the Administrator shall reasonably promptly (in accordance with the applicable Clawback Rules) determine the amount of any Erroneously Awarded Compensation for each Executive Officer resulting from such Accounting Restatement and shall reasonably promptly thereafter provide each Executive Officer with written notice containing the amount of Erroneously Awarded Compensation and a demand for repayment or return, as applicable. For Clawback Eligible Incentive Compensation based on stock price or total shareholder return where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in the applicable Accounting Restatement, the amount shall be determined based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Clawback Eligible Incentive Compensation was Received (in which case, the Company shall maintain documentation of such determination of that reasonable estimate and provide such documentation to the Listing Exchange). For the avoidance of doubt, recovery under this Section 3 with respect to an Executive Officer shall not require the finding of any misconduct by such

2 Executive Officer or such Executive Officer being found responsible for the accounting error leading to an Accounting Restatement. In the event that any repayment of Erroneously Awarded Compensation is owed to the Company, the Administrator shall recover reasonably promptly the Erroneously Awarded Compensation through any Method of Recovery it deems reasonable and appropriate in its discretion based on all applicable facts and circumstances and taking into account the time value of money and the cost to shareholders of delaying recovery. For the avoidance of doubt, except to the extent permitted pursuant to the Clawback Rules, in no event may the Company accept an amount that is less than the amount of Erroneously Awarded Compensation in satisfaction of an Executive Officer’s obligations hereunder. Notwithstanding anything herein to the contrary, the Company shall not be required to take the actions contemplated in this Section 3 if recovery would be Impracticable. 4 Discretionary Clawback Resulting from Fraud If a Misconduct Event occurs, the Administrator may, in its sole discretion, to the extent permitted by applicable law, seek to recover through any Method of Recovery it deems reasonable and appropriate in its discretion based on all applicable facts and circumstances, all or any portion of any incentive-based compensation (including cash or equity-based incentive compensation) that is granted to or earned by the Executive Officer after the Effective Date (together with any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any such compensation), including any Incentive-based Compensation, in each case, whether such compensation has vested or not. In determining the appropriate action to take in recovering compensation pursuant to this Section4, the Administrator may consider such factors as it deems appropriate, including: (i) the associated costs and benefits of seeking the amounts of compensation to be recovered; (ii) the requirements of applicable law; (iii) the extent to which the Executive Officer participated or otherwise bore responsibility for the Misconduct Event; and (iv) the extent to which the Executive Officer’s current compensation may or may not have been impacted had the Board or the Committee known about the Misconduct Event. In addition, the Administrator may, in its sole discretion, determine whether and to what extent additional or alternative action is appropriate to address the circumstances surrounding the Misconduct Event so as to minimize the likelihood of any recurrence and to impose such other discipline as it deems appropriate. 5 Reporting and Disclosure The Company shall file all disclosures with respect to this Policy in accordance with the requirements of U.S. federal securities laws, including any disclosure required by applicable SEC rules.

3 6 Indemnification Prohibition The Company shall not be permitted to indemnify any Executive Officer against the loss of any compensation that is repaid, returned or recovered pursuant to the terms of this Policy and/or pursuant to the Clawback Rules, including any payment or reimbursement for the cost of third- party insurance purchased by any Executive Officer to cover any such loss under this Policy and/or pursuant to the Clawback Rules. Further, the Company shall not enter into any agreement that exempts any compensation from the application of this Policy or that waives the Company’s right to recovery of any compensation subject to this Policy, and this Policy shall supersede any such agreement (whether entered into before, on or after the Effective Date). Any such purported indemnification (whether oral or in writing) shall be null and void. 7 Interpretation and Calculations It is intended that this Policy be interpreted in a manner that is consistent with the requirements of the Clawback Rules. The terms of this Policy shall also be construed and enforced in such a manner as to comply with applicable law, including the Sarbanes-Oxley Act of 2002, the Dodd- Frank Wall Street Reform and Consumer Protection Act, and any other law or regulation that the Administrator determines is applicable. The Administrator is authorized to engage, on behalf of the Company, any third-party advisors it deems advisable in order to perform any calculations contemplated by this Policy. 8 Amendment, Termination and Successors The Administrator may modify or amend this Policy, in whole or in part, from time to time in its discretion and shall amend any provisions of this Policy as it deems necessary, including as and when it determines that it is legally required by the Clawback Rules, or any federal securities law, SEC rule or Listing Exchange rule. The Administrator may terminate this Policy at any time and this Policy shall terminate immediately upon the Clawback Rules ceasing to apply to the Company. Notwithstanding anything in this Section 8 to the contrary, no amendment or termination of this Policy shall be effective if such amendment or termination would (after taking into account any actions taken by the Company contemporaneously with such amendment or termination) cause the Company to violate the Clawback Rules, or any federal securities law, SEC rule or Listing Exchange rule. Furthermore, unless otherwise determined by the Administrator or as otherwise amended, this Policy shall automatically be deemed amended in a manner necessary to comply with any change in the Clawback Rules. This Policy shall be binding and enforceable against all Executive Officers and their beneficiaries, estates, heirs, executors, administrators or other legal representatives to the extent required by the Clawback Rules or as otherwise determined by the Administrator. 9 Other Recoupment Rights and No Additional Payments The Administrator may require that any employment agreement, equity award agreement, or any other agreement entered into on or after the Effective Date shall, as a condition to the grant of

4 any benefit thereunder, require an Executive Officer to agree to abide by the terms of this Policy. Executive Officers shall be deemed to have accepted continuing employment on terms that include compliance with the Policy, to the extent of its otherwise applicable provisions, and to be contractually bound by its enforcement provisions. Executive Officers who cease employment or service with the Company shall continue to be bound by the terms of the Policy with respect to any compensation that is subject to this Policy. Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available to the Company under applicable law, regulation or rule or pursuant to the terms of any similar policy in any employment agreement, cash-based bonus plan, equity award agreement or similar agreement and any other legal remedies available to the Company. To the extent that an Executive Officer has already reimbursed the Company for any compensation Received under any duplicative recovery obligations established by the Company or applicable law, it shall be appropriate for any such reimbursed amount to be credited to the amount of compensation that is subject to recovery under this Policy, as determined by the Administrator in its sole discretion. Nothing in this Policy precludes the Company from implementing any additional clawback or recoupment policies with respect to Executive Officers or any other service provider of the Company. Application of this Policy does not preclude the Company from taking any other action to enforce any Executive Officer’s obligations to the Company, including termination of employment or institution of civil or criminal proceedings or any other remedies that may be available to the Company with respect to any Executive Officer. 10 Questions / Review and Approval This Policy may be updated from time. If you have any questions about this Policy, you should contact the Head of the Legal Department. This Policy has been approved by Lion Electric’s board of directors on August 2, 2023, following recommendation of the Human Resources and Compensation Committee. * * *

EXHIBIT A DEFINITIONS For purposes of this Policy, the following capitalized terms shall have the meanings set forth below. “Accounting Principles” shall mean the accounting principles used in preparing the Company’s financial statements, being as of the Effective Date, the IFRS. “Accounting Restatement” shall mean an accounting restatement: (i) due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements (a “Big R” restatement); or (ii) that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (a “little r” restatement). “Administrator” shall mean the Committee, or any other committee designated from time to time by the Board to administer the Policy, and in the absence of such designation, the Board. “Board” shall mean the board of directors of the Company. “Clawback Eligible Incentive Compensation” shall mean, with respect to each individual who served as an Executive Officer at any time during the applicable performance period for any Incentive-based Compensation (whether or not such individual is serving as an Executive Officer at the time the Erroneously Awarded Compensation is required to be repaid to the Company), all Incentive-based Compensation which meets the four following conditions and has been Received by such individual: (i) on or after the Effective Date; (ii) after beginning service as an Executive Officer; (iii) while the Company has a class of securities listed on the Listing Exchange; and (iv) during the applicable Clawback Period. “Clawback Period” shall mean, with respect to any Accounting Restatement, the three (3) completed fiscal years of the Company immediately preceding the Restatement Date and any transition period (that results from a change in the Company’s fiscal year) of less than nine (9) months within or immediately following those three (3) completed fiscal years. “Clawback Rules” shall mean Section 10D of the Exchange Act and any applicable rules or standards adopted by the SEC thereunder (including Rule 10D-1 under the Exchange Act) or the Listing Exchange pursuant to Rule 10D-1 under the Exchange Act (including Section 303A.14 of the New York Stock Exchange Listed Company Manual), in each case as may be in effect from time to time. “Committee” shall mean the Human Resources and Compensation Committee of the Board. “Company” shall mean The Lion Electric Company, together with each of its direct and indirect subsidiaries. “Effective Date” shall mean October 2, 2023. “Erroneously Awarded Compensation” shall mean, with respect to each Executive Officer in connection with an Accounting Restatement, the amount of Clawback Eligible Incentive

Compensation that exceeds the amount of Clawback Eligible Incentive Compensation that otherwise would have been Received had it been determined based on the restated amounts, computed without regard to any taxes paid. “Executive Officer” shall mean any individual who is or was an executive officer as determined by the Administrator in accordance with the definition of “executive officer” as set forth in the Clawback Rules and any other senior executive, employee or other personnel of the Company who may from time to time be deemed subject to the Policy by the Administrator. A list of executive officers determined by the Administrator to be “Executive Officers” for purposes of this policy is set forth in Exhibit B, which shall be reviewed as required from time to time at the sole discretion of the Administrator. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. “Excluded Compensation” shall mean any compensation granted, earned or vested based wholly or in part upon something other than the attainment of a Financial Reporting Measure (including, but not limited to, the Executive Officer’s salary, any discretionary cash bonus and any equity-based awards that are only subject to time-based or service-based vesting conditions). “Financial Reporting Measures” shall mean measures that are determined and presented in accordance with the Accounting Principles (including IFRS measures), and any measures that are derived wholly or in part from such measures (including non-IFRS measures). Such measures may include, without limitation, revenues, EBITDA, net or operating income, liquidity measures or any other financial reporting measure that is measured relative to a peer group to the extent the underlying financial reporting measure is subject to an Accounting Restatement. Stock price and total shareholder return shall for purposes of this Policy be considered Financial Reporting Measures. For the avoidance of doubt, a Financial Reporting Measure need not be presented within the Company’s financial statements or included in a filing with the SEC. "IFRS” shall mean the International Financial Reporting Standards as issued by the International Accounting Standards. “Incentive-based Compensation” shall mean any incentive-based compensation (including cash or equity-based incentive compensation) that is granted, earned or vested based wholly or in part upon the attainment of a Financial Reporting Measure, together with any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any such compensation. For greater certainty, Incentive-based Compensation shall exclude any Excluded Compensation. “Impracticable” shall mean, in accordance with the good faith determination of the Committee, or if the Committee does not consist of independent directors, a majority of the independent directors serving on the Board, that either: (i) the direct expenses paid to a third party to assist in enforcing the Policy against an Executive Officer would exceed the amount to be recovered, after the Company has made a reasonable attempt to recover the applicable Erroneously Awarded Compensation, documented such reasonable attempt(s) and, as required, provided such documentation to the Listing Exchange; (ii) recovery would violate the laws of the Province of Québec as those laws were adopted prior to November 28, 2022, provided that, before concluding that it would be Impracticable to recover any amount of Erroneously Awarded Compensation based on violation of the laws of the Province of Québec, the Company has obtained an opinion of counsel qualified in the Province of Québec, acceptable to the Listing Exchange, that recovery would result in such a violation and a copy of the opinion is provided to the Listing Exchange; or

(iii) recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder. “Listing Exchange” shall mean the New York Stock Exchange. “Method of Recovery” shall include, but is not limited to: (i) requiring reimbursement of the relevant amount of compensation; (ii) seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards; (iii) offsetting any applicable amount to be recovered by the Company, including, as applicable, any Erroneously Awarded Compensation from any compensation otherwise owed by the Company to the Executive Officer; (iv) cancelling outstanding vested or unvested equity awards; and/or (v) taking any other remedial and recovery action permitted by applicable law, as determined by the Administrator. “Misconduct Event” shall mean, with respect to an Executive Officer, the Executive Officer’s commission of, or participation in, intentional acts of fraud that in either case results in material harm to the reputation or business of the Company. “Policy” shall mean this Clawback Policy, as the same may be amended and/or restated from time to time. “Received” shall, with respect to any Incentive-based Compensation, mean deemed receipt and Incentive-based Compensation shall be deemed received in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive-based Compensation award is attained, even if the payment or grant of the Incentive-based Compensation occurs after the end of that period. For the avoidance of doubt, Incentive-Based Compensation that is subject to both a Financial Reporting Measure vesting condition and a service-based vesting condition shall be considered received when the Financial Reporting Measure is achieved, even if the Incentive- Based Compensation continues to be subject to the service-based vesting condition. “Restatement Date” shall mean the earlier to occur of: (i) the date the Board, a committee of the Board or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement; or (ii) the date a court, regulator or other legally authorized body directs the Company to prepare an Accounting Restatement. “SEC” shall mean the U.S. Securities and Exchange Commission.

EXHIBIT B LIST OF EXECUTIVE OFFICERS • Chief Executive Officer - Founder • President • Chief Financial Officer • Chief Legal Officer and Corporate Secretary • Chief People Officer • Chief Operating Officer • Chief Information Officer

XML

Cover Page	12 Months Ended
	Dec. 31, 2023 shares
Document Information [Line Items]
Document Type	40-F
Document Registration Statement	false
Document Annual Report	true
Current Fiscal Year End Date	--12-31
Document Period End Date	Dec. 31, 2023
Entity File Number	001-40387
Entity Registrant Name	THE LION ELECTRIC COMPANY
Entity Incorporation, State or Country Code	A8
Entity Address, Address Line One	921 chemin de la Rivière-du-Nord
Entity Address, City or Town	Saint-Jerome
Entity Address, State or Province	QC
Entity Address, Postal Zip Code	J7Y 5G2
City Area Code	450
Local Phone Number	432-5466
Annual Information Form	true
Audited Annual Financial Statements	true
Entity Common Stock, Shares Outstanding	226,184,932
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Document Financial Statement Error Correction [Flag]	false
Entity Central Index Key	0001834974
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	FY
Common shares
Document Information [Line Items]
Title of 12(b) Security	Common Shares
Trading Symbol	LEV
Security Exchange Name	NYSE
Warrants
Document Information [Line Items]
Title of 12(b) Security	Warrants
Trading Symbol	LEV.WS
Security Exchange Name	NYSE
Common Share Purchase Warrants
Document Information [Line Items]
Title of 12(b) Security	Common Share Purchase Warrant
Trading Symbol	LEV.WS.A
Security Exchange Name	NYSE
Business Contact
Document Information [Line Items]
Entity Address, Address Line One	2915 Ogletown Rd.
Entity Address, City or Town	Newark
Entity Address, Address Line Two	Suite 2999
Entity Address, State or Province	DE
Entity Address, Postal Zip Code	19713
Contact Personnel Name	CorpoMax Inc.
City Area Code	302
Local Phone Number	266-8200

XML

Audit Information	12 Months Ended
	Dec. 31, 2023
Auditor [Line Items]
Auditor Firm ID	1232
Auditor Name	Raymond Chabot Grant Thornton LLP
Auditor Location	Montréal, Canada

XML

Consolidated Statements of Financial Position - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Current
Cash	$ 29,892,966	$ 88,266,985
Accounts receivable	75,641,780	62,971,542
Inventories	249,606,756	167,191,935
Prepaid expenses and other current assets	1,553,276	5,067,513
Current assets	356,694,778	323,497,975
Non-current
Other non-current assets	6,994,815	1,073,226
Property, plant and equipment	198,536,683	160,756,328
Right-of-use assets	89,663,139	60,508,354
Intangible assets	175,703,257	151,364,023
Contract asset	13,528,646	13,211,006
Non-current assets	484,426,540	386,912,937
Total assets	841,121,318	710,410,912
Current
Trade and other payables	92,424,961	75,222,042
Deferred revenue and other deferred liabilities	18,267,139	634,971
Current portion of long-term debt and other debts	27,056,476	24,713
Current portion of lease liabilities	7,984,563	5,210,183
Current liabilities	145,733,139	81,091,909
Non-current
Long-term debt and other debts	197,885,889	110,648,635
Lease liabilities	83,972,023	58,310,032
Share warrant obligations	29,582,203	23,243,563
Conversion options on convertible debt instruments	25,034,073	0
Non-current liabilities	336,474,188	192,202,230
Total liabilities	482,207,327	273,294,139
SHAREHOLDERS’ EQUITY
Share capital	489,362,920	475,950,194
Contributed surplus	139,569,185	134,365,664
Deficit	(255,746,097)	(151,979,960)
Cumulative translation adjustment	(14,272,017)	(21,219,125)
Total shareholders’ equity	358,913,991	437,116,773
Total shareholders’ equity and liabilities	$ 841,121,318	$ 710,410,912

XML

Consolidated Statements of Earnings (Loss) and Comprehensive Loss - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Statement of comprehensive income [abstract]
Revenue	$ 253,495,601	$ 139,914,470
Cost of sales	259,020,001	152,861,775
Gross loss	(5,524,400)	(12,947,305)
Administrative expenses	51,479,445	44,843,042
Selling expenses	19,650,125	22,973,972
Restructuring costs	1,426,487	0
Impairment of intangible assets and property, plant and equipment	35,998,123	0
Operating loss	(114,078,580)	(80,764,319)
Finance costs	17,892,444	955,422
Foreign exchange (gain) loss	(2,259,539)	1,972,679
Change in fair value of conversion options on convertible debt instruments and interest paid in kind	(4,982,236)	0
Change in fair value of share warrant obligations	(20,963,112)	(101,468,186)
Earnings (loss) before income taxes	(103,766,137)	17,775,766
Income taxes	0	0
Net earnings (loss)	(103,766,137)	17,775,766
Item that will be subsequently reclassified to net earnings (loss)
Foreign currency translation adjustment	6,947,108	(18,309,729)
Comprehensive loss	$ (96,819,029)	$ (533,963)
Earnings (loss) per share
Basic earnings (loss) per share (in USD per share)	$ (0.46)	$ 0.09
Diluted earnings (loss) per share (in USD per share)	$ (0.46)	$ 0.09

XML

Consolidated Statements of Changes in Equity - USD ($)	Total	Share capital	Contributed surplus	Deficit	Cumulative translation adjustment
Number of shares outstanding at beginning of period (in shares) at Dec. 31, 2021		190,002,712
Conversion Option, Beginning balance at Dec. 31, 2021	$ 368,681,834	$ 418,709,160	$ 122,637,796	$ (169,755,726)	$ (2,909,396)
Share-based compensation	12,349,758		12,349,758
Shares issued pursuant to exercise of stock options and warrants (in shares)		45,421
Shares issued pursuant to exercise of stock options and warrants	3,798	$ 625,688	(621,890)
Issuance of shares though "at-the-market" equity program (in shares)		8,346,789
Issuance of shares through "at-the-market" equity program	29,351,308	$ 29,351,308
Issuance of shares though the December 2022 Offering (in shares)		19,685,040
Issuance of shares through the December 2022 Offering	27,264,038	$ 27,264,038
Net earnings (loss)	17,775,766			17,775,766
Other comprehensive income (loss)
Foreign currency translation adjustment	(18,309,729)				(18,309,729)
Number of shares outstanding at end of period (in shares) at Dec. 31, 2022		218,079,962
Conversion Option, Ending balance at Dec. 31, 2022	437,116,773	$ 475,950,194	134,365,664	(151,979,960)	(21,219,125)
Share-based compensation	5,203,521		5,203,521
Shares issued pursuant to exercise of stock options and warrants	33,149	$ 33,149
Issuance of shares though "at-the-market" equity program (in shares)		4,894,060
Issuance of shares through "at-the-market" equity program	8,580,405	$ 8,580,405
Issuance of shares though the December 2022 Offering (in shares)		2,952,755
Issuance of shares through the December 2022 Offering	4,175,836	$ 4,175,836
Issuance of shares related to closing fee of convertible debenture financing (in shares)		258,155
Issuance of shares related to closing fee of convertible debenture financing	623,336	$ 623,336
Net earnings (loss)	(103,766,137)			(103,766,137)
Other comprehensive income (loss)
Foreign currency translation adjustment	6,947,108				6,947,108
Number of shares outstanding at end of period (in shares) at Dec. 31, 2023		226,184,932
Conversion Option, Ending balance at Dec. 31, 2023	$ 358,913,991	$ 489,362,920	$ 139,569,185	$ (255,746,097)	$ (14,272,017)

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
OPERATING ACTIVITIES
Net earnings (loss)	$ (103,766,137)	$ 17,775,766
Non-cash items:
Depreciation and amortization	26,074,572	11,492,473
Write-down of inventory	12,022,984	478,889
Impairment of intangible assets and property, plant and equipment	35,998,123	0
Share-based compensation	5,203,521	12,362,070
Accretion expense	5,663,365	0
Accretion and revaluation expense on balance of purchase price payable related to the acquisition of the dealership rights	0	82,850
Gain on derecognition of the balance of purchase price payable related to the acquisition of the dealership rights	0	(2,130,583)
Non-cash issuance of closing fee shares through 2023 Debentures Financing	623,336	0
Change in fair value of conversion options on convertible debt instruments and interest paid in kind	(4,982,236)	0
Change in fair value of share warrant obligations	(20,963,112)	(101,468,186)
Unrealized foreign exchange loss (gain)	(4,106,220)	821,424
Finance costs attributable to 2023 Debenture financing	(3,829,850)	0
Net change in non-cash working capital items	(57,974,652)	(58,967,500)
Cash flows used in operating activities	(110,036,306)	(119,552,797)
INVESTING ACTIVITIES
Acquisition of property, plant and equipment	(78,291,978)	(129,573,638)
Addition to intangible assets	(75,173,685)	(78,284,126)
Disposition of property, plant and equipment	0	24,413
Government assistance related to property, plant and equipment and intangible assets	9,452,796	3,226,696
Net proceeds from Mirabel battery building sale-leaseback	20,506,589	0
Cash flows used in investing activities	(123,506,278)	(204,606,655)
FINANCING ACTIVITIES
Increase in long-term debt and other debts	171,687,491	111,576,513
Repayment of long-term debt and other debts	(148,305,458)	(10,348,894)
Payment of lease liabilities	(6,512,231)	(4,977,183)
Proceeds from issuance of shares through "at-the-market" equity program, net of issuance costs	8,580,405	29,351,308
Proceeds from the issuance of warrants through the December 2022 Offering	2,907,226	19,913,196
Proceeds from the issuance of units through the December 2022 Offering - Common Shares, net of issuance costs	4,175,836	27,264,038
Proceeds from the 2023 Debentures Financing	142,920,845	0
Proceeds from the issuance of shares through exercise of stock options and warrants	0	23,173
Cash flows from financing activities	175,454,114	172,802,151
Effect of exchange rate changes on cash held in foreign currency	(285,549)	(2,077,744)
Net decrease in cash	(58,374,019)	(153,435,045)
Cash, beginning of year	88,266,985	241,702,030
Cash, end of year	29,892,966	88,266,985
Other information on cash flows related to operating activities:
Interest paid	11,119,136	2,386,930
Interest paid on obligations under lease liabilities	$ 4,656,033	$ 3,162,932

XML

REPORTING ENTITY AND NATURE OF OPERATIONS

12 Months Ended

Dec. 31, 2023

General Information About Financial Statements [Abstract]

REPORTING ENTITY AND NATURE OF OPERATIONS

REPORTING ENTITY AND NATURE OF OPERATIONS

The principal activities of The Lion Electric Company ("Lion" or the "Company") and its subsidiaries (together referred to as the "Group") include the design, development, manufacturing and distribution of purpose-built all-electric medium and heavy-duty urban vehicles including battery systems, chassis, bus bodies and truck cabins. The Group also distributes truck and bus parts and accessories.

The Company is incorporated under the Business Corporations Act (Quebec) and is the Group’s ultimate parent company. Its registered office and principal place of business is 921, chemin de la Riviere-du-Nord, Saint-Jerome, Quebec, Canada. These audited consolidated financial statements ("consolidated financial statements") are as at December 31, 2023 and December 31, 2022 and for the fiscal years ended December 31, 2023 and 2022 and include the accounts of the Company and its subsidiaries. The Company is a publicly listed entity, and its shares are traded on the Toronto Stock Exchange and New York Stock Exchange under the symbol LEV.

XML

BASIS OF PRESENTATION AND STATEMENT OF COMPLIANCE WITH IFRS

12 Months Ended

Dec. 31, 2023

General Information About Financial Statements [Abstract]

BASIS OF PRESENTATION AND STATEMENT OF COMPLIANCE WITH IFRS

BASIS OF PRESENTATION AND STATEMENT OF COMPLIANCE WITH IFRS

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (“IASB”) and are expressed in United States ("US") dollars for reporting purposes.

These consolidated financial statements have been approved for issue by the Board of Directors on February 28, 2024.

XML

SUMMARY OF ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2023

Disclosure Of Significant Accounting Policies Abstract [Abstract]

SUMMARY OF ACCOUNTING POLICIES

SUMMARY OF ACCOUNTING POLICIES

3.1 Overall considerations

The consolidated financial statements have been prepared using the material accounting policies and measurement bases that are in effect at December 31, 2023, as summarized below. These were used throughout all years presented in the consolidated financial statements.

3.2 Basis of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as of December 31, 2023 and 2022. All subsidiaries have a reporting date of December 31. Subsidiaries are all entities over which the Group has the power to control the financial and operating policies. The Group obtains and exercises control when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

All transactions and balances between Group companies are eliminated on consolidation, including unrealized gains and losses on transactions between Group companies. Where unrealized losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.2 Basis of consolidation (continued)

Amounts reported in the consolidated financial statements of the subsidiary have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

The Company’s principal subsidiaries, their jurisdiction of incorporation, and the Company’s percentage ownership share of each are as follows:

Subsidiary	Jurisdiction of Incorporation	Ownership percentage
Lion Holding USA Inc.	Delaware	100%
The Lion Electric Co USA Inc.	Delaware	100%
Lion Electric Manufacturing USA Inc.	Delaware	100%

3.3 Foreign currency translation

Functional and presentation currency

The consolidated financial statements are presented in US dollars. The functional currency of the parent company and its subsidiaries is the Canadian dollar, except for The Lion Electric Co USA Inc. and Lion Electric Manufacturing USA Inc., whose functional currencies are the US dollar. The functional currency of the entities in the Group has remained unchanged during the reporting periods.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at year-end exchange rates are recognized in the consolidated statements of earnings (loss) and comprehensive loss.

Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.

The Group’s Canadian dollar financial statements are translated to US dollars as follows: assets and liabilities are translated at the closing rate in effect at the reporting date and income and expenses are translated at the average exchange rate for the period. The share capital account is translated at rates in effect at the time of issuance/redemptions. Exchange gains or losses resulting from the translation of the Group’s accounts into the reporting currency are reported as foreign currency translation adjustment within other comprehensive income (loss) and presented as a separate component of shareholders’ equity under cumulative translation adjustment.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.4 Revenue

The Group’s principal sources of revenue are the sale of all-electric medium and heavy-duty urban vehicles. The Group also enters into sales contracts for other products including energy infrastructure, vehicle parts, and related services.

To determine whether to recognize revenue, the Group follows a 5-step process:

–identifying the contract with a customer;

–identifying the performance obligations;

–determining the transaction price;

–allocating the transaction price to the performance obligations; and

–recognizing revenue when/as performance obligation(s) are satisfied.

The Group recognizes revenue in the amount of consideration it will receive for delivering a product or a service to a customer. Revenue is recognized at a point in time, when the Group satisfies its performance obligations by transferring control of the goods to its customers or provides the service, which generally occurs when the goods are delivered to the customers and when the customer confirms acceptance.

Control is generally transferred when the customer has the ability to direct the use and obtain substantially all of the remaining benefit, which is upon shipment, or when the product has been completed, is ready for delivery, and title has transferred to the customer.

The Group provides a warranty for its products against defects for periods varying from one year to eight years for certain components. An allowance for warranty expense is recorded when the revenue for the related product is recognized. The allowance is based upon the terms of the warranty, the Group’s historical experience and management estimates of future expenses for replacement or repairs. The corresponding expense is recorded in cost of sales.

3.5 Cost of sales and gross profit

Cost of sales includes all raw material costs, direct parts, material and labor costs, manufacturing conversion costs, including depreciation costs of manufacturing equipment such as tooling and machinery, inter-facility transportation and logistic costs, amortization of product development costs, outbound freight to customers, and reserves for estimated warranty expenses. Cost of sales also includes the cost of purchasing finished goods for resale, costs relating to purchasing, receiving and inspection activities, warehousing costs, product engineering costs, insurance related to manufacturing activities, customs and duties, adjustments to warranty expense, as well as charges to write down the carrying value of inventory when it exceeds its estimated net realizable value and to provide for obsolete and on-hand inventory in excess of forecasted demand. Gross loss is the result of revenue less cost of sales.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.6 Administrative expenses

Administrative expenses consist of share-based compensation, as well as employee benefits for management, information technology, human resources, accounting, legal, investor relations, and other general administrative functions. Administrative expenses also include professional fees, non-manufacturing depreciation expense, and non-manufacturing related insurance costs (including director and officer insurance). Administrative expenses are recognized in the consolidated statements of earnings (loss) and comprehensive loss upon utilization of the service or at the date of their origin.

3.7 Selling expenses

Selling expenses consist of salaries and other similar expenses related to Lion’s bus and truck sales force and employee benefits costs, sales commissions, share-based compensation, business development, aftermarket sales, non-manufacturing depreciation expense, and advertising, marketing, and communications. Selling expenses are recognized in the consolidated statements of earnings (loss) and comprehensive loss upon utilization of the service or at the date of their origin.

3.8 Employee benefits

Employee benefits include wages, salaries, fringe benefits, commissions, compensated absences, and bonuses. These short-term benefits are recognized in cost of sales, administrative expenses, and selling expenses as the services are provided.

3.9 Restructuring costs

Restructuring costs include employee severance costs, employee benefits and employee transitions costs when payments are probable and amounts are reliably estimable. Other restructuring related costs are recognized as incurred.

3.10 Finance costs

Finance costs consists primarily of interest paid on Lion’s outstanding debts, legal and other costs related to long-term debts and other debts and share warrant financing activities, interest on lease liabilities, interest on convertible and non-convertible debt instruments as well as non-cash accretion on convertible and non-convertible debt instruments, long-term debts and other debts and revaluation expenses on the balance of purchase price payable related to the acquisition of dealership rights.

3.11 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. Capitalization of borrowing costs ceases when the asset is completed and available for use. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.12 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short- term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. As at December 31, 2023 and 2022, the Company only held cash.

3.13 Accounts receivable

Accounts receivable include amounts due from customers in the normal course of business as well as refundable tax credits and grants under government programs. The payments are generally received within a year.

Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost, less impairment. The Group maintains an allowance for expected credit loss based on collection history and customer specific credit risk in accordance with the expected credit loss model. Trade accounts receivables are presented net of an allowance for credit losses.

3.14 Inventories

Finished goods, work in process, and raw material inventories are valued at the lower of cost and net realizable value. Cost is determined using the specific identification cost method for finished goods and work in process, while the cost of raw materials is determined using the weighted average cost method. Supplier rebates are deducted to determine the cost of purchase.

The cost of inventories includes all purchase, conversion and other costs incurred to bring the inventories to their present location and condition and include the purchase price and other costs directly related to the acquisition of raw materials and the cost of purchased finished goods. Inventory costs also include the costs directly related to the conversion of materials to finished goods, such as direct labor, and a systematic allocation of fixed and variable production overhead, including manufacturing depreciation expense.

The allocation of fixed production overhead to the cost of inventories is based on the normal capacity of the production facilities. Costs incurred as a result of operating below the normal capacity of the production facilities are excluded from the carrying value of inventories and charged directly to cost of sales. Normal capacity is the average production expected to be achieved during the fiscal year, under normal circumstances.

The net realizable value represents the estimated selling price in the normal course of business less the estimated costs necessary to make the sale. Raw materials and work in progress inventories are not written down if the finished products in which they will be incorporated are expected to be sold at or above cost.

The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the year the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, is recognized as a reduction in the amount of inventories recognized as an expense in the year in which the reversal occurs.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.15 Property, plant and equipment

Property, plant and equipment are initially recorded at cost, net of government grants, and are subsequently carried at cost less accumulated depreciation and any accumulated impairment losses. The costs of an item of property, plant, and equipment includes any expenditures directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of self-constructed assets includes the cost of materials and direct labor, site preparation costs, initial delivery and handling costs, installation and assembly costs, and any other costs directly attributable to bringing the assets to the location and condition necessary for the assets to be capable of operating in the manner intended by management.

Property, plant and equipment, less their estimated residual values, are depreciated over their estimated useful lives using the straight-line method. The following estimated useful lives are applied:

Leasehold improvements	Earlier of useful life or remaining lease term
Machinery and equipment	7,000 units produced or 5 years
Rolling stock	5 years
Computer equipment	5 years
Furniture and office equipment	10 years
Production moulds	1,250 units produced
Master patterns and templates	7,000 units produced
Prototypes	3 years

The Group begins to depreciate property, plant and equipment when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

Consequently, construction in progress is not amortized and is subject to impairment testing if there is any indication that it may be impaired (see Note 3.18). The estimated residual values, estimated useful lives and depreciation methods are reviewed annually by the Company and any change resulting from this evaluation is applied as a change in estimate and is accounted for on a prospective basis.

3.16 Leased assets

At the inception of contracts, the Group assesses whether a contract is, or contains a lease by assessing if the contract, or part of the contract, conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. To determine if this is achieved, the Group assesses the following key factors:

– whether the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group;

– whether the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract;

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.16 Leased assets (continued)

– whether the Group has the right to direct the use (how and for what purpose) of the identified asset throughout the period of use.

Measurement and recognition of leases as a lessee

Short-term or low value leases

The Group has elected to recognize leases that have a lease term of 12 months or less and leases of low-value assets as an expense on a straight-line basis over the lease term.

All other leases

At a lease commencement date, the Group recognizes a right-of-use asset and a lease liability on the consolidated statements of financial position.

The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received). The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist in accordance with IAS 36 Impairment of assets.

The lease liability is measured at the present value of the remaining lease payments at the date of recognition, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The incremental borrowing rate is the estimated rate that the Group would have to pay to borrow the same amount over a similar term, and with similar security to obtain an asset of equivalent value. This rate is adjusted should the lessee entity have a different risk profile to that of the Group.

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in-substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee, and payments arising from options reasonably certain to be exercised.

The lease liability is subsequently measured by reducing the carrying amount to account for payments made and increasing the carrying amount to account for accretion expense. The accretion expense is presented within finance costs in the consolidated statements of earnings (loss) and comprehensive loss over the lease period.

The lease liability is remeasured when there are changes to the lease terms resulting from a change in the Group’s assessment of whether the Group will exercise a purchase, extension, or termination option, or when there is a change in the future lease payments resulting from a change in an index or rate, or change in the Group’s estimate of the amount expected to be payable under residual value guarantees.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.16 Leased assets (continued)

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or consolidated statements of earnings (loss) and comprehensive loss if the right-of-use asset is already fully depreciated.

3.17 Intangible assets

Initial recognition

Dealership rights with an indefinite useful life

Dealership rights with an indefinite useful life are recorded initially at cost and are not amortized. As the acquisition of dealership rights was based on future sales of a specific product, the Group has elected to measure the cost based on a financial liability model, whereby the fair value of all variable payments under the contract is recorded on initial recognition of the asset with a corresponding liability. Any re-measurements of the related liability are recognized in earnings (loss) and comprehensive loss. The cost also includes any directly attributable costs of acquisition. Directly attributable costs include professional fees arising directly from bringing the asset to its working conditions.

Dealership rights are subject to asset impairment testing as described below. The useful life is reviewed each period to determine whether events and circumstances continue to support an indefinite useful life assessment.

Acquired Software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and install the specific software.

Internally developed intangible assets

Expenditures on the research phase are recognized as an expense as incurred. Costs that are directly attributable to an electric vehicle project’s development phase and costs incurred on software development projects are recognized as intangible assets, provided they meet the following recognition requirements:

– the development costs can be measured reliably;

– the project is technically and commercially feasible;

– the Group intends to and has sufficient resources to complete the project;

– the Group has the ability to use or sell the intangible assets; and

– the intangible assets will generate probable future economic benefits.

Development costs not meeting these criteria for capitalization are expensed as incurred. Directly attributable costs include employee benefits costs incurred along with an appropriate portion of relevant overheads and subcontractors’ fees.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.17 Intangible assets (continued)

Subsequent measurement

All finite-live intangible assets are stated at cost, less accumulated amortization and impairment losses. Finite-life intangible assets, less their estimated residual value, are amortized over their estimated useful lives using the straight-line method. The following estimated useful lives are applied:

Software	5 years
Development costs	7,000 units produced

The estimated residual values, estimated useful lives and amortization methods are reviewed annually by the Group and any change resulting from this evaluation applied as a change in estimates accounted on a prospective basis. In addition, they are subject to impairment testing as described below.

3.18 Impairment testing of intangible assets, property, plant and equipment and right-of-use assets

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at the cash-generating unit level. Cash-generating units to which intangible assets with indefinite useful lives have been allocated (determined by the Group’s management as being equivalent to its operating segments) are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognized for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganizations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect management’s assessment of respective risk profiles, such as market and asset-specific risks factors.

Impairment losses for cash-generating units are charged pro rata to the assets in the cash-generating unit. All assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount.

3.19 Government incentive and assistance

Government incentives and assistance related to current expenses is accounted for as a reduction of related expenses while incentive and assistance related to the acquisition of non-current assets is accounted for as a reduction of the related non-current assets.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.19 Government incentive and assistance (continued)

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an non-current asset, it is accounted for as a reduction of the related non-current assets and it is recognised as income in equal amounts over the expected useful life of the related asset.

3.20 Research and development tax credits

Tax credits related to current expenses are accounted for as a reduction of related expenses while tax credits related to the acquisition or development of non-current assets are accounted for as a reduction of the related non-current assets.

Reimbursable tax credits are accrued in the year in which the expenditures are incurred, provided that the Group is reasonably certain that the credits will be received. The tax credits must be examined and approved by the tax authorities and it is possible that the amounts subsequently granted will differ from the amounts initially recorded.

3.21 Financial instruments

Recognition and derecognition

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires.

Financial Assets

Classification and initial measurement of financial assets

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

Financial assets, are classified into the following categories:

– amortized cost;

– fair value through profit or loss (FVTPL);

– fair value through other comprehensive income (FVOCI).

In the years presented, the Group does not have any financial assets categorized as FVTPL or FVOCI.

The classification is determined by both:

– the entity’s business model for managing the financial asset;

– the contractual cash flow characteristics of the financial asset.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.21 Financial instruments (continued)

Classification and initial measurement of financial assets (continued)

All income and expenses relating to financial assets that are recognized in the consolidated statements of earnings (loss) and comprehensive loss are presented within finance costs, except for the impairment of trade receivables which is presented within administrative expenses.

Subsequent measurement of financial assets

Financial assets at amortized cost

Financial assets are measured at amortized cost if the assets meet the following conditions (and are not designated as FVTPL):

– they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows;

– the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, these are measured at amortized cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. Cash, trade receivables and incentives and other government assistance receivable are classified within this category.

Impairment of financial assets

The Group uses the expected credit losses impairment model with respect to its financial assets carried at amortized cost. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since the initial recognition of the respective financial instrument.

The Group accounts for the expected credit losses using the simplified approach over the life of financial assets measured at amortized cost. Expected credit losses over the life of the asset are expected credit losses for all of the default events that a financial instrument may experience over its expected life. The assessment of expected credit losses reflects reasonable and justifiable information about past events, current circumstances and forecasts of events and economic conditions and takes into account the factors specific to the account receivable, the general condition of the economy and a current as well as expected appreciation of the condition prevailing at the statements of financial position date, including the time value of the money, if any.

Classification and measurement of financial liabilities - amortized cost

The Group’s financial liabilities measured at amortized cost include trade and other payables (excluding non-financial liabilities) and long-term debt and other debts. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortized cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.21 Financial instruments (continued)

Classification and measurement of financial liabilities - amortized cost (continued)

All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in the consolidated statements of earnings (loss) and comprehensive loss are included within finance costs.

Classification and measurement of financial liabilities - FVTPL - warrants

The Group determined that the warrants, including the warrants issued to a customer, the public warrants and the private warrants issued as part of a business combination transaction, the public warrants issued as part of the December 2022 Offering, and the warrants issued as part of the 2023 Debenture Financing (as defined in Note 12.7) are derivative instruments and should be classified as a liability in accordance with IAS 32 - Financial Instruments: Presentation and IFRS 9 - Financial Instruments and are measured at FVTPL. Derivative and financial liabilities designated at FVTPL are carried subsequently at fair value with gains or losses recognized in the consolidated statements of earnings (loss) and comprehensive loss.

Warrants issued to a customer

The vested portion of the warrants issued to a customer is initially recorded at fair value and then revalued at each reporting date with a corresponding contract asset recognized at inception. The corresponding contract asset is amortized as a reduction of revenues on a percentage per dollar of revenue generated with the customer and its affiliates.

The unvested portion of the warrants represents a retrospective volume discount based on specified levels of spending by the customer and its affiliates. Revenues will be recognized based on the prices specified in the work orders, net of the estimated value of the volume discount based on the portion of the warrant expected to vest using the fair value at inception. At each reporting date, the Group will review experience, current information on expected orders from the customer and its affiliates and the potential impact of other reasonably foreseen constraints will be used to estimate and provide for the discount, using the expected value method, and revenue will only be recognized to the extent that it is highly probable that a significant reversal will not occur.

Private and public warrants

The warrants are initially recorded at fair value and then revalued at each reporting date. Estimating fair value requires determining the most appropriate valuation model which captures the significant features of the financial instruments. This estimate also requires the determination of the most appropriate inputs to the valuation model including the expected life of the warrants, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating such warrants are disclosed in Note 14.

3.22 Convertible debt instruments

The Group reviewed the terms of the convertible debentures to determine whether there are component parts of compound financial instruments that are required to be separated and accounted for as individual financial instruments.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.22 Convertible debt instruments (continued)

Conversion option features that have economic characteristics and risks that do not meet the "Fixed for Fixed" criteria or are not closely related to those of the host instrument should be classified as embedded derivatives and separated from the host contract. The Group determined that the conversion options on the convertible debt instruments are derivative instruments that should be separated from the host contract and classified as a liability in accordance with IAS 32 - Financial Instruments: Presentation and IFRS 9 - Financial Instruments due to the variability in the cash flows.

At inception, the Group allocated the proceeds first to the fair value of the conversion options on the convertible debt instruments and the remaining proceeds are allocated to the convertible debenture host contract. The conversion options on the convertible debt instruments designated at fair value through profit or loss ("FVTPL") are carried subsequently at fair value with gains or losses recognized in the consolidated statements of earnings (loss) and comprehensive loss. The convertible debenture host contract is measured at amortized cost, using the effective interest method until extinguished upon conversion or at the instrument’s maturity date. The effective interest expense is classified as accretion expense under finance costs in the consolidated statements of earnings (loss) and comprehensive loss.

Transaction costs related to the issue of convertible debt instruments are allocated to the components in proportion to the initial carrying amounts. Transaction costs relating to conversion options on the convertible debt instruments are recognized as finance costs in the consolidated statements of earnings (loss) and comprehensive loss as incurred. Transaction costs relating to the convertible debentures component are included in the carrying amount and are amortized over the term of the convertible debt instruments using the effective interest method.

3.23 Share-based employee remuneration

Stock options and restricted share units

Stock options and restricted share units ("RSUs") are equity settled share-based payments, which are measured at fair value at the grant date. For stock options, the compensation cost is measured using the Black-Scholes option pricing model and is expensed over the award’s vesting period. For RSUs, compensation cost is measured at the fair value of the underlying common share at the grant date and is expensed over the award’s vesting period. RSUs can be settled in cash based on the Company’s share price on the vesting date, or through the delivery of common shares issued from treasury or purchased on the open market, at the Company’s option. RSUs are expected to be settled in common shares purchased on the open market.

Compensation expense is recognized in net earnings (loss) and comprehensive loss with a corresponding increase in contributed surplus. The measurement of compensation expense for stock options and RSUs is net of estimated forfeitures. Any consideration paid by plan participants on the exercise of stock options is credited to share capital. Upon the exercise of stock options or the vesting of RSUs, the corresponding amounts previously credited to contributed surplus are transferred to share capital. Stock options and RSUs that are dilutive are considered in the calculation of diluted earnings per share, as per Note 20 to these consolidated financial statements.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.23 Share-based employee remuneration (continued)

Deferred share unit plan

The Company has a deferred share unit plan for independent members of the Company’s Board of Directors, who receive a portion of their compensation in the form of deferred share units (“DSUs”). These DSUs are equity settled awards and are fully recognized in net earnings (loss) and comprehensive loss based on the fair value of the underlying common shares at the grant date.

3.24 Provisions, contingent assets and contingent liabilities

Provisions for product warranties, legal disputes, onerous contracts or other claims are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Restructuring provisions are recognized only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan’s main features to those affected by it. Provisions are not recognized for future operating losses.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in a settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material. Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provision. In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognized.

3.25 Income taxes

Tax expense recognized in the consolidated statements of earnings (loss) and comprehensive loss comprises the sum of deferred tax and current tax not recognized directly in equity. The calculation of current tax and deferred tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the balance sheet liability method.

Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income. This is assessed based on the Group’s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.

Deferred tax liabilities are generally recognized in full, although IAS 12, Income Taxes, specifies limited exemptions. As a result of these exemptions the Group does not recognize deferred tax on temporary differences relating to goodwill, or to its investments in subsidiaries. The Group does not offset deferred tax assets and liabilities unless it has a legally enforceable right to do so and intends to settle on a net basis.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.26 Share Capital

Common shares are classified as share capital within equity. Incremental costs directly attributable to the issuance of share are recognized as a deduction from share capital, net of any tax effect.

Contributed surplus is used to record the accumulated compensation expense related to equity-settled share-based compensation transactions. Upon the exercise of stock options and the vesting of RSUs and DSUs, the corresponding amounts previously credited to contributed surplus are transferred to share capital.

Deficit includes all current and prior year losses. All transactions with owners of the parent company are recorded separately within equity. Cumulative translation adjustment comprises foreign currency translation differences arising from the translation of the consolidated financial statements of the Group into the US dollar, the presentation currency.

3.27 Earnings per share

Basic earnings (loss) per share ("EPS") are calculated by dividing the net earnings (loss) available to common share shareholders by the weighted average number of shares outstanding during the year.

Diluted earnings (loss) per share are calculated by adjusting the weighted average of shares outstanding during the year to include the weighted average number of shares that would be issued upon the conversion of all potential dilutive warrants, stock options, RSUs, and DSUs into common shares.

3.28 Segment reporting

The Group has only one operating segment: the manufacturing and sale of electric vehicles in Canada and the United States. The Group has one operating segment based on Lion’s operational structure and decision process for allocation of resources.

3.29 Significant management judgements in applying accounting policies and estimation uncertainty

Significant management judgements

The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the consolidated financial statements.

Capitalization of internally developed intangible assets

Distinguishing the research and development phases of a new customized project and determining whether the recognition requirements for the capitalization of development costs are met require judgement. After capitalization, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalized costs may be impaired.

Recognition of deferred tax assets

The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Group’s future taxable income against which the deferred tax assets can be utilized.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.29 Significant management judgements in applying accounting policies and estimation uncertainty (continued)

Recognition of deferred tax assets (continued)

In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.

Estimation uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

Tax credits receivable

The calculation of the Group’s tax credits receivable involves a degree of estimation and judgement in respect of certain items whose tax treatment cannot be finally determined until a notice of assessment has been issued by the relevant taxation authority and payment has been received or applied against income taxes otherwise payable.

Impairment of non-financial assets

Management estimates the recoverable amount of each asset or cash-generating units based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.

Leases

Recognizing leases requires judgement and use of estimates and assumptions. Judgement is used to determine whether there is reasonable certainty that a lease extension or cancellation option will be exercised. Furthermore, management estimates are used to determine the lease terms and the appropriate interest rate to establish the lease liability.

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utility of certain software and computer equipment. Technical obsolescence also can affect development costs as technology evolves.

Inventories

Management estimates the net realizable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.29 Significant management judgements in applying accounting policies and estimation uncertainty (continued)

Fair value measurement

Management uses various valuation techniques to determine the fair value of financial instruments, where active market quotes are not available. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case, management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.

Share-based compensation and private share warrant obligation

Management assesses the fair value of stock options and the private share warrant obligation using the Black-Scholes valuation model. The Black-Scholes model requires management to make estimates and assumptions with respect to inputs including the risk-free interest rate, volatility and expected option or warrant life.

3.30 Initial and early application of new accounting standards and interpretations in the reporting standards

Amendments to IAS 1, Presentation of Financial Statements and IFRS Practice Statement 2, Making Materiality Judgements

On February 11, 2021, the IASB issued amendments to IAS 1, Presentation of Financial Statements and IFRS Practice Statement 2, Making Materiality Judgements, to provide guidance in determining which accounting policies to disclose. The amendments require entities to disclose material accounting policies rather than significant policies. The amendments clarify that accounting policy information is material if users of an entity’s financial statements would need it to understand other material information in the financial statements. In assessing the materiality of accounting policy information, entities need to consider both size of the transaction, other events or conditions and the nature of them, even if the related amounts are immaterial. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IAS 8, Accounting Policies, Change in Accounting Estimates and Errors

On February 11, 2021, the IASB issued amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, to clarify how to distinguish changes in accounting policies, which must be applied retrospectively, from changes in accounting estimate, which are accounted for prospectively. The amendments clarify the definition of accounting estimates as "monetary amounts in the financial statements that are subject to measurement uncertainty". The amendments clarify that a change in accounting estimate is a change in input or a change in a measurement technique used to develop an accounting estimate, if they do not result in the correction of a prior period error. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.30 Initial and early application of new accounting standards and interpretations in the reporting standards (continued)

Amendments to IAS 12, Income Taxes

On May 6, 2021, the IASB released Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12). The amendment relates to the recognition of deferred tax when an entity accounts for transactions, such as leases or decommissioning obligations, by recognizing both an asset and a liability. The objective of this amendment is to narrow the initial recognition exemption in paragraphs 15 and 24 of IAS 12, so that it would not apply to transactions that give rise to both taxable and deductible temporary differences, to the extent the amounts recognized for the temporary differences are the same. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IFRS 16, Leases

On September 22, 2022, the IASB issued an amendment to IFRS 16, Leases to clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. The amendment requires a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. The early adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IAS 7, Statement of Cash Flow and IFRS 7, Financial Instruments : Disclosures

On May 25, 2023, the IASB issued an amendment to IAS 7, Statement of Cash Flow and IFRS 7, Financial Instruments: Disclosures to add qualitative and quantitative disclosure requirements to allow users to assess how supplier finance arrangements affect an entity’s liabilities, cash flows and liquidity risk. The amendments to IAS 7 will become effective for annual reporting periods beginning on or after January 1, 2024 and the amendments to IFRS 7 when it applies the amendments to IAS 7. Earlier application is permitted. The Company made the election to early adopt the amendments as of June 30, 2023 and disclose the additional information in the Company's financial statements.

3.31 Standards, amendments and Interpretations to existing Standards that are not yet effective and have not been adopted early by the Group

At the date of authorization of these consolidated financial statements, several other new, but not yet effective, standards and amendments to existing standards, and interpretations have been published by the IASB. None of these standards or amendments to existing standards have been adopted early by the Company.

Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New standards, amendments and interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Company’s consolidated financial statements.

XML

ACCOUNTS RECEIVABLE

12 Months Ended

Dec. 31, 2023

Subclassifications of assets, liabilities and equities [abstract]

ACCOUNTS RECEIVABLE

ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Trade receivables, gross	41,777,117	25,935,309
Allowance for credit losses	(1,155,120)	(250,439)
Trade receivables, net	40,621,997	25,684,870
Incentives and other government assistance receivable (Note 4.1)	26,625,156	25,312,738
Financial assets	67,247,153	50,997,608
Commodity taxes receivable	4,028,472	4,557,779
Research and development tax credits receivable	4,366,155	7,416,155
Non-financial assets	8,394,627	11,973,934
	75,641,780	62,971,542

All amounts are considered short-term. The net carrying value of trade receivables is considered a reasonable approximation of their fair value.

As of December 31, 2023, amounts owing from one customer represented 13.4% of the total trade accounts receivable (two customers represented 19.2% and 15.2%, respectively, as of December 31, 2022).

4 - ACCOUNTS RECEIVABLE (CONTINUED)

4.1 Incentives and other government assistance receivable

Incentives and other government assistance receivable consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Transport Canada Medium and Heavy-duty Zero-Emission Vehicles ("iMHZEV") Program	3,702,540	5,020,673
U.S. Environmental Protection Agency ("EPA") School Bus Program	—	3,767,713
Government of Quebec Ecocamionnage program	4,376,726	4,118,060
Ministry of Transportation of Quebec Programme d'électrification du transport scolaire ("PETS")	17,820,959	11,425,724
Other government assistance and incentives receivable	724,931	980,568
	26,625,156	25,312,738

XML

INVENTORIES

12 Months Ended

Dec. 31, 2023

Inventories [Abstract]

INVENTORIES

INVENTORIES

Inventories consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Raw materials	173,404,495	135,656,954
Work in process	28,105,877	22,809,755
Finished goods	48,096,384	8,725,226
	249,606,756	167,191,935

The cost of inventories recognized as expense during the year totals $243,927,490 ($144,405,153 in 2022) and was recognized in the cost of sales in the consolidated statements of earnings (loss) and comprehensive loss.

For the year ended December 31, 2023, cost of sales include an expense of $12,022,984 ($478,889 in 2022) related to the write-down of inventory to net realizable value, including $9,808,973 in 2023 related to raw material inventory as a result of the decision to delay the start of commercial production of the LionA and LionM minibuses.

XML

PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2023

Disclosure Of Property, Plant and Equipment Abstract [Abstract]

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

	Leasehold improvements	Machinery and equipment	Rolling stock	Computer equipment	Furniture and office equipment	Production moulds	Master patterns and templates	Prototypes	Building	Construction in progress		Total
	$	$	$	$	$	$	$	$	$	$		$
GROSS CARRYING AMOUNT
Balance at January 1, 2023	52,688,714	58,166,555	2,531,772	7,470,595	1,010,711	3,304,058	1,327,362	202,172	—	42,110,058		168,811,997
Additions	16,166,380	22,470,851	3,728,406	2,132,104	2,484,595	1,189,208	180,450	4,273,619	11,984,946	4,518,943		69,129,502
Additions - Borrowing costs (Note 18)	—	1,371,166	—	—	—	—	—	—	1,359,161	—		2,730,327
Transfers	894,216	—	—	—	—	—	—	—	43,592,543	(44,486,759)		—
Disposals and write-offs	—	(1,487,289)	(28,205)	—	(184,839)	(353,564)	—	(139,531)	(23,813,344)	—		(26,006,772)
Impairmenta	—	(1,025,686)	(291,420)	—	—	—	—	(308,346)	—	—		(1,625,452)
Foreign currency translation adjustment	(42,698)	798,124	45,625	140,834	21,963	74,452	30,288	65,399	753,451	487,652	—	2,375,090
Balance at December 31, 2023	69,706,612	80,293,721	5,986,178	9,743,533	3,332,430	4,214,154	1,538,100	4,093,313	33,876,757	2,629,894		215,414,692
ACCUMULATED DEPRECIATION
Balance at January 1, 2023	2,814,583	1,840,519	437,616	1,464,667	146,952	1,073,708	139,988	137,636	—	—		8,055,669
Depreciation	2,347,584	3,267,855	1,449,581	1,001,617	218,077	1,470,615	170,750	894,363	—	—		10,820,442
Disposals and write-offs	—	(1,487,289)	(43,763)	—	(184,839)	(273,951)	—	(102,980)	—	—		(2,092,822)
Impairmenta	—	(38,301)	(99,210)	—	—	—	—	(68,521)	—	—		(206,032)
Foreign currency translation adjustment	92,418	58,560	9,091	51,767	3,063	58,253	7,052	20,548	—	—		300,752
Balance at December 31, 2023	5,254,585	3,641,344	1,753,315	2,518,051	183,253	2,328,625	317,790	881,046	—	—		16,878,009
Carrying amount December 31, 2023	64,452,027	76,652,377	4,232,863	7,225,482	3,149,177	1,885,529	1,220,310	3,212,267	33,876,757	2,629,894		198,536,683
GROSS CARRYING AMOUNT
Balance at January 1, 2022	17,054,605	6,421,141	1,308,726	2,992,982	513,344	1,462,683	965,937	78,709	—	5,301,919		36,100,046
Additions	35,455,356	52,807,971	1,317,358	4,745,673	529,882	1,978,942	433,228	135,627	—	38,118,683		135,522,720
Additions - Borrowing Costs	—	515,919	—	—	—	—	—	—	—	1,034,749		1,550,668
Transfer	462,435	67,455	—	—	—	—	—	—	—	(529,890)		—
Disposal	—	—	(83,130)	—	—	—	—	—	—	—		(83,130)
Foreign currency translation adjustment	(283,682)	(1,645,931)	(11,182)	(268,060)	(32,515)	(137,567)	(71,803)	(12,164)	—	(1,815,403)		(4,278,307)
Balance at December 31, 2022	52,688,714	58,166,555	2,531,772	7,470,595	1,010,711	3,304,058	1,327,362	202,172	—	42,110,058		168,811,997
ACCUMULATED DEPRECIATION
Balance at January 1, 2022	1,618,691	343,839	224,406	758,100	96,809	246,449	64,885	78,709	—	—		3,431,888
Depreciation	1,339,208	1,581,078	278,078	781,479	57,878	864,400	81,543	54,428	—	—		5,038,092
Disposal	—	—	(58,142)	—	—	—	—	—	—	—		(58,142)
Foreign currency translation adjustment	(143,316)	(84,398)	(6,726)	(74,912)	(7,735)	(37,141)	(6,440)	4,499	—	—		(356,169)
Balance at December 31, 2022	2,814,583	1,840,519	437,616	1,464,667	146,952	1,073,708	139,988	137,636	—	—		8,055,669
Carrying amount December 31, 2022	49,874,131	56,326,036	2,094,156	6,005,928	863,759	2,230,350	1,187,374	64,536	—	42,110,058		160,756,328

PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

a.In the fourth quarter of 2023, the Company made a strategic decision to indefinitely delay the start of commercial production of the LionA all-electric mini school bus and LionM all-electric minibus in order to prioritize development and commercialization efforts on other all-electric vehicles, and as a result a non-cash impairment charge of $1,419,420 was recognized in the consolidated statements of earnings (loss) and comprehensive loss as a reduction of property, plant and equipment related to prototypes and related machinery and equipment. The recoverable amount of the LionA all-electric mini school bus and LionM all-electric minibus was determined on the basis of value in use, which was nil.

Incentives and other government assistance in the amount of $3,849,847 ($3,063,476 in 2022) was recognized during the year as a reduction of property, plant and equipment, respectively, $2,475,331 related to machinery and equipment and $1,374,516 relates to construction in progress ($1,931,179 and $1,132,297, respectively, in 2022).

Depreciation was recognized as follows in the consolidated statements of earnings (loss) and comprehensive loss:

	2023	2022
	$	$
Cost of sales	6,028,565	2,581,448
Administrative expenses	3,986,583	2,456,644
Selling expenses	805,294	—
	10,820,442	5,038,092

XML

RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS

12 Months Ended

Dec. 31, 2023

Lessee, Leases [Abstract]

RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS

RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS

The Group has entered into leases agreements for the rental of premises, rolling stock and equipment. The leases have an initial term of 1 to 40 years and some have a renewal option after their initial term. The lease terms are negotiated individually and encompass a wide range of different terms and conditions.

Right-of-use assets

	Premises	Rolling stock	Equipment	Total
	$	$	$	$
Balance at January 1, 2023	59,375,131	1,133,223	—	60,508,354
Additions	29,560,843	956,364	9,363,281	39,880,488
Modifications	(2,401,574)	(31,868)	5,353	(2,428,089)
Depreciation expense	(7,766,903)	(468,994)	(882,686)	(9,118,583)
Foreign currency translation adjustment	799,545	21,424	—	820,969
Balance at December 31, 2023	79,567,042	1,610,149	8,485,948	89,663,139

7 - RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS (CONTINUED)

Right-of-use assets (continued)

	Premises	Rolling stock	Equipment	Total
	$	$	$	$
Balance at January 1, 2022	60,297,423	604,939	—	60,902,362
Additions	6,661,404	740,287	—	7,401,691
Modifications	(450,567)	10,670	—	(439,897)
Depreciation expense	(6,497,931)	(186,833)	—	(6,684,764)
Foreign currency translation adjustment	(635,198)	(35,840)	—	(671,038)
Balance at December 31, 2022	59,375,131	1,133,223	—	60,508,354

On February 2, 2023, the Group completed a sale-leaseback transaction with BTB Real Estate Investment Trust for its battery manufacturing building located in Mirabel, Quebec for a total sale price of $20,909,566 (C$28,000,000), and net proceeds of $20,506,589 after the deduction of selling and legal fees of $484,994. The sale of the building resulted in a difference between the carrying value and net proceeds of $3,306,755 which was recognized as an increase to the right-of-use asset related to the lease agreement entered into with BTB Real Estate Investment Trust for the Mirabel battery manufacturing building concurrent with the sale, which has an initial 20-year term and subsequent renewal options.

Depreciation was recognized as follows :

	2023	2022
	$	$
Cost of sales	6,248,180	1,348,589
Administrative expenses	459,161	278,995
Selling expenses	1,330,000	1,826,769
Capitalized to property, plant and equipment	1,081,242	3,230,411
	9,118,583	6,684,764

7 - RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS (CONTINUED)

Lease liabilities

	$
Balance at January 1, 2023	63,520,215
Additions	36,573,733
Lease payments	(6,512,231)
Modifications	(2,456,531)
Foreign currency translation adjustment	831,400
Balance at December 31, 2023	91,956,586
Current portion	7,984,563
Non-current portion	83,972,023

Balance at January 1, 2022	62,209,317
Additions	7,401,691
Lease payments	(4,977,183)
Modifications	(439,897)
Foreign currency translation adjustment	(673,713)
Balance at December 31, 2022	63,520,215
Current portion	5,210,183
Non-current portion	58,310,032

Amounts recognized in administrative expenses in the consolidated statements of earnings (loss) and comprehensive loss are as follows:

	2023	2022
	$	$
Expense relating to variable lease payments, short-term leases and low-value assets not included in lease liabilities	4,309,208	1,159,705

See Notes 18 and 21 for information on interest expense on lease liabilities and Note 25.4 for contractual undiscounted payments related to lease liabilities.

Variable payments

Some leases for premises require repayment of a portion of the lessor’s payments for property taxes, insurance and operating expenses such as power, maintenance, administration and security; these amounts vary based on the use and wear and tear of the space. The final lease payments are determined each year.

7 - LEASE OBLIGATIONS (CONTINUED)

Lease liabilities (continued)

Renewal and termination options

Some leases include renewal or termination options that can be exercised at the Group’s option. These options are used to maximize the operational flexibility of the Group’s activities. These options are not reflected in measuring lease liabilities in many cases because the options are not reasonably certain to be exercised by the Group. The Group’s practice is to ensure that space, rolling stock or equipment meets its needs, which evolve over time.

Residual value guarantee

The residual value guarantee expected to be payable as well as those not expected to be payable have been excluded from the lease liability calculation as they were not significant.

Purchase Options

Some leases include a purchase option that can be exercised at the Group’s option. These options are reflected in measuring the lease liability when they are reasonably certain to be exercised by the Group.

XML

INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2023

Intangible Assets [Abstract]

INTANGIBLE ASSETS

INTANGIBLE ASSETS

Details of the Group’s intangible assets and their carrying amounts are as follows:

	Software	Development costs (a)	Dealership rights (b)	Total
	$	$	$	$
GROSS CARRYING AMOUNT
Balance at January 1, 2023	10,137,374	140,917,328	5,222,629	156,277,331
Additions, separately acquired	6,393	—	—	6,393
Additions, internally developed	726,027	57,516,017	—	58,242,044
Additions, borrowing costs (Note 18)	—	3,805,274	—	3,805,274
Impairment (c)	—	(34,578,703)	—	(34,578,703)
Foreign currency translation adjustment	243,580	4,091,097	—	4,334,677
Balance at December 31, 2023	11,113,374	171,751,013	5,222,629	188,087,016

8 - INTANGIBLE ASSETS (CONTINUED)

	Software	Development costs (a)	Dealership rights (b)	Total
	$	$	$	$
ACCUMULATED AMORTIZATION
Balance at January 1, 2023	2,506,338	2,406,970	—	4,913,308
Amortization	2,095,740	5,121,049	—	7,216,789
Foreign currency translation adjustment	103,387	150,275	—	253,662
Balance at December 31, 2023	4,705,465	7,678,294	—	12,383,759
Carrying amount December 31, 2023	6,407,909	164,072,719	5,222,629	175,703,257

	Software	Development costs (a)	Dealership rights (b)	Total
	$	$	$	$
GROSS CARRYING AMOUNT
Balance at January 1, 2022	4,217,288	74,279,002	5,535,707	84,031,997
Additions, separately acquired	5,178,497	—	—	5,178,497
Additions, internally developed	1,258,813	70,331,615	—	71,590,428
Additions, borrowing costs (Note 18 )	—	3,542,538	—	3,542,538
Foreign currency translation adjustment	(517,224)	(7,235,827)	(313,078)	(8,066,129)
Balance at December 31, 2022	10,137,374	140,917,328	5,222,629	156,277,331
ACCUMULATED AMORTIZATION
Balance at January 1, 2022	1,177,575	954,592	—	2,132,167
Amortization	1,451,393	1,548,635	—	3,000,028
Foreign currency translation adjustment	(122,630)	(96,257)	—	(218,887)
Balance at December 31, 2022	2,506,338	2,406,970	—	4,913,308
Carrying amount December 31, 2022	7,631,036	138,510,358	5,222,629	151,364,023

8 - INTANGIBLE ASSETS (CONTINUED)

a.Incentives and other government assistance in the amount of $5,602,949 ($2,373,217 in 2022) was recognized during the year as a reduction of development costs.

b.During the year ended December 31, 2019, in order to acquire dealership rights in certain territories in the United States, the Group entered into an agreement with a private company. As of the termination date, May 7, 2022, the Group paid a cumulative amount of $3,778,203 under the agreement.

Dealership rights with an indefinite useful life are expected to provide economic benefits to the Group indefinitely as it allows the Group to sell to end customers in certain territories in the United States, conditional to yearly renewals of the dealer licenses. Management intends to renew its dealer licenses indefinitely.

c.In the fourth quarter of 2023, the Company made a strategic decision to indefinitely delay the start of commercial production of the LionA all-electric mini school bus and LionM all-electric minibus in order to prioritize development and commercialization efforts on other all-electric vehicles, and as a result a non-cash impairment charge of $34,578,703 was recognized in the consolidated statements of earnings (loss) and comprehensive loss as a reduction of intangible assets related to development costs. The recoverable amount of the LionA all-electric mini school bus and LionM all-electric minibus was determined on the basis of value in use, which was nil.

Amortization has been allocated as follows in the consolidated statements of earnings (loss) and comprehensive loss :

	2023	2022
	$	$
Cost of sales	5,121,049	1,548,636
Administrative expenses	2,095,740	1,451,392
	7,216,789	3,000,028

XML

FINANCIAL ASSETS AND LIABILITIES

12 Months Ended

Dec. 31, 2023

Financial Instruments [Abstract]

FINANCIAL ASSETS AND LIABILITIES

FINANCIAL ASSETS AND LIABILITIES

9.1 Categories of financial assets and financial liabilities

The classification of financial instruments is summarized as follows:

	Classifications	December 31, 2023	December 31, 2022
		$	$
FINANCIAL ASSETS
Cash	Amortized cost	29,892,966	88,266,985
Trade receivables	Amortized cost	40,621,997	25,684,870
Incentives and other government assistance receivable	Amortized cost	26,625,156	25,312,738
FINANCIAL LIABILITIES
Trade and other payables	Amortized cost	71,856,894	62,383,813
Long-term debt and other debts	Amortized cost	224,942,365	110,673,348
Conversion options on convertible debt instruments	FVTPL	25,034,073	–
Share warrant obligations	FVTPL	29,582,203	23,243,563

9.2 Fair value of financial instruments

Current financial instruments that are not measured at fair value on the consolidated statements of financial position are represented by cash, trade receivables, incentives and other government assistance receivable, and trade and other payables (financial liabilities). Their carrying values are considered to be a reasonable approximation of their fair value because of their short-term maturity and / or the contractual terms of these instruments.

As of December 31, 2023 and December 31, 2022, the fair values of long-term debt and other debts based on discounted cash flows were not materially different from their carrying values because there were no material changes in the assumptions used for fair value determination at inception, with the exception of the loan from Strategic Innovation Fund of the Government of Canada (Note 12.3) and from Investissement Quebec (Note 12.2). The combined carrying value of Strategic Innovation Fund of the Government of Canada and Investissement Quebec loans amounted to $38,697,354 (December 31, 2022: $16,571,800) while their combined fair value amounted to $27,744,314 (December 31, 2022: $15,026,548).

As of December 31, 2023 and December 31, 2022, the fair values of the warrants issued to a customer, the private Business Combination warrants, the warrants issued as part of 2023 Debenture Financing (as defined in Note 12.7) and the conversion options on convertible debt instruments were determined using the Black-Scholes or the binomial option pricing model and the fair value of the public Business Combination warrants and December 2022 warrants (see Note 14) was determined using their market value.

9 - FINANCIAL ASSETS AND LIABILITIES (CONTINUED)

9.2 Fair value of financial instruments (continued)

As at December 31, 2023, the impact of a 5.0% increase in the value of the Company’s share price would have an impact of increasing the fair values of the private share warrants, the warrants issued to a customer and the warrants issued as part of 2023 Debenture Financing (as defined in Note 12.7) with a corresponding increase in consolidated loss of $1,694,344 (December 31, 2022: decrease in consolidated net earnings by $398,922) and a 5.0% decrease in the value would have an impact of decreasing the loss by $1,654,197 (December 31, 2022: increase in consolidated net earnings by $374,263).

As at December 31, 2023, the impact of a 5.0% increase or decrease in the value of the Company’s share price would have an impact of $473,190 on the fair value of the public warrants, with a corresponding impact on the consolidated loss (December 31, 2022: $1,007,825).

As at December 31, 2023, the impact of a 5.0% increase in the value of the Company’s share price would have an impact of increasing the fair value of the conversion options on convertible debt instruments with a corresponding increase in consolidated loss of $2,080,274 (December 31, 2022: nil) and a 5.0% decrease in the value would have an impact of decreasing the loss by $2,034,988 (December 31, 2022: nil).

9.3 Fair Value Hierarchy

Fair value measurements are categorized in accordance with the following levels:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or

liability; and

Level 3: Inputs are unobservable inputs for the asset or liability.

The Group’s financial instruments are categorized as follows on the fair value hierarchy:

	Fair Value Hierarchy
FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE
Share warrant obligations- public	Level 1
Share warrant obligations- private	Level 2
Share warrant obligations- warrants issued to a customer	Level 3
Share warrant obligations- July 2023 warrants	Level 2
Conversion options on convertible debt instruments	Level 3
FINANCIAL INSTRUMENTS MEASURED AT AMORTIZED COST
Long-term debt and other debts	Level 2

See Note 14 for share warrants obligation, Note 13 for the conversion options on convertible debt instrument and Note 12 for long-term debt and other debts for additional information related to the inputs used in the fair value calculation and the reconciliation between opening and closing balances.

XML

TRADE AND OTHER PAYABLES

12 Months Ended

Dec. 31, 2023

Subclassifications of assets, liabilities and equities [abstract]

TRADE AND OTHER PAYABLES

TRADE AND OTHER PAYABLES

Trade and other payables consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Trade accounts	54,351,734	46,355,352
Accrued liabilities payable (also refer to Note 17)	17,505,160	16,028,461
Financial liabilities	71,856,894	62,383,813

Allowance for warranties	6,439,324	2,752,398
Salaries and vacations payable	10,197,794	7,267,172
Deductions at source	1,942,437	1,384,223
Sales taxes payable	1,988,512	1,434,436
Non-financial liabilities	20,568,067	12,838,229
	92,424,961	75,222,042

XML

DEFERRED REVENUE AND OTHER DEFERRED LIABILITIES

12 Months Ended

Dec. 31, 2023

Subclassifications of assets, liabilities and equities [abstract]

DEFERRED REVENUE AND OTHER DEFERRED LIABILITIES

DEFERRED REVENUE AND OTHER DEFERRED LIABILITIES

Deferred revenue and other deferred liabilities consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Deferred revenue related to the U.S. Environmental Protection Agency ("EPA") Clean School Bus Program (Note 11.1)	16,293,067	—
Deferred liabilities related to the non-repayable financial contribution under Project Innovation Program for the Development of a Mobilizing Project (Note 11.2)	1,622,433	—
Other deferred liabilities	351,639	634,971
	18,267,139	634,971

11 - DEFERRED REVENUE AND OTHER DEFERRED LIABILITIES (CONTINUED)

11.1 U.S. Environmental Protection Agency (EPA) Clean School Bus Program (the "EPA Program")

In May 2022, the EPA announced the availability of $500 million under the first round of funding of the EPA Program, which amount was subsequently increased to $945 million. On April 25, 2023, the EPA announced an additional $400 million through the 2023 grant round under the EPA Program, and on September 28, 2023 the EPA announced an additional $500 million through the 2023 rebate round under the EPA Program. Lion all-electric school buses are eligible under the EPA Program.

Under the first funding round of the EPA Program in which Lion participated directly and indirectly through school districts, once the EPA has reviewed the payment request and confirmed that all required information was included, the EPA issued a rebate payment to the selectee such that payments made under the EPA Program were generally made before delivery of the applicable school bus.

11.2 Non-repayable financial contribution under Project Innovation Program for the Development of a Mobilizing Project

On March 20, 2023, the Company entered into a non-repayable financial contribution agreement under the Project Innovation Program for the Development of a Mobilizing Project. The agreement provides for financing of up to C$26,991,772 until December 31, 2026. On April 21, 2023, the Company received an advance of government assistance of $7,013,566 (C$9,446,572) from Investissement Quebec relating to future vehicle development project costs, of which $5,391,133 of qualifying related expenditures have been incurred as at December 31, 2023 and recorded as a reduction of intangible assets.

XML

LONG-TERM DEBT AND OTHER DEBTS

12 Months Ended

Dec. 31, 2023

Financial Instruments [Abstract]

LONG-TERM DEBT AND OTHER DEBTS

LONG-TERM DEBT AND OTHER DEBTS

	December 31, 2023	December 31, 2022
	$	$
Credit Agreement with Banking Syndicate, secured, maturing August 11, 2025 (Note 12.1)	70,000,000	71,916,716
Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.2)	23,573,074	10,381,986
Strategic Innovation Fund of the Government of Canada unsecured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.3)	15,124,280	6,189,814
Loans on research and development tax credits and subsidies receivable (Note 12.4)	22,682,595	22,150,030
Secured loans for the acquisition of rolling stock, maturing between December 2023 and August 2024 (Note 12.5)	10,361	34,802
Credit facility for the supplier payment program (Note 12.6)	4,363,520	—
Non-Convertible Debentures issued as part of 2023 Debenture Financing (Note 12.7, Note 12.7.1)	44,532,212	—
Convertible Debentures issued as part of 2023 Debenture Financing (Note 12.7, Note 12.7.2)	44,656,323	—
	224,942,365	110,673,348
Current portion of long-term debt and other debts	27,056,476	24,713
Long-term portion of long-term debt and other debts	197,885,889	110,648,635

12.1 Credit Agreement with Banking Syndicate

On August 11, 2021, Lion entered into a new credit agreement with a syndicate of lenders represented by National Bank of Canada, as administrative agent and collateral agent, and including Bank of Montreal and Federation des Caisses Desjardins du Quebec (the “Revolving Credit Agreement”). The Revolving Credit Agreement was amended on January 25, 2022 to increase the maximum principal amount that may become available from time to time under the revolving credit facility, subject to the borrowing base and compliance with the covenants contained under the Revolving Credit Agreement from $100,000,000 to $200,000,000. The Revolving Credit Agreement was further amended on July 19, 2023 ("the July 2023 Amendment") to permit the incurrence of the 2023 Debenture Financing (as defined in Note 12.7), extend the maturity of the Revolving Credit Agreement by one year to August 11, 2025, and provide for an availability block and the establishment of an interest reserve account. The credit facility under the Revolving Credit Agreement is available for use to finance working capital and for other general corporate purposes, and available to be drawn subject to a borrowing base comprised of eligible accounts (including insured or investment grade accounts) and eligible inventory, in each case, subject to customary eligibility and exclusionary criteria, advance rates and reserves.

12- LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.1 Credit Agreement with Banking Syndicate (continued)

The credit facility under the Revolving Credit Agreement currently bears interest at a floating rate by reference to the Canadian prime rate or pursuant to banker’s acceptance based on the Canadian Dollar Offered Rate ("CDOR") rate, if in Canadian dollars, or the US base rate or Term Secured Overnight Financing Rate ("SOFR"), if in US dollars, as applicable, plus the relevant applicable margin.

As at December 31, 2023, the weighted average all-in interest rate was 6.96%, including stamping fees and spread, divided as follows:

	Repricing date	Interest Rate
Loans in the amount of US$70,000,000	January 2024	6.94%- 6.98%, including spread of 1.50%

As at December 31, 2022, the weighted average all-in interest rate was 5.46%, including stamping fees and spread, divided as follows:

	Repricing date	Interest Rate
Loans in the amount of C$50,000,000	January 2023	3.67% - 4.71% plus 1.50% stamping fee
Loans in the amount of US$35,000,000	January 2023	4.42% - 5.80%, including spread of 1.50%

The Revolving Credit Agreement matures on August 11, 2025. The obligations under the Revolving Credit Agreement are secured by a first priority security interest, hypothec and lien on substantially all of Lion’s and certain of its subsidiaries’ movable property and assets (subject to certain exceptions and limitations). The Revolving Credit Agreement includes certain customary affirmative covenants, restrictions and negative covenants on Lion’s and its subsidiaries’ activities, subject to certain exceptions, baskets and thresholds. The Revolving Credit Agreement also provides for customary events of default, in each case, subject to customary grace periods, baskets and materiality thresholds. Finally, the Revolving Credit Agreement also requires Lion to maintain certain financial ratios and namely, an all times tangible net worth test and a springing fixed charge coverage ratio based on a minimum availability test which may, from time to time, impact the maximum amount available under the revolving credit facility. Further, in accordance with the July 2023 Amendment, the amount available under the revolving credit facility provided under the Revolving Credit Agreement is subject to an availability block of C$10,000,000 which, upon availability dropping below 30% and so long as no default then exist or would result therefrom, may become available and be drawn to fund an interest reserve account to be made subject to the control of the administrative agent and collateral agent under the Revolving Credit Agreement. Such interest reserve account amounts can be used to pay interest under the Non-Convertible Debentures if no default or event of default shall have occurred and be continuing or shall result therefrom.

12- LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.2 Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center

On July 1, 2021, the Company entered into an interest-bearing secured loan agreement with Investissement Quebec (the “IQ Loan”) relating to the construction of the battery manufacturing plant (the "Battery Plant") and innovation center (the "Innovation Center" and collectively with the Battery Plant, the "Lion Campus"). The IQ Loan provides for financing of up to C$50,000,000. On July 19, 2023, in connection with the 2023 Debenture Financing (as defined in Note 12.7), the IQ Loan was amended (the "IQ Loan 2023 Amendment") to allow holders of the Non-Convertible Debentures to benefit from a second-priority hypothec on substantially all movable/personal property of the Company, subject to certain exceptions in regards to excluded assets, and a first-rank hypothec on each of the immovable/real rights related to the Company’s Innovation Center facility located in Mirabel, Quebec and battery factory equipment financed by Investissement Quebec.

As part of the IQ Loan 2023 Amendment, the potential forgiveness of up to 30% of the IQ Loan subject to certain criteria tied to the Company and to the operations of the facilities, including the creation and maintenance of workforce and certain minimum spending related to R&D activities was replaced with certain financial penalties of up to C$3,000,000 and/or C$15,000,000 for the Company, pro-rated based on the proportion of criteria achieved and the borrowing amount relative to the C$50,000,000 maximum. Funds will be provided to the Company by way of reimbursement of a predetermined percentage of qualified expenditures incurred by the Company, such that the ultimate amount to be received by the Company from Investissement Quebec is dependent upon qualified expenditures being made by the Company in connection with the Lion Campus. The Company will conduct work, incur expenses and fund all costs from its own capital resources, and then submit claims to Investissement Quebec for reimbursement of a predetermined percentage of eligible qualified expenditures up to C$50,000,000. Disbursement by Investissement Quebec is conditional upon, among other things, the Company’s compliance with certain affirmative and negative covenants as set out in the IQ Loan, including covenants relating to Company’s creation and maintenance of workforce, operations and R&D activities.

The IQ Loan bears interest at a fixed rate of 4.41%, and will be repayable over a ten-year term, beginning in June 2027. The IQ Loan contains certain affirmative and negative covenants, including covenants relating to the Company’s workforce, operations and research and development activities and to the location of its head office in the Province of Quebec, as well as certain financial covenants. Following the IQ Loan 2023 Amendment, and the purchase of the equipment used in the battery factory of the Company, the obligations under the IQ Loan will be secured by a second-priority hypothec on the Company’s immovable (real) property rights related to the Innovation Center facility located on the Lion Campus and the equipment used in connection with the battery factory of the Company, and a hypothec on substantially all of the Company’s other movable property and assets (subject to certain exceptions and limitations in regards to excluded assets) ranking after those securing the Revolving Credit Agreement, the Non-Convertible Debentures and the Finalta-CDPQ Loan Agreement.

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.3 Strategic Innovation Fund of the Government of Canada unsecured loan related to Battery Plant and Innovation Center

On August 19, 2021, the Company entered into an unsecured non-interest bearing loan agreement with the Strategic Innovation Fund of the Government of Canada relating to the construction of the Lion Campus (the “SIF Loan”). The SIF Loan provides for financing of up to C$49,950,000, of which up to 30% is expected to be forgiven subject to the satisfaction of certain criteria tied to the Company and to the operations of the facilities, including the creation and maintenance of workforce and certain minimum spending related to research and development activities. The SIF Loan is repayable over a 15-year term beginning in April 2026. The SIF Loan contains certain affirmative and negative covenants, including relating to the Company’s workforce, operations and research and development activities and to the location of its head office. As at December 31, 2023, the SIF Loan has a nominal value of $21,982,156 (December 31, 2022: $9,358,929) and is discounted at the rate of 4.03%. As at December 31, 2023, the difference between the proceeds received and the fair value of the debt of $7,329,216 (December 31, 2022: $3,226,695) was accounted as a government grant and recorded as a reduction of property, plant and equipment in the amount of $3,849,847 (December 31, 2022: $3,063,476) and intangible assets in the amount of $310,311 (December 31, 2022: $163,219).

The Group has recognized the following related to the SIF Loan:

	December 31, 2023
	$
Beginning balance	6,189,814
Addition	8,903,080
Accretion expense	403,408
Foreign currency translation adjustment	(372,022)
Balance at December 31, 2023	15,124,280

12.4 Loans on research and development tax credits and subsidies receivable

Finalta-CDPQ Loan Agreement

On November 8, 2022, Lion entered into the Finalta-CDPQ Loan Agreement with Finalta, as lender and administrative agent, and Caisse de dépôt et placement du Québec (through one of its subsidiaries), as lender, to finance certain refundable tax credits and grants under government programs. The Finalta-CDPQ Loan Agreement provides for a loan facility of up to a principal amount of C$30,000,000 and bears interest at the rate of 10.95% per annum.

The obligations thereunder are secured by a first priority security interest, hypothec and lien in certain tax credits and government grants and a subordinate security interest, hypothec and lien in substantially all other movable property and assets. The Finalta-CDPQ Loan Agreement matures on November 6, 2024.

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.4 Loans on research and development tax credits and subsidies receivable (continued)

The Finalta-CDPQ Loan Agreement includes certain customary restrictions and negative covenants on Lion’s and its subsidiaries’ activities, subject to certain exceptions, baskets, and thresholds. The Finalta-CDPQ Loan Agreement also provides for customary events of default, in each case, subject to customary grace periods, baskets and materiality thresholds. Upon the occurrence and during the continuance of an event of default, the lenders would be entitled to demand the immediate repayment of all amounts owing to them under the Finalta-CDPQ Loan Agreement and/or the lenders may exercise their other rights, remedies and/or recourses. An aggregate amount of $22,233,751 (C$30,000,000) was advanced under the Finalta-CDPQ Loan Agreement on November 8, 2022 upon entering into the agreement and is outstanding as of the date hereof.

12.5 Secured loans for the acquisition of rolling stock

As of December 31, 2023, the Group had an outstanding secured loan, maturing in August 2024, related to the financing of the acquisition of rolling stock in the amount of $10,361. As of December 31, 2022, the Group had an outstanding secured loan, maturing from December 2023 to August 2024, related to the financing of the acquisition of rolling stock in the amount of $34,802. The loan has an interest rate of 2.35% (December 31, 2022: varying from 2.35% to 4.25%) and was secured by the asset financed having a net carrying value of $19,283 (December 31, 2022: $41,472).

12.6 Credit facility for the supplier payment program

On February 8, 2023, the Company entered into a revolving credit facility with National Bank of Canada (the "Credit Facility") to finance the Company’s accounts payable related to good or services purchased in the normal course of its operations. The Credit Facility is insured by Export Development Canada ("EDC") and provides for financing of up to $5,000,000. Each term loan tranche has a period of minimum 30 days and a maximum of 120 days. Each advance expires at the later of the expiry date of the invoice payable or the date indicated as the expiry date on the term note and accepted by the National Bank of Canada and cannot be prepaid in whole or in part. The Credit Facility is subject to an annual review and may be cancelled by National Bank of Canada at any time. The Credit Facility bears interest at a floating rate by reference to the SOFR for a comparable period, plus the relevant credit adjustment spread of 1.5%.

As at December 31, 2023, the credit facility for the supplier payment program was divided as follows:

	December 31, 2023
	$
Carrying amount
Presented in long-term debts and other debts of which suppliers has not received payments	—
Presented in long-term debts and other debts of which suppliers has received payments	4,363,520
Presented in long-term debts and other debts	4,363,520

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.6 Credit facility for the supplier payment program (continued)

	December 31, 2023
Range of payment due date
Liabilities that are part of the arrangements	119 - 120 days after invoice date
Comparable trade payables that are not part of the arrangements	Net 30 days

12.7 2023 Debenture Financing

On July 19, 2023, the Company closed concurrent financing transactions for aggregate gross proceeds for the Company of $142,920,845 (the “2023 Debenture Financing”).

The 2023 Debenture Financing consists of:

i.the issuance by way of private placement of senior unsecured convertible debentures (the “Convertible Debentures”) for gross proceeds of $74,005,000. The Group allocated proceeds in the amount of $30,342,059 to the fair value of the conversion options on the convertible debt instruments (refer to Note 13) and $43,662,941 to the Convertible Debentures (refer to Note 12.7.2).

ii.the issuance by way of private placement of senior secured non-convertible debentures (the “Non-Convertible Debentures”) and the issuance by way of private placement to the holders of Non-Convertible Debentures of a number of common share purchase warrants (the "July 2023 Warrants") for gross proceeds of $68,915,845 (C$90,900,000). The Group allocated proceeds in the amount of $24,767,843 to the fair value of the July 2023 Warrants (refer to Note 14.4) and $44,148,002 to the Non-Convertible debentures (refer to Note 12.7.1).

Transactions costs of $6,235,509 were incurred as part of the 2023 Debenture Financing. An amount of $2,405,659 was recognized as finance costs in the consolidated statements of earnings (loss) and comprehensive loss, $1,919,701 were netted against the proceeds received from the Convertible Debenture and $1,910,149 were netted against the proceeds received from the Non-Convertible Debenture.

12.7.1 Non-Convertible Debentures issued as part of 2023 Debenture Financing

The Non-Convertible Debentures with a principal amount of $68,915,845 (C$90,900,000) bear interest at the rate of 11% per annum and are payable in cash quarterly. The Non-Convertible Debentures will mature on July 19, 2028. The Company will have the right, at any time after January 19, 2024, upon 30-day notice, to redeem all or part of the principal amount thereunder, without penalty, at a price equal to one hundred per cent (100%) of the principal amount so redeemed, plus accrued and unpaid interest on the principal amount so repaid, accruing to the date of such redemption.

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.7.1 Non-Convertible Debentures issued as part of 2023 Debenture Financing (continued)

The Non-Convertible Debentures contain customary covenants for an instrument of its nature, including covenants relating to compliance with the financial ratios and negative covenants included in the Revolving Credit Agreement (as defined below) (provided (i) that any amendment to the financial ratios to which the lenders under the Revolving Credit Agreement consent will automatically be incorporated in the Non-Convertible Debentures, and (ii) that a default shall only occur under the Non-Convertible Debentures if a financial ratio default occurs and is continuing on the date that is fifteen business days following the delivery of the Company’s consolidated financial statements evidencing such event of default, and only if the lenders under the Revolving Credit Agreement have not waived or tolerated such event of default before the expiry of this fifteen business day period), in addition to certain covenants relating to maintaining the current headquarters, employees and facilities of the Company in the province of Québec.

The Non-Convertible Debentures contain customary events of default for an instrument of its nature, including, among other things, (i) the occurrence of an event of default under the Revolving Credit Agreement if such default results in the acceleration of the payments owed thereunder and (ii) the occurrence of an event of default under any other debt instrument of the Company with a principal amount exceeding US$15,000,000 if such default permits the acceleration of the payment of such debt. The Non-Convertible Debentures constitute senior secured obligations of the Company and will be secured by a hypothec and other liens on substantially all of the Company’s and certain of its subsidiaries’ movable/personal property as well as on the immovable/real rights related to the Company’s Innovation Center facility located in Mirabel, Québec and guaranteed by such subsidiaries.

The Non-Convertible Debentures were recorded at the estimated fair value of $42,237,853 using an effective interest rate of 22.54% per annum at the time of issuance, representing proceeds received from the issuance of the Non-Convertible Debenture of $44,148,002, less an amount of $1,910,149 incurred as a direct cost in the closing of the financing.

The Group has recognized the following related to the Non-Convertible debenture:

	December 31, 2023
	$
Beginning balance at July 19, 2023	42,237,853
Accretion expense	2,346,874
Foreign currency translation adjustment	(52,515)
Balance at December 31, 2023	44,532,212

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.7.2 Convertible Debentures issued as part of 2023 Debenture Financing

The Convertible Debentures, with a principal amount of $74,005,000 bear interest at the rate of 13% per annum, compounded monthly on the last day of each month. Prior to any accrual date, the Company has the right, at its discretion, to make an election to pay interest accrued on the principal for the applicable month in cash (in which case any interest so paid shall not be compounded).The Convertible Debentures will mature on July 19, 2028. The Convertible Debentures contain customary covenants and events of default for an instrument of its nature, including covenants relating to compliance with the financial ratios and negative covenants included in the Revolving Credit Agreement (as defined below) (provided (i) that any amendment to the financial ratios to which the lenders under the Revolving Credit Agreement consent will automatically be incorporated in the Convertible Debentures, and (ii) that a default shall only occur under the Convertible Debentures if a financial ratio default occurs and is continuing on the date that is fifteen business days following the delivery of the Company’s consolidated financial statements evidencing such event of default, and only if the lenders under the Revolving Credit Agreement have not waived or tolerated such event of default before the expiry of this fifteen business day period).

The Convertible Debentures also include certain covenants relating to maintaining the current headquarters, employees and facilities of the Company in the province of Québec and certain covenants limiting the incurrence of capital expenditures over the term of the Convertible Debentures, including limits on capital expenditures towards increasing production capacity at the Company’s manufacturing facilities beyond certain capacity as well as limits on the incurrence of maintenance and other capital expenditures.

The Convertible Debentures contain customary events of default for an instrument of its nature, including, among other things, the occurrence of an event of default under any other debt of the Company with a principal amount exceeding US$15,000,000 if such default results in the acceleration of the amounts owed thereunder.

Upon the occurrence of an event of default under the Convertible Debentures or, if later, at the expiry of any agreed-upon period for curing an event of default, as the case may be, holders of Convertible Debentures will have the right, upon giving written notice to the Company, to (i) require the Company to redeem all of their Convertible Debentures, or (ii) require that the principal amount of the Convertible Debentures, plus any accrued, compounded and unpaid interest, be converted into Common Shares, with the number of Common Shares issuable upon such conversion being subject to a grid-based “make-whole” adjustment as set forth below.

In connection with the Financing, the Company issued 258,155 Common Shares in the aggregate (the “Closing Fee Shares”) to the holders of Convertible Debentures, representing 0.75% of the principal amount of Convertible Debentures, based on the 5-day volume weighted average price (“VWAP”) of the Common Shares on the NYSE on July 14, 2023.

Pursuant to applicable Canadian securities laws, the Convertible Debentures (and any Common Shares issuable upon conversion) and the Closing Fee Shares are subject to a hold period expiring on November 20, 2023.

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.7.2 Convertible Debentures issued as part of 2023 Debenture Financing (continued)

The Convertible Debentures were recorded at the estimated fair value of $41,743,240 using an effective interest rate of 21.02% per annum at the time of issuance, representing the proceeds received from the issuance of the Convertible Debenture of $43,662,941, less an amount of $1,919,701 incurred as a direct cost in the closing of the financing.

The Group has recognized the following related to the Convertible debenture:

	December 31, 2023
	$
Beginning balance at July 19, 2023	41,743,240
Accretion expense	2,913,083
Balance at December 31, 2023	44,656,323

For the years ended December 31, 2023 and 2022, the Company was in compliance with all the covenants and financial ratios included in its long-term debt and other debts above CONVERSION OPTIONS ON CONVERTIBLE DEBT INSTRUMENTS

The Convertible Debentures are convertible at the holders’ option into Common Shares at a conversion price of US$2.58 per Common Share (reflecting a 20% premium over the 5-day VWAP for the Common Shares on the New York Stock Exchange (“NYSE”) calculated on July 14, 2023, the last trading day prior to announcement of the 2023 Debenture Financing). The conversion price is subject to customary adjustments, including for share splits or consolidation, share dividends, rights offerings, asset or other distributions and above market repurchases of shares (including above market exchanges or tender offers), in each case in compliance with the rules and requirements of the TSX relating to anti-dilution mechanisms.

Upon the occurrence of a “fundamental change”, including a change of control of the Company or the Company failing to comply with the covenants to maintain the current headquarters, employees and facilities of the Company in the province of Québec, holders of Convertible Debentures will either (i) convert all of their Convertible Debentures, with the number of Common Shares issuable upon such conversion being subject to a grid-based “make-whole” adjustment, or (ii) require the Company to repurchase for cash all of their Convertible Debentures at a repurchase price equal to 150% of the principal amount and the accrued, compounded and unpaid interest. In the event holders of Convertible Debentures elect to convert their Convertible Debentures upon a fundamental change or an event of default, the number of Common Shares issuable upon such conversion will be subject to a grid-based “make-whole” adjustment pursuant to which the conversion rate determining the number of Common Shares issuable will be increased by a number of additional Common Shares (the “Additional Shares”), (i) in the case of a conversion in connection with a fundamental change, based on a reference price on the date on which the fundamental change occurs or becomes effective, or (ii) in the case of a conversion following an event of default, based on a reference price on the date on which the holder exercises its conversion right.

13 - CONVERSION OPTIONS ON CONVERTIBLE DEBT INSTRUMENTS (CONTINUED)

The fair value of the conversion options on convertible debt instruments was determined using the Black-Scholes or the binomial option pricing model taking into account the following assumptions:

	December 31, 2023	July 19, 2023
Exercise price ($)	2.58	2.58
Share price ($)	1.77	2.12
Volatility (%)	57%	57%
Risk-free interest rate (%)	3.28%	3.76%
Expected warrant life (years)	4.54	5.00

The expected volatility was determined by reference to historical data of comparable share prices over the expected life of the conversion options on convertible debt instruments .

The Group has recognized the following conversion options on convertible debt instruments:

	December 31, 2023
	$
Beginning balance at July 19, 2023	30,342,059
Paid in kind interest	3,551,316
Fair value adjustment	(8,533,552)
Foreign currency translation adjustment	(325,750)
Ending balance	25,034,073

During the year ended December 31, 2023, transaction costs of $1,334,030 were recognized as finance costs in the consolidated statements of earnings (loss) and comprehensive loss.

XML

CONVERSION OPTION ON CONVERTIBLE DEBT INSTRUMENTS

12 Months Ended

Dec. 31, 2023

Borrowing costs [abstract]

CONVERSION OPTION ON CONVERTIBLE DEBT INSTRUMENTS

LONG-TERM DEBT AND OTHER DEBTS

	December 31, 2023	December 31, 2022
	$	$
Credit Agreement with Banking Syndicate, secured, maturing August 11, 2025 (Note 12.1)	70,000,000	71,916,716
Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.2)	23,573,074	10,381,986
Strategic Innovation Fund of the Government of Canada unsecured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.3)	15,124,280	6,189,814
Loans on research and development tax credits and subsidies receivable (Note 12.4)	22,682,595	22,150,030
Secured loans for the acquisition of rolling stock, maturing between December 2023 and August 2024 (Note 12.5)	10,361	34,802
Credit facility for the supplier payment program (Note 12.6)	4,363,520	—
Non-Convertible Debentures issued as part of 2023 Debenture Financing (Note 12.7, Note 12.7.1)	44,532,212	—
Convertible Debentures issued as part of 2023 Debenture Financing (Note 12.7, Note 12.7.2)	44,656,323	—
	224,942,365	110,673,348
Current portion of long-term debt and other debts	27,056,476	24,713
Long-term portion of long-term debt and other debts	197,885,889	110,648,635

12.1 Credit Agreement with Banking Syndicate

On August 11, 2021, Lion entered into a new credit agreement with a syndicate of lenders represented by National Bank of Canada, as administrative agent and collateral agent, and including Bank of Montreal and Federation des Caisses Desjardins du Quebec (the “Revolving Credit Agreement”). The Revolving Credit Agreement was amended on January 25, 2022 to increase the maximum principal amount that may become available from time to time under the revolving credit facility, subject to the borrowing base and compliance with the covenants contained under the Revolving Credit Agreement from $100,000,000 to $200,000,000. The Revolving Credit Agreement was further amended on July 19, 2023 ("the July 2023 Amendment") to permit the incurrence of the 2023 Debenture Financing (as defined in Note 12.7), extend the maturity of the Revolving Credit Agreement by one year to August 11, 2025, and provide for an availability block and the establishment of an interest reserve account. The credit facility under the Revolving Credit Agreement is available for use to finance working capital and for other general corporate purposes, and available to be drawn subject to a borrowing base comprised of eligible accounts (including insured or investment grade accounts) and eligible inventory, in each case, subject to customary eligibility and exclusionary criteria, advance rates and reserves.

12- LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.1 Credit Agreement with Banking Syndicate (continued)

The credit facility under the Revolving Credit Agreement currently bears interest at a floating rate by reference to the Canadian prime rate or pursuant to banker’s acceptance based on the Canadian Dollar Offered Rate ("CDOR") rate, if in Canadian dollars, or the US base rate or Term Secured Overnight Financing Rate ("SOFR"), if in US dollars, as applicable, plus the relevant applicable margin.

As at December 31, 2023, the weighted average all-in interest rate was 6.96%, including stamping fees and spread, divided as follows:

	Repricing date	Interest Rate
Loans in the amount of US$70,000,000	January 2024	6.94%- 6.98%, including spread of 1.50%

As at December 31, 2022, the weighted average all-in interest rate was 5.46%, including stamping fees and spread, divided as follows:

	Repricing date	Interest Rate
Loans in the amount of C$50,000,000	January 2023	3.67% - 4.71% plus 1.50% stamping fee
Loans in the amount of US$35,000,000	January 2023	4.42% - 5.80%, including spread of 1.50%

The Revolving Credit Agreement matures on August 11, 2025. The obligations under the Revolving Credit Agreement are secured by a first priority security interest, hypothec and lien on substantially all of Lion’s and certain of its subsidiaries’ movable property and assets (subject to certain exceptions and limitations). The Revolving Credit Agreement includes certain customary affirmative covenants, restrictions and negative covenants on Lion’s and its subsidiaries’ activities, subject to certain exceptions, baskets and thresholds. The Revolving Credit Agreement also provides for customary events of default, in each case, subject to customary grace periods, baskets and materiality thresholds. Finally, the Revolving Credit Agreement also requires Lion to maintain certain financial ratios and namely, an all times tangible net worth test and a springing fixed charge coverage ratio based on a minimum availability test which may, from time to time, impact the maximum amount available under the revolving credit facility. Further, in accordance with the July 2023 Amendment, the amount available under the revolving credit facility provided under the Revolving Credit Agreement is subject to an availability block of C$10,000,000 which, upon availability dropping below 30% and so long as no default then exist or would result therefrom, may become available and be drawn to fund an interest reserve account to be made subject to the control of the administrative agent and collateral agent under the Revolving Credit Agreement. Such interest reserve account amounts can be used to pay interest under the Non-Convertible Debentures if no default or event of default shall have occurred and be continuing or shall result therefrom.

12- LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.2 Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center

On July 1, 2021, the Company entered into an interest-bearing secured loan agreement with Investissement Quebec (the “IQ Loan”) relating to the construction of the battery manufacturing plant (the "Battery Plant") and innovation center (the "Innovation Center" and collectively with the Battery Plant, the "Lion Campus"). The IQ Loan provides for financing of up to C$50,000,000. On July 19, 2023, in connection with the 2023 Debenture Financing (as defined in Note 12.7), the IQ Loan was amended (the "IQ Loan 2023 Amendment") to allow holders of the Non-Convertible Debentures to benefit from a second-priority hypothec on substantially all movable/personal property of the Company, subject to certain exceptions in regards to excluded assets, and a first-rank hypothec on each of the immovable/real rights related to the Company’s Innovation Center facility located in Mirabel, Quebec and battery factory equipment financed by Investissement Quebec.

As part of the IQ Loan 2023 Amendment, the potential forgiveness of up to 30% of the IQ Loan subject to certain criteria tied to the Company and to the operations of the facilities, including the creation and maintenance of workforce and certain minimum spending related to R&D activities was replaced with certain financial penalties of up to C$3,000,000 and/or C$15,000,000 for the Company, pro-rated based on the proportion of criteria achieved and the borrowing amount relative to the C$50,000,000 maximum. Funds will be provided to the Company by way of reimbursement of a predetermined percentage of qualified expenditures incurred by the Company, such that the ultimate amount to be received by the Company from Investissement Quebec is dependent upon qualified expenditures being made by the Company in connection with the Lion Campus. The Company will conduct work, incur expenses and fund all costs from its own capital resources, and then submit claims to Investissement Quebec for reimbursement of a predetermined percentage of eligible qualified expenditures up to C$50,000,000. Disbursement by Investissement Quebec is conditional upon, among other things, the Company’s compliance with certain affirmative and negative covenants as set out in the IQ Loan, including covenants relating to Company’s creation and maintenance of workforce, operations and R&D activities.

The IQ Loan bears interest at a fixed rate of 4.41%, and will be repayable over a ten-year term, beginning in June 2027. The IQ Loan contains certain affirmative and negative covenants, including covenants relating to the Company’s workforce, operations and research and development activities and to the location of its head office in the Province of Quebec, as well as certain financial covenants. Following the IQ Loan 2023 Amendment, and the purchase of the equipment used in the battery factory of the Company, the obligations under the IQ Loan will be secured by a second-priority hypothec on the Company’s immovable (real) property rights related to the Innovation Center facility located on the Lion Campus and the equipment used in connection with the battery factory of the Company, and a hypothec on substantially all of the Company’s other movable property and assets (subject to certain exceptions and limitations in regards to excluded assets) ranking after those securing the Revolving Credit Agreement, the Non-Convertible Debentures and the Finalta-CDPQ Loan Agreement.

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.3 Strategic Innovation Fund of the Government of Canada unsecured loan related to Battery Plant and Innovation Center

On August 19, 2021, the Company entered into an unsecured non-interest bearing loan agreement with the Strategic Innovation Fund of the Government of Canada relating to the construction of the Lion Campus (the “SIF Loan”). The SIF Loan provides for financing of up to C$49,950,000, of which up to 30% is expected to be forgiven subject to the satisfaction of certain criteria tied to the Company and to the operations of the facilities, including the creation and maintenance of workforce and certain minimum spending related to research and development activities. The SIF Loan is repayable over a 15-year term beginning in April 2026. The SIF Loan contains certain affirmative and negative covenants, including relating to the Company’s workforce, operations and research and development activities and to the location of its head office. As at December 31, 2023, the SIF Loan has a nominal value of $21,982,156 (December 31, 2022: $9,358,929) and is discounted at the rate of 4.03%. As at December 31, 2023, the difference between the proceeds received and the fair value of the debt of $7,329,216 (December 31, 2022: $3,226,695) was accounted as a government grant and recorded as a reduction of property, plant and equipment in the amount of $3,849,847 (December 31, 2022: $3,063,476) and intangible assets in the amount of $310,311 (December 31, 2022: $163,219).

The Group has recognized the following related to the SIF Loan:

	December 31, 2023
	$
Beginning balance	6,189,814
Addition	8,903,080
Accretion expense	403,408
Foreign currency translation adjustment	(372,022)
Balance at December 31, 2023	15,124,280

12.4 Loans on research and development tax credits and subsidies receivable

Finalta-CDPQ Loan Agreement

On November 8, 2022, Lion entered into the Finalta-CDPQ Loan Agreement with Finalta, as lender and administrative agent, and Caisse de dépôt et placement du Québec (through one of its subsidiaries), as lender, to finance certain refundable tax credits and grants under government programs. The Finalta-CDPQ Loan Agreement provides for a loan facility of up to a principal amount of C$30,000,000 and bears interest at the rate of 10.95% per annum.

The obligations thereunder are secured by a first priority security interest, hypothec and lien in certain tax credits and government grants and a subordinate security interest, hypothec and lien in substantially all other movable property and assets. The Finalta-CDPQ Loan Agreement matures on November 6, 2024.

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.4 Loans on research and development tax credits and subsidies receivable (continued)

The Finalta-CDPQ Loan Agreement includes certain customary restrictions and negative covenants on Lion’s and its subsidiaries’ activities, subject to certain exceptions, baskets, and thresholds. The Finalta-CDPQ Loan Agreement also provides for customary events of default, in each case, subject to customary grace periods, baskets and materiality thresholds. Upon the occurrence and during the continuance of an event of default, the lenders would be entitled to demand the immediate repayment of all amounts owing to them under the Finalta-CDPQ Loan Agreement and/or the lenders may exercise their other rights, remedies and/or recourses. An aggregate amount of $22,233,751 (C$30,000,000) was advanced under the Finalta-CDPQ Loan Agreement on November 8, 2022 upon entering into the agreement and is outstanding as of the date hereof.

12.5 Secured loans for the acquisition of rolling stock

As of December 31, 2023, the Group had an outstanding secured loan, maturing in August 2024, related to the financing of the acquisition of rolling stock in the amount of $10,361. As of December 31, 2022, the Group had an outstanding secured loan, maturing from December 2023 to August 2024, related to the financing of the acquisition of rolling stock in the amount of $34,802. The loan has an interest rate of 2.35% (December 31, 2022: varying from 2.35% to 4.25%) and was secured by the asset financed having a net carrying value of $19,283 (December 31, 2022: $41,472).

12.6 Credit facility for the supplier payment program

On February 8, 2023, the Company entered into a revolving credit facility with National Bank of Canada (the "Credit Facility") to finance the Company’s accounts payable related to good or services purchased in the normal course of its operations. The Credit Facility is insured by Export Development Canada ("EDC") and provides for financing of up to $5,000,000. Each term loan tranche has a period of minimum 30 days and a maximum of 120 days. Each advance expires at the later of the expiry date of the invoice payable or the date indicated as the expiry date on the term note and accepted by the National Bank of Canada and cannot be prepaid in whole or in part. The Credit Facility is subject to an annual review and may be cancelled by National Bank of Canada at any time. The Credit Facility bears interest at a floating rate by reference to the SOFR for a comparable period, plus the relevant credit adjustment spread of 1.5%.

As at December 31, 2023, the credit facility for the supplier payment program was divided as follows:

	December 31, 2023
	$
Carrying amount
Presented in long-term debts and other debts of which suppliers has not received payments	—
Presented in long-term debts and other debts of which suppliers has received payments	4,363,520
Presented in long-term debts and other debts	4,363,520

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.6 Credit facility for the supplier payment program (continued)

	December 31, 2023
Range of payment due date
Liabilities that are part of the arrangements	119 - 120 days after invoice date
Comparable trade payables that are not part of the arrangements	Net 30 days

12.7 2023 Debenture Financing

On July 19, 2023, the Company closed concurrent financing transactions for aggregate gross proceeds for the Company of $142,920,845 (the “2023 Debenture Financing”).

The 2023 Debenture Financing consists of:

i.the issuance by way of private placement of senior unsecured convertible debentures (the “Convertible Debentures”) for gross proceeds of $74,005,000. The Group allocated proceeds in the amount of $30,342,059 to the fair value of the conversion options on the convertible debt instruments (refer to Note 13) and $43,662,941 to the Convertible Debentures (refer to Note 12.7.2).

ii.the issuance by way of private placement of senior secured non-convertible debentures (the “Non-Convertible Debentures”) and the issuance by way of private placement to the holders of Non-Convertible Debentures of a number of common share purchase warrants (the "July 2023 Warrants") for gross proceeds of $68,915,845 (C$90,900,000). The Group allocated proceeds in the amount of $24,767,843 to the fair value of the July 2023 Warrants (refer to Note 14.4) and $44,148,002 to the Non-Convertible debentures (refer to Note 12.7.1).

Transactions costs of $6,235,509 were incurred as part of the 2023 Debenture Financing. An amount of $2,405,659 was recognized as finance costs in the consolidated statements of earnings (loss) and comprehensive loss, $1,919,701 were netted against the proceeds received from the Convertible Debenture and $1,910,149 were netted against the proceeds received from the Non-Convertible Debenture.

12.7.1 Non-Convertible Debentures issued as part of 2023 Debenture Financing

The Non-Convertible Debentures with a principal amount of $68,915,845 (C$90,900,000) bear interest at the rate of 11% per annum and are payable in cash quarterly. The Non-Convertible Debentures will mature on July 19, 2028. The Company will have the right, at any time after January 19, 2024, upon 30-day notice, to redeem all or part of the principal amount thereunder, without penalty, at a price equal to one hundred per cent (100%) of the principal amount so redeemed, plus accrued and unpaid interest on the principal amount so repaid, accruing to the date of such redemption.

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.7.1 Non-Convertible Debentures issued as part of 2023 Debenture Financing (continued)

The Non-Convertible Debentures contain customary covenants for an instrument of its nature, including covenants relating to compliance with the financial ratios and negative covenants included in the Revolving Credit Agreement (as defined below) (provided (i) that any amendment to the financial ratios to which the lenders under the Revolving Credit Agreement consent will automatically be incorporated in the Non-Convertible Debentures, and (ii) that a default shall only occur under the Non-Convertible Debentures if a financial ratio default occurs and is continuing on the date that is fifteen business days following the delivery of the Company’s consolidated financial statements evidencing such event of default, and only if the lenders under the Revolving Credit Agreement have not waived or tolerated such event of default before the expiry of this fifteen business day period), in addition to certain covenants relating to maintaining the current headquarters, employees and facilities of the Company in the province of Québec.

The Non-Convertible Debentures contain customary events of default for an instrument of its nature, including, among other things, (i) the occurrence of an event of default under the Revolving Credit Agreement if such default results in the acceleration of the payments owed thereunder and (ii) the occurrence of an event of default under any other debt instrument of the Company with a principal amount exceeding US$15,000,000 if such default permits the acceleration of the payment of such debt. The Non-Convertible Debentures constitute senior secured obligations of the Company and will be secured by a hypothec and other liens on substantially all of the Company’s and certain of its subsidiaries’ movable/personal property as well as on the immovable/real rights related to the Company’s Innovation Center facility located in Mirabel, Québec and guaranteed by such subsidiaries.

The Non-Convertible Debentures were recorded at the estimated fair value of $42,237,853 using an effective interest rate of 22.54% per annum at the time of issuance, representing proceeds received from the issuance of the Non-Convertible Debenture of $44,148,002, less an amount of $1,910,149 incurred as a direct cost in the closing of the financing.

The Group has recognized the following related to the Non-Convertible debenture:

	December 31, 2023
	$
Beginning balance at July 19, 2023	42,237,853
Accretion expense	2,346,874
Foreign currency translation adjustment	(52,515)
Balance at December 31, 2023	44,532,212

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.7.2 Convertible Debentures issued as part of 2023 Debenture Financing

The Convertible Debentures, with a principal amount of $74,005,000 bear interest at the rate of 13% per annum, compounded monthly on the last day of each month. Prior to any accrual date, the Company has the right, at its discretion, to make an election to pay interest accrued on the principal for the applicable month in cash (in which case any interest so paid shall not be compounded).The Convertible Debentures will mature on July 19, 2028. The Convertible Debentures contain customary covenants and events of default for an instrument of its nature, including covenants relating to compliance with the financial ratios and negative covenants included in the Revolving Credit Agreement (as defined below) (provided (i) that any amendment to the financial ratios to which the lenders under the Revolving Credit Agreement consent will automatically be incorporated in the Convertible Debentures, and (ii) that a default shall only occur under the Convertible Debentures if a financial ratio default occurs and is continuing on the date that is fifteen business days following the delivery of the Company’s consolidated financial statements evidencing such event of default, and only if the lenders under the Revolving Credit Agreement have not waived or tolerated such event of default before the expiry of this fifteen business day period).

The Convertible Debentures also include certain covenants relating to maintaining the current headquarters, employees and facilities of the Company in the province of Québec and certain covenants limiting the incurrence of capital expenditures over the term of the Convertible Debentures, including limits on capital expenditures towards increasing production capacity at the Company’s manufacturing facilities beyond certain capacity as well as limits on the incurrence of maintenance and other capital expenditures.

The Convertible Debentures contain customary events of default for an instrument of its nature, including, among other things, the occurrence of an event of default under any other debt of the Company with a principal amount exceeding US$15,000,000 if such default results in the acceleration of the amounts owed thereunder.

Upon the occurrence of an event of default under the Convertible Debentures or, if later, at the expiry of any agreed-upon period for curing an event of default, as the case may be, holders of Convertible Debentures will have the right, upon giving written notice to the Company, to (i) require the Company to redeem all of their Convertible Debentures, or (ii) require that the principal amount of the Convertible Debentures, plus any accrued, compounded and unpaid interest, be converted into Common Shares, with the number of Common Shares issuable upon such conversion being subject to a grid-based “make-whole” adjustment as set forth below.

In connection with the Financing, the Company issued 258,155 Common Shares in the aggregate (the “Closing Fee Shares”) to the holders of Convertible Debentures, representing 0.75% of the principal amount of Convertible Debentures, based on the 5-day volume weighted average price (“VWAP”) of the Common Shares on the NYSE on July 14, 2023.

Pursuant to applicable Canadian securities laws, the Convertible Debentures (and any Common Shares issuable upon conversion) and the Closing Fee Shares are subject to a hold period expiring on November 20, 2023.

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.7.2 Convertible Debentures issued as part of 2023 Debenture Financing (continued)

The Convertible Debentures were recorded at the estimated fair value of $41,743,240 using an effective interest rate of 21.02% per annum at the time of issuance, representing the proceeds received from the issuance of the Convertible Debenture of $43,662,941, less an amount of $1,919,701 incurred as a direct cost in the closing of the financing.

The Group has recognized the following related to the Convertible debenture:

	December 31, 2023
	$
Beginning balance at July 19, 2023	41,743,240
Accretion expense	2,913,083
Balance at December 31, 2023	44,656,323

For the years ended December 31, 2023 and 2022, the Company was in compliance with all the covenants and financial ratios included in its long-term debt and other debts above CONVERSION OPTIONS ON CONVERTIBLE DEBT INSTRUMENTS

The Convertible Debentures are convertible at the holders’ option into Common Shares at a conversion price of US$2.58 per Common Share (reflecting a 20% premium over the 5-day VWAP for the Common Shares on the New York Stock Exchange (“NYSE”) calculated on July 14, 2023, the last trading day prior to announcement of the 2023 Debenture Financing). The conversion price is subject to customary adjustments, including for share splits or consolidation, share dividends, rights offerings, asset or other distributions and above market repurchases of shares (including above market exchanges or tender offers), in each case in compliance with the rules and requirements of the TSX relating to anti-dilution mechanisms.

Upon the occurrence of a “fundamental change”, including a change of control of the Company or the Company failing to comply with the covenants to maintain the current headquarters, employees and facilities of the Company in the province of Québec, holders of Convertible Debentures will either (i) convert all of their Convertible Debentures, with the number of Common Shares issuable upon such conversion being subject to a grid-based “make-whole” adjustment, or (ii) require the Company to repurchase for cash all of their Convertible Debentures at a repurchase price equal to 150% of the principal amount and the accrued, compounded and unpaid interest. In the event holders of Convertible Debentures elect to convert their Convertible Debentures upon a fundamental change or an event of default, the number of Common Shares issuable upon such conversion will be subject to a grid-based “make-whole” adjustment pursuant to which the conversion rate determining the number of Common Shares issuable will be increased by a number of additional Common Shares (the “Additional Shares”), (i) in the case of a conversion in connection with a fundamental change, based on a reference price on the date on which the fundamental change occurs or becomes effective, or (ii) in the case of a conversion following an event of default, based on a reference price on the date on which the holder exercises its conversion right.

13 - CONVERSION OPTIONS ON CONVERTIBLE DEBT INSTRUMENTS (CONTINUED)

The fair value of the conversion options on convertible debt instruments was determined using the Black-Scholes or the binomial option pricing model taking into account the following assumptions:

	December 31, 2023	July 19, 2023
Exercise price ($)	2.58	2.58
Share price ($)	1.77	2.12
Volatility (%)	57%	57%
Risk-free interest rate (%)	3.28%	3.76%
Expected warrant life (years)	4.54	5.00

The expected volatility was determined by reference to historical data of comparable share prices over the expected life of the conversion options on convertible debt instruments .

The Group has recognized the following conversion options on convertible debt instruments:

	December 31, 2023
	$
Beginning balance at July 19, 2023	30,342,059
Paid in kind interest	3,551,316
Fair value adjustment	(8,533,552)
Foreign currency translation adjustment	(325,750)
Ending balance	25,034,073

During the year ended December 31, 2023, transaction costs of $1,334,030 were recognized as finance costs in the consolidated statements of earnings (loss) and comprehensive loss.

XML

SHARE WARRANT OBLIGATIONS

12 Months Ended

Dec. 31, 2023

Subclassifications of assets, liabilities and equities [abstract]

SHARE WARRANT OBLIGATIONS

SHARE WARRANT OBLIGATIONS

14.1 Warrants issued to a customer

On July 1, 2020, in connection with the entering into of a master purchase agreement and a work order (collectively, the “MPA”) with Amazon Logistics, Inc., the Company issued warrants to purchase common shares of the Company (the “Warrant”) to Amazon.com NV Investment Holdings LLC (the “Warrantholder”) which vests, subject to the terms and conditions contained therein, based on the aggregate amount of spending by Amazon.com, Inc. and its affiliates on the Group’s products or services.

14 - SHARE WARRANT OBLIGATIONS (CONTINUED)

14.1 Warrants issued to a customer (continued)

At the election of the Warrantholder, any vested portion of the Warrant can be exercised either on a cash basis by the payment of the applicable exercise price or on a net issuance basis based on the in-the-money value of the Warrant. The exercise price of the Warrant corresponds to $5.66 per share. The Warrant grants the Warrantholder the right to acquire up to 35,350,003 common shares of the Company.

There was an initial vesting of a portion of the Warrant which was exercisable for 5,302,511 common shares as at December 31, 2023 and December 31, 2022. The remaining portion of the Warrant vests in three tranches based on the aggregate amount of spending by Amazon.com, Inc. and its affiliates on Group products or services.

The Warrant has a term of 8 years. Full vesting of the Warrant requires spending of at least $1.2 billion on Group products or services over the term of the Warrant, subject to accelerated vesting upon the occurrence of certain events, including a change of control of the Group or a termination of the MPA for cause.

The fair value of the Warrant was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	December 31, 2023	December 31, 2022
Exercise price ($)	5.66	5.66
Share price ($)	1.77	2.24
Volatility (%)	57%	43%
Risk-free interest rate (%)	3.30%	3.38%
Expected warrant life (years)	4.50	5.50

The Group has recognized the following contract asset and share warrant obligation:

	December 31, 2023	December 31, 2022
	$	$
Contract asset
Beginning Balance	13,211,006	14,113,415
Foreign currency translation adjustment	317,640	(902,409)
Ending Balance	13,528,646	13,211,006

14 - SHARE WARRANT OBLIGATIONS (CONTINUED)

14.1 Warrants issued to a customer (continued)

Share warrant obligation
Beginning Balance	2,172,269	30,871,444
Fair value adjustment	(262,569)	(28,281,579)
Foreign currency translation adjustment	(11,909)	(417,596)
Ending Balance	1,897,791	2,172,269

14.2 Warrants issued as part of the business combination transaction

Upon completion of the business combination transaction on May 6, 2021, each outstanding warrant to purchase shares of Northern Genesis Acquisition Corp. (“NGA”)’s common stock was converted into a warrant to acquire one common share of the Company at a price of $11.50 per share. A total of 27,111,741 NGA warrants were converted into 27,111,741 Business Combination Warrants, 15,972,672 of which are publicly traded and 11,139,069 of which are private. As at December 31, 2023 and December 31, 2022 , there were 27,111,323 Business Combination Warrants outstanding of which 15,972,364 are publicly traded and 11,138,959 are private.

Each Business Combination Warrant entitles the holder to acquire one common share at an exercise price of $11.50 per share until May 6, 2026, subject to adjustment in certain customary events. The public Business Combination Warrants may be redeemed by the Company, in whole at a price of $0.01 per public Business Combination Warrant, provided that the last reported sales price of the Company’s common shares equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period commencing once the public Business Combination Warrants become exercisable and ending on the third trading day prior to the date on which the Company gives proper notice of such redemption.

The fair value of the public warrants was determined using their market trading price as follows:

	December 31, 2023	December 31, 2022
Warrant price ($)	0.05	0.45

Each private Business Combination Warrant may not be redeemed by the Company so long as they are held by Northern Genesis Sponsor LLC or any of its permitted transferees. Once transferred to any person that is not Northern Genesis Sponsor LLC or any of its permitted transferees, a private Business Combination Warrant becomes treated as a public Business Combination Warrant.

14 - SHARE WARRANT OBLIGATIONS (CONTINUED)

14.2 Warrants issued as part of the business combination transaction (continued)

The fair value of the private warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	December 31, 2023	December 31, 2022
Exercise price ($)	11.50	11.50
Share price ($)	1.77	2.24
Volatility (%)	53%	50%
Risk-free interest rate (%)	3.81%	3.68%
Expected warrant life (years)	2.33	3.33

The expected volatility was determined by reference to historical data of comparable share prices over the expected life of the warrants.

The Group has recognized the following warrant obligations:

	Public warrants	Private warrants	Total
	$	$	$
Beginning balance at January 1, 2023	7,075,767	914,881	7,990,648
Fair value adjustment	(6,173,511)	(727,873)	(6,901,384)
Foreign currency translation adjustment	3,481	(9,825)	(6,344)
Balance at December 31, 2023	905,737	177,183	1,082,920

	Public warrants	Private warrants	Total
	$	$	$
Beginning balance at January 1, 2022	42,961,675	32,392,815	75,354,490
Fair value adjustment	(35,011,131)	(31,200,119)	(66,211,250)
Exercised	(348)	—	(348)
Foreign currency translation adjustment	(874,429)	(277,815)	(1,152,244)
Balance at December 31, 2022	7,075,767	914,881	7,990,648

14 - SHARE WARRANT OBLIGATIONS (CONTINUED)

14.3 Warrants issued as part of the December 2022 Offering

On December 16, 2022, the Company closed the "December 2022 Offering", pursuant to which the Company issued of 19,685,040 "2022 Warrants". On January 17, 2023, the Company announced the exercise and closing of the underwriters’ over-allotment option with respect to the offering of units closed in December 2022, pursuant to which the Company issued 2,952,755 2022 Warrants. Each whole 2022 Warrant entitles the holder to purchase one common share for a price of $2.80 per share for a period of five years ending on December 15, 2027, subject to adjustment in certain customary events.

The over-allotment option aggregate gross proceeds of $2,907,226 were allocated to the warrants, representing the fair value of the warrants on the day of issuance. Issuance fees of $247,586 were recognized in administrative expenses in the consolidated statements of earnings (loss) and comprehensive loss and related to legal and other professional costs ($58,916) and net commissions paid to the agents ($188,670). As at December 31, 2023 and December 31, 2022, all warrants are outstanding.

The fair value of the warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	January 17, 2023	December 16, 2022
Exercise price ($)	2.80	2.80
Share price ($)	2.49	2.54
Volatility (%)	45%	44%
Risk-free interest rate (%)	2.95%	3.07%
Expected warrant life (years)	5.00	5.00

The expected volatility was determined by reference to historical data of comparable share prices over the expected life of the warrants.

The fair value of the 2022 Warrants was determined using their market trading price as follows:

	December 31, 2023	December 31, 2022
Warrant price ($)	0.41	0.70

14 - SHARE WARRANT OBLIGATIONS (CONTINUED)

14.3 Warrants issued as part of the December 2022 Offering (continued)

The Group has recognized the following warrant obligation:

	December 31, 2023	December 31, 2022
	$	$
Beginning balance	13,080,646	19,913,196
Additions	2,907,226	—
Fair value adjustment	(7,378,042)	(6,975,357)
Foreign currency translation adjustment	(51,764)	142,807
Ending balance	8,558,066	13,080,646

14.4 July 2023 Warrants issued as part of 2023 Debenture Financing

In connection with the 2023 Debenture Financing, the Company issued Warrants to holders of Non-Convertible Debentures (refer to Note 12.7) entitling them to purchase, at any time after six (6) months following the issuance

thereof until July 19, 2028, 22,500,000 Common Shares in the aggregate at an exercise price of C$2.81 per Common Share (representing the 5-day VWAP of the Common Shares on the Toronto Stock Exchange ("TSX") as of July 14, 2023). The exercise price of the Warrants is subject to customary adjustments, including for share splits or consolidation, share dividends, rights offerings, asset or other distributions and above market repurchases of shares (including above market exchanges or tender offers), in each case in compliance with the rules and requirements of the TSX relating to anti-dilution mechanisms.

Upon a change of control of the Company, the Company will have the right to redeem and cancel all of the outstanding Warrants for a cash purchase price based on the remaining term of the Warrants and the value of the consideration offered or payable per Common Share in the transaction constituting the change of control. In addition, upon a change of control of the Company resulting in (or which is reasonably anticipated to result in) the Common Shares ceasing to be listed on a stock exchange, the holders of Warrants may require the Company to redeem and cancel all Warrants at the Redemption Price subject to and on the date such transaction resulting in a change of control is completed. Pursuant to applicable Canadian securities laws, the Warrants (and any Common Shares issuable upon exercise) will be subject to a hold period expiring on November 20, 2023.

14 - SHARE WARRANT OBLIGATIONS (CONTINUED)

14.4 July 2023 Warrants issued as part of 2023 Debenture Financing (continued)

The fair value of the warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	December 31, 2023	July 19, 2023
Exercise price (C$)	2.81	2.81
Share price (C$)	2.36	2.78
Volatility (%)	57%	57%
Risk-free interest rate (%)	3.28%	3.76%
Expected warrant life (years)	4.54	5.00

The expected volatility was determined by reference to historical data of comparable share prices over the expected life of the warrants. The Group has recognized the following warrant obligation:

	December 31, 2023
	$
Beginning balance at July 19, 2023	24,767,843
Fair value adjustment	(6,421,117)
Foreign currency translation adjustment	(303,300)
Ending balance	18,043,426

During the year ended December 31, 2023, transaction costs of $1,071,629 were recognized as finance costs in the consolidated statements of earnings (loss) and comprehensive loss.

XML

EMPLOYEE BENEFITS EXPENSE

12 Months Ended

Dec. 31, 2023

Employee Benefits [Abstract]

EMPLOYEE BENEFITS EXPENSE

EMPLOYEE BENEFITS EXPENSE

The following table summarizes the employee benefits expense recorded and included in administrative and selling expenses during the year ended December 31, 2023, and 2022:

	2023	2022
	$	$
Wages and salaries	56,381,455	35,576,358
Share-based compensation (Note 16)	5,203,521	12,362,070
	61,584,976	47,938,428

The compensation of key management personnel is further disclosed in Note 22.

XML

SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangements [Abstract]

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

16.1 Stock options

The Group has a stock option plan (the "Plan") for its key employees, officers and consultants under which it has authorized the grant of options for the purchase of its common shares for a maximum of 10% of outstanding common shares.

The Board of Directors determines the stock option term, which shall be no more than 10 years. Under the terms of the plan, the exercise price of each option cannot be below the fair value of the common shares on the grant date. Unless otherwise determined by the Board of Directors, the options granted under the plan vest within four years, beginning on the first anniversary of the date of granting.

The following table summarizes the outstanding options as at December 31, 2023 and 2022 and changes during the years then ended:

	2023		2022
	Number of stock options	Weighted average exercise price	Number of stock options	Weighted average exercise price
		C$		C$
Outstanding, beginning of year	9,547,185	2.11	9,072,149	1.82
Granted	1,921,151	2.78	558,697	6.94
Exercised(a)	—	—	(45,121)	0.93
Forfeited	(708,753)	10.79	(38,540)	6.91
Outstanding, end of year	10,759,583	1.65	9,547,185	2.11
Exercisable, end of year	8,746,808	1.19	7,615,432	1.25

a. Stock options exercised during the year ended December 31, 2022 had a weighted average share price of C$3.42 at the date of exercise.

16 - SHARE-BASED COMPENSATION (CONTINUED)

16.1 Stock options (continued)

The following table summarizes the information relating to stock options outstanding:

	As at December 31, 2023
	Number of stock options	Remaining contractual life (years)	Number of stock options exercisable
Exercise price
C$0.93 (issued in 2018)	4,747,277	3.96	4,747,277
C$0.93 (issued in 2019)	3,664,907	5.76	3,664,907
C$6.90 (issued in 2020)	289,023	6.71	216,767
C$15.45 (issued in 2021)	26,389	7.65	13,195
C$23.02 (issued in 2021)	10,013	7.49	5,007
C$13.29 (issued in 2021)	14,600	7.94	7,300
C$6.92 (issued in 2022)	304,335	8.36	76,084
C$7.05 (issued in 2022)	65,083	8.38	16,271
C$2.75 (issued in 2023)	1,260,598	9.22	—
C$2.89 (issued in 2023)	377,358	9.70	—
	10,759,583		8,746,808

	As at December 31, 2022
	Number of stock options	Remaining contractual life (years)	Number of stock options exercisable
Exercise price
C$0.93 (issued in 2018)	4,747,277	4.96	4,747,277
C$0.93 (issued in 2019)	3,664,907	6.76	2,649,930
C$6.90 (issued in 2020)	289,023	7.71	144,512
C$15.45 (issued in 2021)	26,389	8.65	6,597
C$23.02 (issued in 2021)	253,865	8.49	63,466
C$13.29 (issued in 2021)	14,600	8.94	3,650
C$6.92 (issued in 2022)	486,041	9.36	—
C$7.05 (issued in 2022)	65,083	9.38	—
	9,547,185		7,615,432

16 - SHARE-BASED COMPENSATION (CONTINUED)

16.1 Stock options (continued)

For share options granted during the year ended December 31, 2023, the weighted average fair value of those options at the measurement date is $1,755,912 (December 31, 2022: $1,428,004). Stock options granted during the year ended December 31, 2023 had a weighted average fair value price of $0.91 at the date of the grant.

The following table summarizes the weighted average values for the assumptions used in the Black-Scholes option pricing model for the stock option grants during the years ended December 31, 2023 and 2022:

	2023	2022
Expected dividends per share (C$)	—	—
Exercise price (C$)	2.78	6.94
Share price (C$)	2.78	6.94
Expected Volatility (%)	40%	40%
Risk-free interest rate (%)	3.19%	2.78%
Expected option life (years)	6.25	7.50

Compensation expense related to the share-based compensation was recognized in the consolidated statements of earnings (loss) and comprehensive loss as follows:

	2023	2022
	$	$
Administrative expenses	3,414,925	8,296,836
Selling expenses	240,720	2,765,645
	3,655,645	11,062,481

The expected volatility was determined by reference to historical data of comparable companies share prices over the expected life of the stock options.

16.2 Restricted share units

In June 2021, the Company approved a restricted share unit (“RSU”) plan for officers and other key employees of the Group. A RSU represents the right of an individual to receive one common share of the Company on the vesting date without any monetary consideration being paid to the Company. All RSUs vest within a maximum three-year vesting period and they can be settled in cash based on the Company’s share price on the vesting date, or through the delivery of common shares issued from treasury or purchased on the open market, at the Company’s option. RSUs are expected to be settled in common shares purchased on the open market.

Compensation cost for RSUs is measured at the fair value of the underlying common share at the grant date and is expensed over the award’s vesting period.

16 - SHARE-BASED COMPENSATION (CONTINUED)

16.2 Restricted share units (continued)

	2023		2022
	Number of restricted share units	Weighted average exercise price	Number of restricted share units	Weighted average exercise price
		C$		C$
Outstanding, beginning of year	297,658	8.35	36,247	18.59
Granted	811,458	2.75	276,584	6.93
Forfeited	(211,876)	5.39	(15,173)	6.92
Outstanding, end of year	897,240	3.99	297,658	8.35
Vested, end of year	—	—	—	—

All RSUs have an average remaining contractual life of approximately 1.8 years as at December 31, 2023 (December 31, 2022 : 1.9 years).

Compensation expense related to the RSUs was recognized in the consolidated statements of earnings (loss) and comprehensive loss as follows:

	2023	2022
	$	$
Administrative expenses	680,938	399,812
Selling expenses	(49,443)	123,063
	631,495	522,875

The corresponding increase is recorded in contributed surplus. When the underlying shares are issued, the amounts previously credited to contributed surplus are transferred to share capital. The Group elects to account for forfeitures as they occur and reverse compensation costs previously recognized in the period the award is forfeited.

16.3 Deferred share units

In June 2021, the Company approved a deferred share unit (“DSU”) plan for officers and other key employees of the Group. A DSU represents the right of an individual to receive one common share of the Company on the vesting date without any monetary consideration being paid to the Company. All DSUs vest on the date of the grant, except otherwise determined by the Board of Directors, and they can be settled in cash based on the Company’s share price on the vesting date, through the delivery of common shares issued from treasury or purchased on the open market, at the Company’s option or a combination of both.

16 - SHARE-BASED COMPENSATION (CONTINUED)

16.3 Deferred share units (continued)

Compensation cost for DSUs is measured at the fair value of the underlying common share at the grant date and is expensed over the award’s vesting period.

	2023		2022
	Number of deferred share units	Weighted average exercise price	Number of deferred share units	Weighted average exercise price
		C$		C$
Outstanding, beginning of year	301,091	4.23	18,755	14.07
Granted	478,884	2.58	284,362	3.65
Settled	—	—	(2,026)	14.07
Outstanding, end of year	779,975	3.21	301,091	4.23
Vested, end of year	779,975	3.21	301,091	4.23

Compensation expense related to the DSUs was recognized in administrative expenses in the statements of consolidated earnings (loss) and comprehensive loss as follows with a corresponding increase in contributed surplus:

	2023	2022
	$	$
Administrative expenses	916,381	776,714

When the underlying shares are issued, the amounts previously credited to contributed surplus are transferred to share capital.

XML

RESTRUCTURING COSTS

12 Months Ended

Dec. 31, 2023

Subclassifications of assets, liabilities and equities [abstract]

RESTRUCTURING COSTS

RESTRUCTURING COSTS

In November 2023, the Company announced a restructuring consisting of a workforce reduction aimed at rationalizing the Company’s cost structure and improving its ability to reach its profitability objectives. The restructuring is completed as at December 31, 2023.

During the year ended December 31, 2023, the Company incurred $1,426,487 of expenses in connection with the restructuring, related to employee transition, severance payments and employee benefits:

The following table summarizes the activities related to the restructuring for the year ended December 31, 2023:

	2023
	$
Expenses	1,426,487
Payments	(714,865)
Liability as of December 31, 2023	711,622

The liability as of December 31, 2023 for restructuring costs is included in trade and other payables on the consolidated statements of financial position, as it is expected to be paid within 12 months.

XML

FINANCE COSTS

12 Months Ended

Dec. 31, 2023

Finance Costs [Abstract]

FINANCE COSTS

FINANCE COSTS

Finance costs for the reporting years consist of the following:

	2023	2022
	$	$
Interest on long-term debt and other debtsa	7,097,927	280,491
Interest on lease liabilitiesa	2,141,641	284,631
Accretion expense	5,663,365	—
Accretion and revaluation expense on balance of purchase price payable related to the acquisition of the dealership rights	—	82,850
Gain on derecognition of the balance of purchase price payable related to the acquisition of the dealership rightsb	—	(2,130,583)
Financing cost	3,752,505	2,489,123
Other	(762,994)	(51,090)
	17,892,444	955,422

a.Net of capitalized borrowing costs of $6,535,601 (Notes 6 and 8) for the year ended December 31, 2023 (December 31, 2022: $5,093,206), $4,021,208 included in interest on long-term debt and other debts and $2,514,393 in interest on lease liability, respectively (December 31, 2022: $2,214,906 included in interest on long-term debt and other debts,$2,878,300 in interest on lease liability, respectively). The weighted average interest rate used to capitalize the borrowing costs is 7.35% in 2023 (2022: 5.68%).

b.On May 7, 2022, the agreement with a private company relating to the previous acquisition of dealership rights in certain territories in the United States matured and the related financial liability was derecognized. The carrying amount of $2,130,583 was recognized as a gain under finance costs in the consolidated statements of earnings (loss) and comprehensive loss.

XML

INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Taxes [Abstract]

INCOME TAXES

INCOME TAXES

The reconciliation of the effective tax rate is as follows:

	2023	2022
	$	$
Net earnings (loss) before income taxes	(103,766,137)	17,775,766
Combined statutory income tax rate in Canada	26.50%	26.50%
Expected income tax expense (recovery)	(27,498,026)	4,710,578
Non-deductible share-based employee remuneration	1,386,071	3,275,949
Change in fair value of share warrant obligations	(7,097,660)	(26,889,069)
Non-deductible accretion expense	1,525,199	16,529
Change in unrecognized deferred tax assets	31,505,502	18,596,751
Impact of US tax rate applicable to the subsidiary	173,834	173,323
Non-deductible expenses	62,703	114,518
Other	(57,623)	1,421
	—	—

The components of the deferred income tax assets and (liabilities) are as follows:

	December 31, 2023	December 31, 2022
	$	$
Property, plant and equipment	2,138,000	(16,438,000)
Right-of-use assets	(24,258,000)	(16,202,000)
Intangible assets	(46,162,000)	(37,151,000)
Lease liabilities	23,681,000	16,051,000
Non-capital losses carry-forward	36,632,000	50,100,000
Deferred financing cost	(203,000)	(282,000)
Financing fees and other	8,172,000	3,922,000
	—	—

INCOME TAXES (CONTINUED)

The Group has accumulated unrecognized deductible temporary differences, unused tax losses and unused research and development expenditures as follows:

	December 31, 2023	December 31, 2022
	$	$
Deductible temporary differences	5,486,000	6,059,000
Non-capital losses carry-forward	152,505,000	73,623,000
Research and development expenditures carry-forward	104,680,000	65,710,000
	262,671,000	145,392,000

The Group has accumulated unrecognized unused tax credits as follows:

	December 31, 2023	December 31, 2022
	$	$
Canadian Federal investment tax credits	16,000,000	10,307,000
Québec investment and innovation tax credit	437,000	64,000
	16,437,000	10,371,000

As at December 31, 2023, the Group has unused research and development expenditures of $104,680,000 (December 31, 2022: $65,710,000) and non-capital losses carry-forward of $152,505,000 (December 31, 2022: $73,623,000) for which deferred tax assets have not been recognized. Of these amounts, $104,680,000 (December 31, 2022: $65,710,000) of research and development expenditures as well as $111,132,000 (December 31, 2022: $47,545,000) of non-capital losses carried forward are for the Group’s Canadian subsidiaries, and $41,373,000 (December 31, 2022: $26,077,000) of tax losses are for its subsidiaries in the United States. Research and development expenditures can be carried forward indefinitely, and the Group’s non-capital loss carry-forwards for its Canadian subsidiaries expire between 2032 and 2043. The Group’s tax loss carry-forwards for its subsidiaries in the United States can be carried forward indefinitely.

In addition, the Group has access to federal non-refundable investment tax credits for which the benefits have not been recognized in the amount of $16,000,000 (December 31, 2022: $10,307,000) expiring between 2036 and 2043.

XML

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2023

Disclosure Of Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

	2023	2022
	$	$
Net earnings (loss)	(103,766,137)	17,775,766
Basic weighted average number of common shares outstanding	224,311,227	193,113,983
Basic earnings (loss) per share	(0.46)	0.09
Basic weighted average number of common shares outstanding	224,311,227	193,113,983
Plus dilutive impact of stock options, RSUs, DSUs, and warrants	—	7,477,680
Diluted weighted average number of common shares outstanding	224,311,227	200,591,663
Diluted earnings (loss) per share	(0.46)	0.09

Excluded from the above calculations for the years ended December 31, 2023 and 2022 are all outstanding stock options, share warrant obligations, convertible debentures, RSUs, and DSUs, which are deemed to be anti-dilutive.

XML

SUPPLEMENTAL CASH FLOW DISCLOSURE

12 Months Ended

Dec. 31, 2023

Statement of cash flows [abstract]

SUPPLEMENTAL CASH FLOW DISCLOSURE

SUPPLEMENTAL CASH FLOW DISCLOSURE

The depreciation and amortization is detailed as follows:

	2023	2022
	$	$
Depreciation – property, plant and equipment	10,820,442	5,038,092
Depreciation – right-of-use assets	8,037,341	3,454,353
Amortization – intangible assets	7,216,789	3,000,028
	26,074,572	11,492,473

See Note 7 for additional information related to the depreciation of right-of-use assets.

The net change in non-cash working capital is detailed as follows:

	2023	2022
	$	$
Inventories	(90,063,714)	(61,739,634)
Accounts receivable	(13,351,335)	(24,369,277)
Prepaid expenses	3,818,496	(940,816)
Trade and other payables (1)	24,056,908	27,926,974
Deferred revenue and other deferred liabilities	17,564,993	155,253
	(57,974,652)	(58,967,500)

21 - SUPPLEMENTAL CASH FLOW DISCLOSURE (CONTINUED)

(1)The net change in trade and other payables excludes trade and other payables as at December 31, 2023 related to the following non-cash working capital items: $634,331 related to the additions of intangible assets and $11,750,398 related to the acquisition of property, plant and equipment and includes trade and other payables as at December 31, 2022 related to the additions of intangible assets of $4,757,926 and related to the acquisition of property, plant and equipment of $16,229,912.

There were $554,310 outstanding payables related to the additions of intangible assets and $8,797,575 related to the acquisition of property, plant and equipment as at December 31, 2021.

The changes in the Group’s liabilities arising from financing activities can be classified as follows:

	Share warrant obligations	Conversion options on convertible debt instruments	Long-term debt and other debts	Lease liabilities	Total
Balance at January 1, 2023	23,243,563	—	110,673,348	63,520,215	197,437,126
Cash flows :
Repayment	—	—	(148,305,458)	(6,512,231)	(154,817,689)
Proceeds	27,675,069	30,342,059	259,498,434	—	317,515,562
Finance costs attributable to 2023 Debenture financing	—	—	(3,829,850)	—	(3,829,850)
Non-cash :
Accretion expense	—	—	5,663,365	—	5,663,365
Non-monetary additions (net of modification)	—	—	—	34,117,202	34,117,202
Change in fair value of share warrant obligations	(20,963,112)	—	—	—	(20,963,112)
Change in fair value of conversion options on convertible debt instruments and interest paid in kind	—	(4,982,236)	—	—	(4,982,236)
Unrealized foreign exchange gain	—	—	(2,568,295)	—	(2,568,295)
Foreign currency translation adjustment	(373,317)	(325,750)	3,810,821	831,400	3,943,154
Balance at December 31, 2023	29,582,203	25,034,073	224,942,365	91,956,586	371,515,227

21 - SUPPLEMENTAL CASH FLOW DISCLOSURE (CONTINUED)

	Share warrant obligations	Long-term debt and other debts	Lease liabilities	Total
Balance at January 1, 2022	106,225,934	13,077,670	62,209,317	181,512,921
Cash flows :
Repayment	—	(10,348,894)	(4,977,183)	(15,326,077)
Proceeds	19,913,196	111,576,513	—	131,489,709
Non-cash :
Accretion expense	—	82,850	—	82,850
Non-monetary additions (net of modification)	—	—	6,961,794	6,961,794
Gain on derecognition of dealership rights	—	(2,130,583)	—	(2,130,583)
Change in fair value of share warrant obligations	(101,468,186)	—	—	(101,468,186)
Contributed surplus	(3,798)	—	—	(3,798)
Unrealized foreign exchange loss	—	516,401	—	516,401
Foreign currency translation adjustment	(1,423,583)	(2,100,609)	(673,713)	(4,197,905)
Balance at December 31, 2022	23,243,563	110,673,348	63,520,215	197,437,126

XML

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2023

Disclosure Of Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Transactions with key management personnel

Key management personnel includes those individuals that have authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, and is comprised of the members of the executive management team and the Board of Directors. Key management personnel remuneration includes the following expenses:

	2023	2022
	$	$
Salaries including bonuses	3,633,112	3,368,388
Share-based payments	3,737,017	8,878,755
Total remuneration	7,370,129	12,247,143

XML

SHARE CAPITAL

12 Months Ended

Dec. 31, 2023

Share Capital [Abstract]

SHARE CAPITAL

SHARE CAPITAL

23.1 Authorized

The authorized share capital is as follows:

–Unlimited number of common shares, bearing one voting right per share, participating, without par value.

–Unlimited number of preferred shares, issuable in one or more series.

23.2 Issued

All issued and outstanding common shares are fully paid.

23.3 ATM Program

On June 17, 2022, the Company established an "at-the-market" equity program (the "ATM Program") that allowed the Company to issue and sell, from time to time through a syndicate of agents, newly issued common shares of the Company, for an aggregate offering amount of up to $125,000,000 (or the Canadian dollar equivalent). On July 19, 2023, the Company terminated its ATM Program which was set to expire in July 2024.

During the year ended December 31, 2023, the Company issued 4,894,060 common shares pursuant to the ATM Program (December 31, 2022: $8,346,789) at an average price of $1.93 per share (December 31, 2022: $3.74) for aggregate gross proceeds of $9,430,894, and for aggregate net proceeds of $8,580,405 after the deduction of equity issuance fees of $850,489 (December 31, 2022: net proceeds of $29,351,308). Equity issuance fees for the year ended December 31, 2023 were mainly related to net commissions paid ($141,462) to the agents under the ATM Program and legal fees ($709,027).

23.4 December 2022 Offering

On January 17, 2023, the Company closed the over-allotment option with respect to the December 2022 Offering in full, to purchase an additional 2,952,755 Units at a price of $2.54 per unit with respect to the December 2022 Units Offering. This resulted in aggregate gross proceeds to the Group of $7,499,998, and for aggregate net proceeds of $6,835,476 after the deduction of underwriting commission and offering costs of $664,522.

Each Unit consisted of one common share in the capital of the Company and one common share purchase warrant. The allocation of the proceeds between the warrants and the common shares at the issuance date was based on allocating the fair value of the warrants based on the Black-Scholes option pricing model (refer to Note 14.3), with the residual value allocated to the common shares.

Pursuant to the December 2022 Offering over-allotment, the Company issued 2,952,755 common shares of which gross proceeds of $4,592,772 were allocated to the shares, and for net proceeds of $4,175,836 after the deduction of equity issuance fees of $416,936. Equity issuance fees were mainly related to legal costs ($114,294) and net commissions paid to the agents ($302,642).

XML

ENTITY-WIDE DISCLOSURES

12 Months Ended

Dec. 31, 2023

Entity Wide Disclosures [Abstract]

ENTITY-WIDE DISCLOSURES

ENTITY-WIDE DISCLOSURES

The Group has one reportable operating segment, the manufacturing and sales of electric vehicles in Canada and in the United States.

The Group’s revenue from external customers is divided into the following geographical areas:

	2023	2022
Revenue from external customers	$	$
Canada	165,650,421	121,086,499
United States	87,845,180	18,827,971
	253,495,601	139,914,470

During the year ended December 31, 2023, there was no reliance on a single customer representing more than 10% of revenue (December 31, 2022: 35% of the Group’s revenue depended on one customer).

The Group’s non-current assets are allocated to geographic areas as follows:

	December 31, 2023
	Canada	United States	Total
	$	$	$
Other non-current assets	6,812,370	182,445	6,994,815
Property, plant and equipment	94,684,032	103,852,651	198,536,683
Right-of-use assets	35,469,879	54,193,260	89,663,139
Intangible assets	167,106,057	8,597,200	175,703,257
Contract asset	13,528,646	—	13,528,646
	317,600,984	166,825,556	484,426,540

	December 31, 2022
	Canada	United States	Total
	$	$	$
Other non-current assets	708,440	364,786	1,073,226
Property, plant and equipment	81,602,840	79,153,488	160,756,328
Right-of-use assets	10,836,851	49,671,503	60,508,354
Intangible assets	144,213,010	7,151,013	151,364,023
Contract asset	13,211,006	—	13,211,006
	250,572,147	136,340,790	386,912,937

Geographical areas are determined according to where the sales take place and according to the location of the long-term assets.

XML

FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT

12 Months Ended

Dec. 31, 2023

Financial Instruments [Abstract]

FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT

FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT

25.1 Financial risk management objectives and policies

Based on the Group’s activities and as a result of holding financial instruments, the group is exposed to various financial risks. The main types of risks are market risk, credit risk and liquidity risk.

The Group’s financial assets and liabilities by category are summarized in Note 9.

The Group’s risk management is coordinated at its headquarters, in close cooperation with the Board of Directors, and focuses on actively securing the Group’s short to medium-term cash flows by minimizing the exposure to financial markets.

The Group does not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant financial risks to which the Group is exposed are described below.

25.2 Market risk

The Group’s financial instruments expose it to market risks, in particular, currency risk and interest rate risk, resulting from its operating, investing and financing activities:

Foreign currency

In 2023 and 2022, the majority of the Group’s transactions are in Canadian dollars in its Canadian entities and in US dollars in its US entities. Currency risk results from the Group’s sales denominated in foreign currency which are primarily in US dollars and purchases which are in US dollars, Euro and British pound for the Canadian entities and purchases made in Canadian dollars or Euros for the US entities.

The Group is exposed to currency risk due to cash, trade and other receivables, trade and other payables and long-term debt and other debts denominated in foreign currencies.

Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those reported to key management, in US dollars:

	December 31, 2023		December 31, 2022
	Assets	Liabilities	Assets	Liabilities
	$	$	$	$
Cash	2,334,652	—	34,192,889	—
Trade and other payables	—	3,074,771	—	6,094,084
Long-term debt and other debts	—	119,019,843	—	35,000,000
	2,334,652	122,094,614	34,192,889	41,094,084

25 - FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT (CONTINUED)

25.2 Market risk (continued)

Foreign currency (continued)

The impact on comprehensive loss and shareholders’ equity of a 10% increase or decrease in foreign currencies on the Group’s financial instruments based on balances at December 31, 2023 would be approximately $11,735,536 ($718,280 as at December 31, 2022).

Interest rate sensitivity

The Group is exposed to interest rate risk with respect to financial assets and liabilities bearing fixed and variable interest rates. Some long-term debts and other debts bear interest at a fixed rate and the Group is, therefore, exposed to the risk of changes in fair value resulting from interest rate fluctuations.

Some long-term debts and other debts bear interest at variable rates and the Group is, therefore, exposed to the cash flow risks resulting from interest rate fluctuations. The Group analyzes its cash flow exposure and interest fluctuations on an ongoing basis.

Based on balances as at December 31, 2023, sensitivity to a plus or minus 1% change in interest rates would affect the profit or loss and equity by $2,250,000 (approximately $1,107,000 as at December 31, 2022).

25.3 Credit risk analysis

Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to this risk for various financial instruments, for example by granting receivables to customers. The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets recognized on the consolidated statements of financial position.

The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporates this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Group’s policy is to deal only with creditworthy counterparties.

The Group’s management considers that all the financial assets that are not impaired or past due for each of the reporting dates presented are of good credit quality. The Group has never experienced any significant credit losses. Consequently, credit risk is not considered material. The Group considers the credit risk not material considering the current and forwarding looking macroeconomic factors affecting the customer’s ability to settle the amount outstanding and that the Group has never experienced any significant credit losses.

25.4 Liquidity risk analysis

In the normal course of business, the Group enters into contractual obligations that will require the Group to disburse cash over future periods. Liquidity risk is that the Group might be unable to meet its contractual obligations.

25 - FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT (CONTINUED)

25.4 Liquidity risk analysis (continued)

The Group’s liquidity and operating results may be adversely affected if the Group’s access to the equity market is hindered, whether as a result of a downturn in the economic conditions generally or related to matters specific to the Group. Over the years, the Group generated cash flows from its financing activities and from its sales. The Group mitigates liquidity risk through the implementation of its capital management policy by managing its capital expenditures, forecast, budget and operational cash flows, and by maintaining adequate lines of credit, if needed.

All commitments have been reflected in the Group’s consolidated statements of financial position except for purchase obligations, which are included in the table of contractual obligations below.

The following tables set forth the maturity of the Group’s contractual obligations (including interest payments where applicable) as at December 31, 2023 and as at December 31, 2022:

	December 31, 2023
	Carrying amount		Undiscounted contractual cash flows	Less than 1 year		Between 1 and 3 years		Between 4 and 5 years		More than 5 years
	$		$	$		$		$		$
Trade and other payables	71,856,894		71,856,894	71,856,894		—		—		—
Long-term debt and other debts	224,942,365		322,891,324	37,571,684		85,120,218		154,644,192		45,555,230
Purchase and other obligations	—	—	72,781,793	58,681,793	—	14,100,000	—	—	—	—
Lease obligations	91,956,586		133,666,965	12,902,616		23,300,865		25,084,501		72,378,983
Total contractual obligations	388,755,845		601,196,976	181,012,987		122,521,083		179,728,693		117,934,213

25 - FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT (CONTINUED)

25.4 Liquidity risk analysis (continued)

	December 31, 2022
	Carrying amount		Undiscounted contractual cash flows	Less than 1 year		Between 1 and 3 years		Between 4 and 5 years		More than 5 years
	$		$	$		$		$		$
Trade and other payables	62,383,813		62,383,813	62,383,813		—		—		—
Long-term debt and other debts	110,673,348		118,341,134	2,450,141		96,150,078		—		19,740,915
Purchase and other obligations	—	—	149,591,363	70,523,901	—	75,154,748	—	3,439,748	—	472,966
Lease obligations	63,520,215		89,985,860	8,320,131		15,454,284		16,693,337		49,518,108
Total contractual obligations	236,577,376		420,302,170	143,677,986		186,759,110		20,133,085		69,731,989

25.5 Capital management

The Group’s capital management objectives are to:

•Ensure the Group’s ability to continue as a going concern;

•Provide an adequate return to shareholders;

•Maintain an optimal capital structure which allows financing options to the Group to complete its projects.

The Group’s capital comprises total shareholders’ equity, cash/bank overdraft, credit facilities, long-term debt, convertible debt instruments and common shares retractable, as presented on the face of the consolidated statements of financial position.

As part of the management of its capital structure, the Group factors in the economic value of the stock option, restricted share units and deferred share units (Note 16).

The Group sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may issue new shares or debt, repurchase shares or sell assets to reduce debt.

The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Group’s management team to sustain the future development of the business.

25 - FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT (CONTINUED)

25.5 Capital management (continued)

The amounts managed as capital by the Group for the reporting years under review are summarized as follows:

	December 31, 2023	December 31, 2022
	$	$
Long-term debt and other debts	224,942,365	110,673,348
Less: Cash	29,892,966	88,266,985
Total net indebtedness	195,049,399	22,406,363
Shareholders’ equity	358,913,991	437,116,773
Warrants issued as part of the business combination transaction, December 2022 Offering and 2023 Debenture Financing	27,684,412	21,071,294
Total net indebtedness	195,049,399	22,406,363
Total capitalization	581,647,802	480,594,430
Total net indebtedness to total capitalization ratio	34%	5%

As at December 31, 2023, the Company was in compliance with all of its obligations under the terms of its banking agreements (Note 12). Management reviews its capital management approach on an ongoing basis and believes that this approach is appropriate given the relative size of the Group. There were no changes in the Company’s approach to capital management during the years ended December 31, 2023 and 2022.

XML

SUMMARY OF ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2023

Disclosure Of Significant Accounting Policies Abstract [Abstract]

Overall considerations

Overall considerations

The consolidated financial statements have been prepared using the material accounting policies and measurement bases that are in effect at December 31, 2023, as summarized below. These were used throughout all years presented in the consolidated financial statements.

Basis of consolidation

Basis of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as of December 31, 2023 and 2022. All subsidiaries have a reporting date of December 31. Subsidiaries are all entities over which the Group has the power to control the financial and operating policies. The Group obtains and exercises control when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

All transactions and balances between Group companies are eliminated on consolidation, including unrealized gains and losses on transactions between Group companies. Where unrealized losses on intra-group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a group perspective.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.2 Basis of consolidation (continued)

Amounts reported in the consolidated financial statements of the subsidiary have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Foreign currency translation

Foreign currency translation

Functional and presentation currency

The consolidated financial statements are presented in US dollars. The functional currency of the parent company and its subsidiaries is the Canadian dollar, except for The Lion Electric Co USA Inc. and Lion Electric Manufacturing USA Inc., whose functional currencies are the US dollar. The functional currency of the entities in the Group has remained unchanged during the reporting periods.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at year-end exchange rates are recognized in the consolidated statements of earnings (loss) and comprehensive loss.

Non-monetary items are not retranslated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the date when fair value was determined.

The Group’s Canadian dollar financial statements are translated to US dollars as follows: assets and liabilities are translated at the closing rate in effect at the reporting date and income and expenses are translated at the average exchange rate for the period. The share capital account is translated at rates in effect at the time of issuance/redemptions. Exchange gains or losses resulting from the translation of the Group’s accounts into the reporting currency are reported as foreign currency translation adjustment within other comprehensive income (loss) and presented as a separate component of shareholders’ equity under cumulative translation adjustment.

Revenue

Revenue

The Group’s principal sources of revenue are the sale of all-electric medium and heavy-duty urban vehicles. The Group also enters into sales contracts for other products including energy infrastructure, vehicle parts, and related services.

To determine whether to recognize revenue, the Group follows a 5-step process:

–identifying the contract with a customer;

–identifying the performance obligations;

–determining the transaction price;

–allocating the transaction price to the performance obligations; and

–recognizing revenue when/as performance obligation(s) are satisfied.

The Group recognizes revenue in the amount of consideration it will receive for delivering a product or a service to a customer. Revenue is recognized at a point in time, when the Group satisfies its performance obligations by transferring control of the goods to its customers or provides the service, which generally occurs when the goods are delivered to the customers and when the customer confirms acceptance.

Control is generally transferred when the customer has the ability to direct the use and obtain substantially all of the remaining benefit, which is upon shipment, or when the product has been completed, is ready for delivery, and title has transferred to the customer.

The Group provides a warranty for its products against defects for periods varying from one year to eight years for certain components. An allowance for warranty expense is recorded when the revenue for the related product is recognized. The allowance is based upon the terms of the warranty, the Group’s historical experience and management estimates of future expenses for replacement or repairs. The corresponding expense is recorded in cost of sales.

Cost of sales and gross profit

Cost of sales and gross profitCost of sales includes all raw material costs, direct parts, material and labor costs, manufacturing conversion costs, including depreciation costs of manufacturing equipment such as tooling and machinery, inter-facility transportation and logistic costs, amortization of product development costs, outbound freight to customers, and reserves for estimated warranty expenses. Cost of sales also includes the cost of purchasing finished goods for resale, costs relating to purchasing, receiving and inspection activities, warehousing costs, product engineering costs, insurance related to manufacturing activities, customs and duties, adjustments to warranty expense, as well as charges to write down the carrying value of inventory when it exceeds its estimated net realizable value and to provide for obsolete and on-hand inventory in excess of forecasted demand. Gross loss is the result of revenue less cost of sales.

Administrative and Selling expenses

Administrative expenses

Administrative expenses consist of share-based compensation, as well as employee benefits for management, information technology, human resources, accounting, legal, investor relations, and other general administrative functions. Administrative expenses also include professional fees, non-manufacturing depreciation expense, and non-manufacturing related insurance costs (including director and officer insurance). Administrative expenses are recognized in the consolidated statements of earnings (loss) and comprehensive loss upon utilization of the service or at the date of their origin.

Selling expenses

Selling expenses consist of salaries and other similar expenses related to Lion’s bus and truck sales force and employee benefits costs, sales commissions, share-based compensation, business development, aftermarket sales, non-manufacturing depreciation expense, and advertising, marketing, and communications. Selling expenses are recognized in the consolidated statements of earnings (loss) and comprehensive loss upon utilization of the service or at the date of their origin.

Employee benefits

Employee benefits

Employee benefits include wages, salaries, fringe benefits, commissions, compensated absences, and bonuses. These short-term benefits are recognized in cost of sales, administrative expenses, and selling expenses as the services are provided.

Restructuring costs

Restructuring costs

Restructuring costs include employee severance costs, employee benefits and employee transitions costs when payments are probable and amounts are reliably estimable. Other restructuring related costs are recognized as incurred.

Finance costs

Finance costs

Finance costs consists primarily of interest paid on Lion’s outstanding debts, legal and other costs related to long-term debts and other debts and share warrant financing activities, interest on lease liabilities, interest on convertible and non-convertible debt instruments as well as non-cash accretion on convertible and non-convertible debt instruments, long-term debts and other debts and revaluation expenses on the balance of purchase price payable related to the acquisition of dealership rights.

Borrowing costs

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. Capitalization of borrowing costs ceases when the asset is completed and available for use. Other borrowing costs are expensed in the period in which they are incurred and reported in finance costs.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

Cash and cash equivalents

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short- term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. As at December 31, 2023 and 2022, the Company only held cash.

Accounts receivable

Accounts receivable

Accounts receivable include amounts due from customers in the normal course of business as well as refundable tax credits and grants under government programs. The payments are generally received within a year.

Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost, less impairment. The Group maintains an allowance for expected credit loss based on collection history and customer specific credit risk in accordance with the expected credit loss model. Trade accounts receivables are presented net of an allowance for credit losses.

Inventories

Inventories

Finished goods, work in process, and raw material inventories are valued at the lower of cost and net realizable value. Cost is determined using the specific identification cost method for finished goods and work in process, while the cost of raw materials is determined using the weighted average cost method. Supplier rebates are deducted to determine the cost of purchase.

The cost of inventories includes all purchase, conversion and other costs incurred to bring the inventories to their present location and condition and include the purchase price and other costs directly related to the acquisition of raw materials and the cost of purchased finished goods. Inventory costs also include the costs directly related to the conversion of materials to finished goods, such as direct labor, and a systematic allocation of fixed and variable production overhead, including manufacturing depreciation expense.

The allocation of fixed production overhead to the cost of inventories is based on the normal capacity of the production facilities. Costs incurred as a result of operating below the normal capacity of the production facilities are excluded from the carrying value of inventories and charged directly to cost of sales. Normal capacity is the average production expected to be achieved during the fiscal year, under normal circumstances.

The net realizable value represents the estimated selling price in the normal course of business less the estimated costs necessary to make the sale. Raw materials and work in progress inventories are not written down if the finished products in which they will be incorporated are expected to be sold at or above cost.

The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the year the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, is recognized as a reduction in the amount of inventories recognized as an expense in the year in which the reversal occurs.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

Property, plant and equipment

Property, plant and equipment

Property, plant and equipment are initially recorded at cost, net of government grants, and are subsequently carried at cost less accumulated depreciation and any accumulated impairment losses. The costs of an item of property, plant, and equipment includes any expenditures directly attributable to bringing the assets to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of self-constructed assets includes the cost of materials and direct labor, site preparation costs, initial delivery and handling costs, installation and assembly costs, and any other costs directly attributable to bringing the assets to the location and condition necessary for the assets to be capable of operating in the manner intended by management.

Property, plant and equipment, less their estimated residual values, are depreciated over their estimated useful lives using the straight-line method.

Leased assets

Leased assets

At the inception of contracts, the Group assesses whether a contract is, or contains a lease by assessing if the contract, or part of the contract, conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. To determine if this is achieved, the Group assesses the following key factors:

– whether the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group;

– whether the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract;

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.16 Leased assets (continued)

– whether the Group has the right to direct the use (how and for what purpose) of the identified asset throughout the period of use.

Measurement and recognition of leases as a lessee

Short-term or low value leases

The Group has elected to recognize leases that have a lease term of 12 months or less and leases of low-value assets as an expense on a straight-line basis over the lease term.

All other leases

At a lease commencement date, the Group recognizes a right-of-use asset and a lease liability on the consolidated statements of financial position.

The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received). The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist in accordance with IAS 36 Impairment of assets.

The lease liability is measured at the present value of the remaining lease payments at the date of recognition, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The incremental borrowing rate is the estimated rate that the Group would have to pay to borrow the same amount over a similar term, and with similar security to obtain an asset of equivalent value. This rate is adjusted should the lessee entity have a different risk profile to that of the Group.

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in-substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee, and payments arising from options reasonably certain to be exercised.

The lease liability is subsequently measured by reducing the carrying amount to account for payments made and increasing the carrying amount to account for accretion expense. The accretion expense is presented within finance costs in the consolidated statements of earnings (loss) and comprehensive loss over the lease period.

The lease liability is remeasured when there are changes to the lease terms resulting from a change in the Group’s assessment of whether the Group will exercise a purchase, extension, or termination option, or when there is a change in the future lease payments resulting from a change in an index or rate, or change in the Group’s estimate of the amount expected to be payable under residual value guarantees.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.16 Leased assets (continued)

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or consolidated statements of earnings (loss) and comprehensive loss if the right-of-use asset is already fully depreciated.

Intangible assets

Intangible assets

Initial recognition

Dealership rights with an indefinite useful life

Dealership rights with an indefinite useful life are recorded initially at cost and are not amortized. As the acquisition of dealership rights was based on future sales of a specific product, the Group has elected to measure the cost based on a financial liability model, whereby the fair value of all variable payments under the contract is recorded on initial recognition of the asset with a corresponding liability. Any re-measurements of the related liability are recognized in earnings (loss) and comprehensive loss. The cost also includes any directly attributable costs of acquisition. Directly attributable costs include professional fees arising directly from bringing the asset to its working conditions.

Dealership rights are subject to asset impairment testing as described below. The useful life is reviewed each period to determine whether events and circumstances continue to support an indefinite useful life assessment.

Acquired Software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and install the specific software.

Internally developed intangible assets

Expenditures on the research phase are recognized as an expense as incurred. Costs that are directly attributable to an electric vehicle project’s development phase and costs incurred on software development projects are recognized as intangible assets, provided they meet the following recognition requirements:

– the development costs can be measured reliably;

– the project is technically and commercially feasible;

– the Group intends to and has sufficient resources to complete the project;

– the Group has the ability to use or sell the intangible assets; and

– the intangible assets will generate probable future economic benefits.

Development costs not meeting these criteria for capitalization are expensed as incurred. Directly attributable costs include employee benefits costs incurred along with an appropriate portion of relevant overheads and subcontractors’ fees.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.17 Intangible assets (continued)

Subsequent measurement

All finite-live intangible assets are stated at cost, less accumulated amortization and impairment losses. Finite-life intangible assets, less their estimated residual value, are amortized over their estimated useful lives using the straight-line method. The following estimated useful lives are applied:

Software	5 years
Development costs	7,000 units produced

The estimated residual values, estimated useful lives and amortization methods are reviewed annually by the Group and any change resulting from this evaluation applied as a change in estimates accounted on a prospective basis. In addition, they are subject to impairment testing as described below.

Impairment testing of intangible assets, property, plant and equipment and right-of-use assets

Impairment testing of intangible assets, property, plant and equipment and right-of-use assets

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at the cash-generating unit level. Cash-generating units to which intangible assets with indefinite useful lives have been allocated (determined by the Group’s management as being equivalent to its operating segments) are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognized for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganizations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect management’s assessment of respective risk profiles, such as market and asset-specific risks factors.

Impairment losses for cash-generating units are charged pro rata to the assets in the cash-generating unit. All assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount.

Government incentive and assistance

Government incentive and assistance

Government incentives and assistance related to current expenses is accounted for as a reduction of related expenses while incentive and assistance related to the acquisition of non-current assets is accounted for as a reduction of the related non-current assets.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.19 Government incentive and assistance (continued)

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an non-current asset, it is accounted for as a reduction of the related non-current assets and it is recognised as income in equal amounts over the expected useful life of the related asset.

Research and development tax credits

Research and development tax credits

Tax credits related to current expenses are accounted for as a reduction of related expenses while tax credits related to the acquisition or development of non-current assets are accounted for as a reduction of the related non-current assets.

Reimbursable tax credits are accrued in the year in which the expenditures are incurred, provided that the Group is reasonably certain that the credits will be received. The tax credits must be examined and approved by the tax authorities and it is possible that the amounts subsequently granted will differ from the amounts initially recorded.

Financial instruments

Financial instruments

Recognition and derecognition

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or expires.

Financial Assets

Classification and initial measurement of financial assets

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

Financial assets, are classified into the following categories:

– amortized cost;

– fair value through profit or loss (FVTPL);

– fair value through other comprehensive income (FVOCI).

In the years presented, the Group does not have any financial assets categorized as FVTPL or FVOCI.

The classification is determined by both:

– the entity’s business model for managing the financial asset;

– the contractual cash flow characteristics of the financial asset.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.21 Financial instruments (continued)

Classification and initial measurement of financial assets (continued)

All income and expenses relating to financial assets that are recognized in the consolidated statements of earnings (loss) and comprehensive loss are presented within finance costs, except for the impairment of trade receivables which is presented within administrative expenses.

Subsequent measurement of financial assets

Financial assets at amortized cost

Financial assets are measured at amortized cost if the assets meet the following conditions (and are not designated as FVTPL):

– they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows;

– the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After initial recognition, these are measured at amortized cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. Cash, trade receivables and incentives and other government assistance receivable are classified within this category.

Impairment of financial assets

The Group uses the expected credit losses impairment model with respect to its financial assets carried at amortized cost. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since the initial recognition of the respective financial instrument.

The Group accounts for the expected credit losses using the simplified approach over the life of financial assets measured at amortized cost. Expected credit losses over the life of the asset are expected credit losses for all of the default events that a financial instrument may experience over its expected life. The assessment of expected credit losses reflects reasonable and justifiable information about past events, current circumstances and forecasts of events and economic conditions and takes into account the factors specific to the account receivable, the general condition of the economy and a current as well as expected appreciation of the condition prevailing at the statements of financial position date, including the time value of the money, if any.

Classification and measurement of financial liabilities - amortized cost

The Group’s financial liabilities measured at amortized cost include trade and other payables (excluding non-financial liabilities) and long-term debt and other debts. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortized cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.21 Financial instruments (continued)

Classification and measurement of financial liabilities - amortized cost (continued)

All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in the consolidated statements of earnings (loss) and comprehensive loss are included within finance costs.

Classification and measurement of financial liabilities - FVTPL - warrants

The Group determined that the warrants, including the warrants issued to a customer, the public warrants and the private warrants issued as part of a business combination transaction, the public warrants issued as part of the December 2022 Offering, and the warrants issued as part of the 2023 Debenture Financing (as defined in Note 12.7) are derivative instruments and should be classified as a liability in accordance with IAS 32 - Financial Instruments: Presentation and IFRS 9 - Financial Instruments and are measured at FVTPL. Derivative and financial liabilities designated at FVTPL are carried subsequently at fair value with gains or losses recognized in the consolidated statements of earnings (loss) and comprehensive loss.

Warrants issued to a customer

The vested portion of the warrants issued to a customer is initially recorded at fair value and then revalued at each reporting date with a corresponding contract asset recognized at inception. The corresponding contract asset is amortized as a reduction of revenues on a percentage per dollar of revenue generated with the customer and its affiliates.

The unvested portion of the warrants represents a retrospective volume discount based on specified levels of spending by the customer and its affiliates. Revenues will be recognized based on the prices specified in the work orders, net of the estimated value of the volume discount based on the portion of the warrant expected to vest using the fair value at inception. At each reporting date, the Group will review experience, current information on expected orders from the customer and its affiliates and the potential impact of other reasonably foreseen constraints will be used to estimate and provide for the discount, using the expected value method, and revenue will only be recognized to the extent that it is highly probable that a significant reversal will not occur.

Private and public warrants

The warrants are initially recorded at fair value and then revalued at each reporting date. Estimating fair value requires determining the most appropriate valuation model which captures the significant features of the financial instruments. This estimate also requires the determination of the most appropriate inputs to the valuation model including the expected life of the warrants, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating such warrants are disclosed in Note 14.

Convertible debt instruments

Convertible debt instruments

The Group reviewed the terms of the convertible debentures to determine whether there are component parts of compound financial instruments that are required to be separated and accounted for as individual financial instruments.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.22 Convertible debt instruments (continued)

Conversion option features that have economic characteristics and risks that do not meet the "Fixed for Fixed" criteria or are not closely related to those of the host instrument should be classified as embedded derivatives and separated from the host contract. The Group determined that the conversion options on the convertible debt instruments are derivative instruments that should be separated from the host contract and classified as a liability in accordance with IAS 32 - Financial Instruments: Presentation and IFRS 9 - Financial Instruments due to the variability in the cash flows.

At inception, the Group allocated the proceeds first to the fair value of the conversion options on the convertible debt instruments and the remaining proceeds are allocated to the convertible debenture host contract. The conversion options on the convertible debt instruments designated at fair value through profit or loss ("FVTPL") are carried subsequently at fair value with gains or losses recognized in the consolidated statements of earnings (loss) and comprehensive loss. The convertible debenture host contract is measured at amortized cost, using the effective interest method until extinguished upon conversion or at the instrument’s maturity date. The effective interest expense is classified as accretion expense under finance costs in the consolidated statements of earnings (loss) and comprehensive loss.

Transaction costs related to the issue of convertible debt instruments are allocated to the components in proportion to the initial carrying amounts. Transaction costs relating to conversion options on the convertible debt instruments are recognized as finance costs in the consolidated statements of earnings (loss) and comprehensive loss as incurred. Transaction costs relating to the convertible debentures component are included in the carrying amount and are amortized over the term of the convertible debt instruments using the effective interest method.

Share-based employee remuneration

Share-based employee remuneration

Stock options and restricted share units

Stock options and restricted share units ("RSUs") are equity settled share-based payments, which are measured at fair value at the grant date. For stock options, the compensation cost is measured using the Black-Scholes option pricing model and is expensed over the award’s vesting period. For RSUs, compensation cost is measured at the fair value of the underlying common share at the grant date and is expensed over the award’s vesting period. RSUs can be settled in cash based on the Company’s share price on the vesting date, or through the delivery of common shares issued from treasury or purchased on the open market, at the Company’s option. RSUs are expected to be settled in common shares purchased on the open market.

Compensation expense is recognized in net earnings (loss) and comprehensive loss with a corresponding increase in contributed surplus. The measurement of compensation expense for stock options and RSUs is net of estimated forfeitures. Any consideration paid by plan participants on the exercise of stock options is credited to share capital. Upon the exercise of stock options or the vesting of RSUs, the corresponding amounts previously credited to contributed surplus are transferred to share capital. Stock options and RSUs that are dilutive are considered in the calculation of diluted earnings per share, as per Note 20 to these consolidated financial statements.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.23 Share-based employee remuneration (continued)

Deferred share unit plan

The Company has a deferred share unit plan for independent members of the Company’s Board of Directors, who receive a portion of their compensation in the form of deferred share units (“DSUs”). These DSUs are equity settled awards and are fully recognized in net earnings (loss) and comprehensive loss based on the fair value of the underlying common shares at the grant date.

Provisions, contingent assets and contingent liabilities

Provisions, contingent assets and contingent liabilities

Provisions for product warranties, legal disputes, onerous contracts or other claims are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Group and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Restructuring provisions are recognized only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan’s main features to those affected by it. Provisions are not recognized for future operating losses.

Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in a settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material. Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provision. In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognized.

Income taxes

Income taxes

Tax expense recognized in the consolidated statements of earnings (loss) and comprehensive loss comprises the sum of deferred tax and current tax not recognized directly in equity. The calculation of current tax and deferred tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the balance sheet liability method.

Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income. This is assessed based on the Group’s forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit.

Deferred tax liabilities are generally recognized in full, although IAS 12, Income Taxes, specifies limited exemptions. As a result of these exemptions the Group does not recognize deferred tax on temporary differences relating to goodwill, or to its investments in subsidiaries. The Group does not offset deferred tax assets and liabilities unless it has a legally enforceable right to do so and intends to settle on a net basis.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

Share Capital

Share Capital

Common shares are classified as share capital within equity. Incremental costs directly attributable to the issuance of share are recognized as a deduction from share capital, net of any tax effect.

Contributed surplus is used to record the accumulated compensation expense related to equity-settled share-based compensation transactions. Upon the exercise of stock options and the vesting of RSUs and DSUs, the corresponding amounts previously credited to contributed surplus are transferred to share capital.

Deficit includes all current and prior year losses. All transactions with owners of the parent company are recorded separately within equity. Cumulative translation adjustment comprises foreign currency translation differences arising from the translation of the consolidated financial statements of the Group into the US dollar, the presentation currency.

Earnings per share

Earnings per share

Basic earnings (loss) per share ("EPS") are calculated by dividing the net earnings (loss) available to common share shareholders by the weighted average number of shares outstanding during the year.

Diluted earnings (loss) per share are calculated by adjusting the weighted average of shares outstanding during the year to include the weighted average number of shares that would be issued upon the conversion of all potential dilutive warrants, stock options, RSUs, and DSUs into common shares.

Segment reporting

Segment reporting

The Group has only one operating segment: the manufacturing and sale of electric vehicles in Canada and the United States. The Group has one operating segment based on Lion’s operational structure and decision process for allocation of resources.

Significant management judgements in applying accounting policies and estimation uncertainty

Significant management judgements in applying accounting policies and estimation uncertainty

Significant management judgements

The following are significant management judgements in applying the accounting policies of the Group that have the most significant effect on the consolidated financial statements.

Capitalization of internally developed intangible assets

Distinguishing the research and development phases of a new customized project and determining whether the recognition requirements for the capitalization of development costs are met require judgement. After capitalization, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalized costs may be impaired.

Recognition of deferred tax assets

The extent to which deferred tax assets can be recognized is based on an assessment of the probability of the Group’s future taxable income against which the deferred tax assets can be utilized.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.29 Significant management judgements in applying accounting policies and estimation uncertainty (continued)

Recognition of deferred tax assets (continued)

In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.

Estimation uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

Tax credits receivable

The calculation of the Group’s tax credits receivable involves a degree of estimation and judgement in respect of certain items whose tax treatment cannot be finally determined until a notice of assessment has been issued by the relevant taxation authority and payment has been received or applied against income taxes otherwise payable.

Impairment of non-financial assets

Management estimates the recoverable amount of each asset or cash-generating units based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.

Leases

Recognizing leases requires judgement and use of estimates and assumptions. Judgement is used to determine whether there is reasonable certainty that a lease extension or cancellation option will be exercised. Furthermore, management estimates are used to determine the lease terms and the appropriate interest rate to establish the lease liability.

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utility of certain software and computer equipment. Technical obsolescence also can affect development costs as technology evolves.

Inventories

Management estimates the net realizable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realization of these inventories may be affected by future technology or other market-driven changes that may reduce future selling prices.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.29 Significant management judgements in applying accounting policies and estimation uncertainty (continued)

Fair value measurement

Management uses various valuation techniques to determine the fair value of financial instruments, where active market quotes are not available. This involves developing estimates and assumptions consistent with how market participants would price the instrument. Management bases its assumptions on observable data as far as possible but this is not always available. In that case, management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.

Share-based compensation and private share warrant obligation

Management assesses the fair value of stock options and the private share warrant obligation using the Black-Scholes valuation model. The Black-Scholes model requires management to make estimates and assumptions with respect to inputs including the risk-free interest rate, volatility and expected option or warrant life.

3.30 Initial and early application of new accounting standards and interpretations in the reporting standards

Amendments to IAS 1, Presentation of Financial Statements and IFRS Practice Statement 2, Making Materiality Judgements

On February 11, 2021, the IASB issued amendments to IAS 1, Presentation of Financial Statements and IFRS Practice Statement 2, Making Materiality Judgements, to provide guidance in determining which accounting policies to disclose. The amendments require entities to disclose material accounting policies rather than significant policies. The amendments clarify that accounting policy information is material if users of an entity’s financial statements would need it to understand other material information in the financial statements. In assessing the materiality of accounting policy information, entities need to consider both size of the transaction, other events or conditions and the nature of them, even if the related amounts are immaterial. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IAS 8, Accounting Policies, Change in Accounting Estimates and Errors

On February 11, 2021, the IASB issued amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, to clarify how to distinguish changes in accounting policies, which must be applied retrospectively, from changes in accounting estimate, which are accounted for prospectively. The amendments clarify the definition of accounting estimates as "monetary amounts in the financial statements that are subject to measurement uncertainty". The amendments clarify that a change in accounting estimate is a change in input or a change in a measurement technique used to develop an accounting estimate, if they do not result in the correction of a prior period error. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.30 Initial and early application of new accounting standards and interpretations in the reporting standards (continued)

Amendments to IAS 12, Income Taxes

On May 6, 2021, the IASB released Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12). The amendment relates to the recognition of deferred tax when an entity accounts for transactions, such as leases or decommissioning obligations, by recognizing both an asset and a liability. The objective of this amendment is to narrow the initial recognition exemption in paragraphs 15 and 24 of IAS 12, so that it would not apply to transactions that give rise to both taxable and deductible temporary differences, to the extent the amounts recognized for the temporary differences are the same. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IFRS 16, Leases

On September 22, 2022, the IASB issued an amendment to IFRS 16, Leases to clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. The amendment requires a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. The early adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IAS 7, Statement of Cash Flow and IFRS 7, Financial Instruments : Disclosures

On May 25, 2023, the IASB issued an amendment to IAS 7, Statement of Cash Flow and IFRS 7, Financial Instruments: Disclosures to add qualitative and quantitative disclosure requirements to allow users to assess how supplier finance arrangements affect an entity’s liabilities, cash flows and liquidity risk. The amendments to IAS 7 will become effective for annual reporting periods beginning on or after January 1, 2024 and the amendments to IFRS 7 when it applies the amendments to IAS 7. Earlier application is permitted. The Company made the election to early adopt the amendments as of June 30, 2023 and disclose the additional information in the Company's financial statements.

Initial and early application of new accounting standards and interpretations in the reporting standards and Standards, amendments and Interpretations to existing Standards that are not yet effective and have not been adopted early by the Group

Initial and early application of new accounting standards and interpretations in the reporting standards

Amendments to IAS 1, Presentation of Financial Statements and IFRS Practice Statement 2, Making Materiality Judgements

On February 11, 2021, the IASB issued amendments to IAS 1, Presentation of Financial Statements and IFRS Practice Statement 2, Making Materiality Judgements, to provide guidance in determining which accounting policies to disclose. The amendments require entities to disclose material accounting policies rather than significant policies. The amendments clarify that accounting policy information is material if users of an entity’s financial statements would need it to understand other material information in the financial statements. In assessing the materiality of accounting policy information, entities need to consider both size of the transaction, other events or conditions and the nature of them, even if the related amounts are immaterial. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IAS 8, Accounting Policies, Change in Accounting Estimates and Errors

On February 11, 2021, the IASB issued amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, to clarify how to distinguish changes in accounting policies, which must be applied retrospectively, from changes in accounting estimate, which are accounted for prospectively. The amendments clarify the definition of accounting estimates as "monetary amounts in the financial statements that are subject to measurement uncertainty". The amendments clarify that a change in accounting estimate is a change in input or a change in a measurement technique used to develop an accounting estimate, if they do not result in the correction of a prior period error. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

3.30 Initial and early application of new accounting standards and interpretations in the reporting standards (continued)

Amendments to IAS 12, Income Taxes

On May 6, 2021, the IASB released Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12). The amendment relates to the recognition of deferred tax when an entity accounts for transactions, such as leases or decommissioning obligations, by recognizing both an asset and a liability. The objective of this amendment is to narrow the initial recognition exemption in paragraphs 15 and 24 of IAS 12, so that it would not apply to transactions that give rise to both taxable and deductible temporary differences, to the extent the amounts recognized for the temporary differences are the same. The adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IFRS 16, Leases

On September 22, 2022, the IASB issued an amendment to IFRS 16, Leases to clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. The amendment requires a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognize any amount of the gain or loss that relates to the right of use it retains. The early adoption of the amendments as of January 1, 2023 did not have an impact on the Company’s financial statements.

Amendments to IAS 7, Statement of Cash Flow and IFRS 7, Financial Instruments : Disclosures

On May 25, 2023, the IASB issued an amendment to IAS 7, Statement of Cash Flow and IFRS 7, Financial Instruments: Disclosures to add qualitative and quantitative disclosure requirements to allow users to assess how supplier finance arrangements affect an entity’s liabilities, cash flows and liquidity risk. The amendments to IAS 7 will become effective for annual reporting periods beginning on or after January 1, 2024 and the amendments to IFRS 7 when it applies the amendments to IAS 7. Earlier application is permitted. The Company made the election to early adopt the amendments as of June 30, 2023 and disclose the additional information in the Company's financial statements.

3.31 Standards, amendments and Interpretations to existing Standards that are not yet effective and have not been adopted early by the Group

At the date of authorization of these consolidated financial statements, several other new, but not yet effective, standards and amendments to existing standards, and interpretations have been published by the IASB. None of these standards or amendments to existing standards have been adopted early by the Company.

Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New standards, amendments and interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Company’s consolidated financial statements.

XML

SUMMARY OF ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2023

Disclosure Of Significant Accounting Policies Abstract [Abstract]

Schedule of Disclosure of Principal Subsidiaries, their Jurisdiction, and the Company's Percentage Ownership Share

The Company’s principal subsidiaries, their jurisdiction of incorporation, and the Company’s percentage ownership share of each are as follows:

Subsidiary	Jurisdiction of Incorporation	Ownership percentage
Lion Holding USA Inc.	Delaware	100%
The Lion Electric Co USA Inc.	Delaware	100%
Lion Electric Manufacturing USA Inc.	Delaware	100%

Schedule of Disclosure of Estimated Useful Lives of Property, Plant and Equipment

The following estimated useful lives are applied:

Leasehold improvements	Earlier of useful life or remaining lease term
Machinery and equipment	7,000 units produced or 5 years
Rolling stock	5 years
Computer equipment	5 years
Furniture and office equipment	10 years
Production moulds	1,250 units produced
Master patterns and templates	7,000 units produced
Prototypes	3 years

Schedule of Disclosure of Subsequent Measurement of Finite-Live Intangible Assets

The following estimated useful lives are applied:

Software	5 years
Development costs	7,000 units produced

XML

ACCOUNTS RECEIVABLE (Tables)

12 Months Ended

Dec. 31, 2023

Subclassifications of assets, liabilities and equities [abstract]

Schedule of Accounts Receivable

Accounts receivable consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Trade receivables, gross	41,777,117	25,935,309
Allowance for credit losses	(1,155,120)	(250,439)
Trade receivables, net	40,621,997	25,684,870
Incentives and other government assistance receivable (Note 4.1)	26,625,156	25,312,738
Financial assets	67,247,153	50,997,608
Commodity taxes receivable	4,028,472	4,557,779
Research and development tax credits receivable	4,366,155	7,416,155
Non-financial assets	8,394,627	11,973,934
	75,641,780	62,971,542

Schedule of Disclosure Of Incentives And Other Governance Assitance Receivable

Incentives and other government assistance receivable

Incentives and other government assistance receivable consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Transport Canada Medium and Heavy-duty Zero-Emission Vehicles ("iMHZEV") Program	3,702,540	5,020,673
U.S. Environmental Protection Agency ("EPA") School Bus Program	—	3,767,713
Government of Quebec Ecocamionnage program	4,376,726	4,118,060
Ministry of Transportation of Quebec Programme d'électrification du transport scolaire ("PETS")	17,820,959	11,425,724
Other government assistance and incentives receivable	724,931	980,568
	26,625,156	25,312,738

XML

INVENTORIES (Tables)

12 Months Ended

Dec. 31, 2023

Inventories [Abstract]

Schedule of Disclosure of Detailed Information About Inventories

Inventories consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Raw materials	173,404,495	135,656,954
Work in process	28,105,877	22,809,755
Finished goods	48,096,384	8,725,226
	249,606,756	167,191,935

XML

PROPERTY, PLANT AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2023

Disclosure Of Property, Plant and Equipment Abstract [Abstract]

Schedule of Disclosure of Detailed Information About Property, Plant and Equipment

	Leasehold improvements	Machinery and equipment	Rolling stock	Computer equipment	Furniture and office equipment	Production moulds	Master patterns and templates	Prototypes	Building	Construction in progress		Total
	$	$	$	$	$	$	$	$	$	$		$
GROSS CARRYING AMOUNT
Balance at January 1, 2023	52,688,714	58,166,555	2,531,772	7,470,595	1,010,711	3,304,058	1,327,362	202,172	—	42,110,058		168,811,997
Additions	16,166,380	22,470,851	3,728,406	2,132,104	2,484,595	1,189,208	180,450	4,273,619	11,984,946	4,518,943		69,129,502
Additions - Borrowing costs (Note 18)	—	1,371,166	—	—	—	—	—	—	1,359,161	—		2,730,327
Transfers	894,216	—	—	—	—	—	—	—	43,592,543	(44,486,759)		—
Disposals and write-offs	—	(1,487,289)	(28,205)	—	(184,839)	(353,564)	—	(139,531)	(23,813,344)	—		(26,006,772)
Impairmenta	—	(1,025,686)	(291,420)	—	—	—	—	(308,346)	—	—		(1,625,452)
Foreign currency translation adjustment	(42,698)	798,124	45,625	140,834	21,963	74,452	30,288	65,399	753,451	487,652	—	2,375,090
Balance at December 31, 2023	69,706,612	80,293,721	5,986,178	9,743,533	3,332,430	4,214,154	1,538,100	4,093,313	33,876,757	2,629,894		215,414,692
ACCUMULATED DEPRECIATION
Balance at January 1, 2023	2,814,583	1,840,519	437,616	1,464,667	146,952	1,073,708	139,988	137,636	—	—		8,055,669
Depreciation	2,347,584	3,267,855	1,449,581	1,001,617	218,077	1,470,615	170,750	894,363	—	—		10,820,442
Disposals and write-offs	—	(1,487,289)	(43,763)	—	(184,839)	(273,951)	—	(102,980)	—	—		(2,092,822)
Impairmenta	—	(38,301)	(99,210)	—	—	—	—	(68,521)	—	—		(206,032)
Foreign currency translation adjustment	92,418	58,560	9,091	51,767	3,063	58,253	7,052	20,548	—	—		300,752
Balance at December 31, 2023	5,254,585	3,641,344	1,753,315	2,518,051	183,253	2,328,625	317,790	881,046	—	—		16,878,009
Carrying amount December 31, 2023	64,452,027	76,652,377	4,232,863	7,225,482	3,149,177	1,885,529	1,220,310	3,212,267	33,876,757	2,629,894		198,536,683
GROSS CARRYING AMOUNT
Balance at January 1, 2022	17,054,605	6,421,141	1,308,726	2,992,982	513,344	1,462,683	965,937	78,709	—	5,301,919		36,100,046
Additions	35,455,356	52,807,971	1,317,358	4,745,673	529,882	1,978,942	433,228	135,627	—	38,118,683		135,522,720
Additions - Borrowing Costs	—	515,919	—	—	—	—	—	—	—	1,034,749		1,550,668
Transfer	462,435	67,455	—	—	—	—	—	—	—	(529,890)		—
Disposal	—	—	(83,130)	—	—	—	—	—	—	—		(83,130)
Foreign currency translation adjustment	(283,682)	(1,645,931)	(11,182)	(268,060)	(32,515)	(137,567)	(71,803)	(12,164)	—	(1,815,403)		(4,278,307)
Balance at December 31, 2022	52,688,714	58,166,555	2,531,772	7,470,595	1,010,711	3,304,058	1,327,362	202,172	—	42,110,058		168,811,997
ACCUMULATED DEPRECIATION
Balance at January 1, 2022	1,618,691	343,839	224,406	758,100	96,809	246,449	64,885	78,709	—	—		3,431,888
Depreciation	1,339,208	1,581,078	278,078	781,479	57,878	864,400	81,543	54,428	—	—		5,038,092
Disposal	—	—	(58,142)	—	—	—	—	—	—	—		(58,142)
Foreign currency translation adjustment	(143,316)	(84,398)	(6,726)	(74,912)	(7,735)	(37,141)	(6,440)	4,499	—	—		(356,169)
Balance at December 31, 2022	2,814,583	1,840,519	437,616	1,464,667	146,952	1,073,708	139,988	137,636	—	—		8,055,669
Carrying amount December 31, 2022	49,874,131	56,326,036	2,094,156	6,005,928	863,759	2,230,350	1,187,374	64,536	—	42,110,058		160,756,328

Schedule of Disclosure of depreciation

Depreciation was recognized as follows in the consolidated statements of earnings (loss) and comprehensive loss:

	2023	2022
	$	$
Cost of sales	6,028,565	2,581,448
Administrative expenses	3,986,583	2,456,644
Selling expenses	805,294	—
	10,820,442	5,038,092

XML

RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS (Tables)

12 Months Ended

Dec. 31, 2023

Lessee, Leases [Abstract]

Schedule of Disclosure of Right-of-use Assets

Right-of-use assets

	Premises	Rolling stock	Equipment	Total
	$	$	$	$
Balance at January 1, 2023	59,375,131	1,133,223	—	60,508,354
Additions	29,560,843	956,364	9,363,281	39,880,488
Modifications	(2,401,574)	(31,868)	5,353	(2,428,089)
Depreciation expense	(7,766,903)	(468,994)	(882,686)	(9,118,583)
Foreign currency translation adjustment	799,545	21,424	—	820,969
Balance at December 31, 2023	79,567,042	1,610,149	8,485,948	89,663,139

7 - RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS (CONTINUED)

Right-of-use assets (continued)

	Premises	Rolling stock	Equipment	Total
	$	$	$	$
Balance at January 1, 2022	60,297,423	604,939	—	60,902,362
Additions	6,661,404	740,287	—	7,401,691
Modifications	(450,567)	10,670	—	(439,897)
Depreciation expense	(6,497,931)	(186,833)	—	(6,684,764)
Foreign currency translation adjustment	(635,198)	(35,840)	—	(671,038)
Balance at December 31, 2022	59,375,131	1,133,223	—	60,508,354

Depreciation was recognized as follows :

	2023	2022
	$	$
Cost of sales	6,248,180	1,348,589
Administrative expenses	459,161	278,995
Selling expenses	1,330,000	1,826,769
Capitalized to property, plant and equipment	1,081,242	3,230,411
	9,118,583	6,684,764

Schedule of Disclosure of Lease Liabilities

Lease liabilities

	$
Balance at January 1, 2023	63,520,215
Additions	36,573,733
Lease payments	(6,512,231)
Modifications	(2,456,531)
Foreign currency translation adjustment	831,400
Balance at December 31, 2023	91,956,586
Current portion	7,984,563
Non-current portion	83,972,023

Balance at January 1, 2022	62,209,317
Additions	7,401,691
Lease payments	(4,977,183)
Modifications	(439,897)
Foreign currency translation adjustment	(673,713)
Balance at December 31, 2022	63,520,215
Current portion	5,210,183
Non-current portion	58,310,032

Schedule of Amounts Recognised in Administrative Expenses in Lease

Amounts recognized in administrative expenses in the consolidated statements of earnings (loss) and comprehensive loss are as follows:

	2023	2022
	$	$
Expense relating to variable lease payments, short-term leases and low-value assets not included in lease liabilities	4,309,208	1,159,705

XML

INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2023

Intangible Assets [Abstract]

Schedule of Disclosure of Intangible Assets and Carrying Amounts

Details of the Group’s intangible assets and their carrying amounts are as follows:

	Software	Development costs (a)	Dealership rights (b)	Total
	$	$	$	$
GROSS CARRYING AMOUNT
Balance at January 1, 2023	10,137,374	140,917,328	5,222,629	156,277,331
Additions, separately acquired	6,393	—	—	6,393
Additions, internally developed	726,027	57,516,017	—	58,242,044
Additions, borrowing costs (Note 18)	—	3,805,274	—	3,805,274
Impairment (c)	—	(34,578,703)	—	(34,578,703)
Foreign currency translation adjustment	243,580	4,091,097	—	4,334,677
Balance at December 31, 2023	11,113,374	171,751,013	5,222,629	188,087,016

8 - INTANGIBLE ASSETS (CONTINUED)

	Software	Development costs (a)	Dealership rights (b)	Total
	$	$	$	$
ACCUMULATED AMORTIZATION
Balance at January 1, 2023	2,506,338	2,406,970	—	4,913,308
Amortization	2,095,740	5,121,049	—	7,216,789
Foreign currency translation adjustment	103,387	150,275	—	253,662
Balance at December 31, 2023	4,705,465	7,678,294	—	12,383,759
Carrying amount December 31, 2023	6,407,909	164,072,719	5,222,629	175,703,257

	Software	Development costs (a)	Dealership rights (b)	Total
	$	$	$	$
GROSS CARRYING AMOUNT
Balance at January 1, 2022	4,217,288	74,279,002	5,535,707	84,031,997
Additions, separately acquired	5,178,497	—	—	5,178,497
Additions, internally developed	1,258,813	70,331,615	—	71,590,428
Additions, borrowing costs (Note 18 )	—	3,542,538	—	3,542,538
Foreign currency translation adjustment	(517,224)	(7,235,827)	(313,078)	(8,066,129)
Balance at December 31, 2022	10,137,374	140,917,328	5,222,629	156,277,331
ACCUMULATED AMORTIZATION
Balance at January 1, 2022	1,177,575	954,592	—	2,132,167
Amortization	1,451,393	1,548,635	—	3,000,028
Foreign currency translation adjustment	(122,630)	(96,257)	—	(218,887)
Balance at December 31, 2022	2,506,338	2,406,970	—	4,913,308
Carrying amount December 31, 2022	7,631,036	138,510,358	5,222,629	151,364,023

8 - INTANGIBLE ASSETS (CONTINUED)

a.Incentives and other government assistance in the amount of $5,602,949 ($2,373,217 in 2022) was recognized during the year as a reduction of development costs.

b.During the year ended December 31, 2019, in order to acquire dealership rights in certain territories in the United States, the Group entered into an agreement with a private company. As of the termination date, May 7, 2022, the Group paid a cumulative amount of $3,778,203 under the agreement.

Dealership rights with an indefinite useful life are expected to provide economic benefits to the Group indefinitely as it allows the Group to sell to end customers in certain territories in the United States, conditional to yearly renewals of the dealer licenses. Management intends to renew its dealer licenses indefinitely.

c.In the fourth quarter of 2023, the Company made a strategic decision to indefinitely delay the start of commercial production of the LionA all-electric mini school bus and LionM all-electric minibus in order to prioritize development and commercialization efforts on other all-electric vehicles, and as a result a non-cash impairment charge of $34,578,703 was recognized in the consolidated statements of earnings (loss) and comprehensive loss as a reduction of intangible assets related to development costs. The recoverable amount of the LionA all-electric mini school bus and LionM all-electric minibus was determined on the basis of value in use, which was nil.

Schedule of Disclosure of Amortization Allocated in Consolidated Statement of Loss

Amortization has been allocated as follows in the consolidated statements of earnings (loss) and comprehensive loss :

	2023	2022
	$	$
Cost of sales	5,121,049	1,548,636
Administrative expenses	2,095,740	1,451,392
	7,216,789	3,000,028

XML

FINANCIAL ASSETS AND LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2023

Financial Instruments [Abstract]

Schedule of Disclosure of Financial Assets

The classification of financial instruments is summarized as follows:

	Classifications	December 31, 2023	December 31, 2022
		$	$
FINANCIAL ASSETS
Cash	Amortized cost	29,892,966	88,266,985
Trade receivables	Amortized cost	40,621,997	25,684,870
Incentives and other government assistance receivable	Amortized cost	26,625,156	25,312,738
FINANCIAL LIABILITIES
Trade and other payables	Amortized cost	71,856,894	62,383,813
Long-term debt and other debts	Amortized cost	224,942,365	110,673,348
Conversion options on convertible debt instruments	FVTPL	25,034,073	–
Share warrant obligations	FVTPL	29,582,203	23,243,563

Schedule of Disclosure of Fair Value Measurement of Liabilities

The classification of financial instruments is summarized as follows:

	Classifications	December 31, 2023	December 31, 2022
		$	$
FINANCIAL ASSETS
Cash	Amortized cost	29,892,966	88,266,985
Trade receivables	Amortized cost	40,621,997	25,684,870
Incentives and other government assistance receivable	Amortized cost	26,625,156	25,312,738
FINANCIAL LIABILITIES
Trade and other payables	Amortized cost	71,856,894	62,383,813
Long-term debt and other debts	Amortized cost	224,942,365	110,673,348
Conversion options on convertible debt instruments	FVTPL	25,034,073	–
Share warrant obligations	FVTPL	29,582,203	23,243,563

Schedule of Classification of Financial Instruments

The Group’s financial instruments are categorized as follows on the fair value hierarchy:

	Fair Value Hierarchy
FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE
Share warrant obligations- public	Level 1
Share warrant obligations- private	Level 2
Share warrant obligations- warrants issued to a customer	Level 3
Share warrant obligations- July 2023 warrants	Level 2
Conversion options on convertible debt instruments	Level 3
FINANCIAL INSTRUMENTS MEASURED AT AMORTIZED COST
Long-term debt and other debts	Level 2

XML

TRADE AND OTHER PAYABLES (Tables)

12 Months Ended

Dec. 31, 2023

Subclassifications of assets, liabilities and equities [abstract]

Schedule of Disclosure of Detailed Information About Trade and Other Payables

Trade and other payables consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Trade accounts	54,351,734	46,355,352
Accrued liabilities payable (also refer to Note 17)	17,505,160	16,028,461
Financial liabilities	71,856,894	62,383,813

Allowance for warranties	6,439,324	2,752,398
Salaries and vacations payable	10,197,794	7,267,172
Deductions at source	1,942,437	1,384,223
Sales taxes payable	1,988,512	1,434,436
Non-financial liabilities	20,568,067	12,838,229
	92,424,961	75,222,042

XML

DEFERRED REVENUE AND OTHER DEFERRED LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2023

Subclassifications of assets, liabilities and equities [abstract]

Schedule of Deferred Revenue and Other Deferred Liability

Deferred revenue and other deferred liabilities consist of the following:

	December 31, 2023	December 31, 2022
	$	$
Deferred revenue related to the U.S. Environmental Protection Agency ("EPA") Clean School Bus Program (Note 11.1)	16,293,067	—
Deferred liabilities related to the non-repayable financial contribution under Project Innovation Program for the Development of a Mobilizing Project (Note 11.2)	1,622,433	—
Other deferred liabilities	351,639	634,971
	18,267,139	634,971

XML

LONG-TERM DEBT AND OTHER DEBTS (Tables)

12 Months Ended

Dec. 31, 2023

Financial Instruments [Abstract]

Schedule of Long-term and Other Debts

	December 31, 2023	December 31, 2022
	$	$
Credit Agreement with Banking Syndicate, secured, maturing August 11, 2025 (Note 12.1)	70,000,000	71,916,716
Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.2)	23,573,074	10,381,986
Strategic Innovation Fund of the Government of Canada unsecured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.3)	15,124,280	6,189,814
Loans on research and development tax credits and subsidies receivable (Note 12.4)	22,682,595	22,150,030
Secured loans for the acquisition of rolling stock, maturing between December 2023 and August 2024 (Note 12.5)	10,361	34,802
Credit facility for the supplier payment program (Note 12.6)	4,363,520	—
Non-Convertible Debentures issued as part of 2023 Debenture Financing (Note 12.7, Note 12.7.1)	44,532,212	—
Convertible Debentures issued as part of 2023 Debenture Financing (Note 12.7, Note 12.7.2)	44,656,323	—
	224,942,365	110,673,348
Current portion of long-term debt and other debts	27,056,476	24,713
Long-term portion of long-term debt and other debts	197,885,889	110,648,635

As at December 31, 2023, the weighted average all-in interest rate was 6.96%, including stamping fees and spread, divided as follows:

	Repricing date	Interest Rate
Loans in the amount of US$70,000,000	January 2024	6.94%- 6.98%, including spread of 1.50%

As at December 31, 2022, the weighted average all-in interest rate was 5.46%, including stamping fees and spread, divided as follows:

	Repricing date	Interest Rate
Loans in the amount of C$50,000,000	January 2023	3.67% - 4.71% plus 1.50% stamping fee
Loans in the amount of US$35,000,000	January 2023	4.42% - 5.80%, including spread of 1.50%

As at December 31, 2023, the credit facility for the supplier payment program was divided as follows:

	December 31, 2023
	$
Carrying amount
Presented in long-term debts and other debts of which suppliers has not received payments	—
Presented in long-term debts and other debts of which suppliers has received payments	4,363,520
Presented in long-term debts and other debts	4,363,520

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.6 Credit facility for the supplier payment program (continued)

	December 31, 2023
Range of payment due date
Liabilities that are part of the arrangements	119 - 120 days after invoice date
Comparable trade payables that are not part of the arrangements	Net 30 days

The expected volatility was determined by reference to historical data of comparable share prices over the expected life of the conversion options on convertible debt instruments .

The Group has recognized the following conversion options on convertible debt instruments:

	December 31, 2023
	$
Beginning balance at July 19, 2023	30,342,059
Paid in kind interest	3,551,316
Fair value adjustment	(8,533,552)
Foreign currency translation adjustment	(325,750)
Ending balance	25,034,073

Schedule of Non-Convertible Debenture

The Group has recognized the following related to the SIF Loan:

	December 31, 2023
	$
Beginning balance	6,189,814
Addition	8,903,080
Accretion expense	403,408
Foreign currency translation adjustment	(372,022)
Balance at December 31, 2023	15,124,280

The Group has recognized the following related to the Non-Convertible debenture:

	December 31, 2023
	$
Beginning balance at July 19, 2023	42,237,853
Accretion expense	2,346,874
Foreign currency translation adjustment	(52,515)
Balance at December 31, 2023	44,532,212

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

Schedule of Convertible Debenture

The Group has recognized the following related to the Convertible debenture:

	December 31, 2023
	$
Beginning balance at July 19, 2023	41,743,240
Accretion expense	2,913,083
Balance at December 31, 2023	44,656,323

XML

CONVERSION OPTION ON CONVERTIBLE DEBT INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2023

Borrowing costs [abstract]

Schedule of Fair Value Measurement

The fair value of the conversion options on convertible debt instruments was determined using the Black-Scholes or the binomial option pricing model taking into account the following assumptions:

	December 31, 2023	July 19, 2023
Exercise price ($)	2.58	2.58
Share price ($)	1.77	2.12
Volatility (%)	57%	57%
Risk-free interest rate (%)	3.28%	3.76%
Expected warrant life (years)	4.54	5.00

Schedule of Non-Convertible Debenture

	December 31, 2023	December 31, 2022
	$	$
Credit Agreement with Banking Syndicate, secured, maturing August 11, 2025 (Note 12.1)	70,000,000	71,916,716
Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.2)	23,573,074	10,381,986
Strategic Innovation Fund of the Government of Canada unsecured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.3)	15,124,280	6,189,814
Loans on research and development tax credits and subsidies receivable (Note 12.4)	22,682,595	22,150,030
Secured loans for the acquisition of rolling stock, maturing between December 2023 and August 2024 (Note 12.5)	10,361	34,802
Credit facility for the supplier payment program (Note 12.6)	4,363,520	—
Non-Convertible Debentures issued as part of 2023 Debenture Financing (Note 12.7, Note 12.7.1)	44,532,212	—
Convertible Debentures issued as part of 2023 Debenture Financing (Note 12.7, Note 12.7.2)	44,656,323	—
	224,942,365	110,673,348
Current portion of long-term debt and other debts	27,056,476	24,713
Long-term portion of long-term debt and other debts	197,885,889	110,648,635

As at December 31, 2023, the weighted average all-in interest rate was 6.96%, including stamping fees and spread, divided as follows:

	Repricing date	Interest Rate
Loans in the amount of US$70,000,000	January 2024	6.94%- 6.98%, including spread of 1.50%

As at December 31, 2022, the weighted average all-in interest rate was 5.46%, including stamping fees and spread, divided as follows:

	Repricing date	Interest Rate
Loans in the amount of C$50,000,000	January 2023	3.67% - 4.71% plus 1.50% stamping fee
Loans in the amount of US$35,000,000	January 2023	4.42% - 5.80%, including spread of 1.50%

As at December 31, 2023, the credit facility for the supplier payment program was divided as follows:

	December 31, 2023
	$
Carrying amount
Presented in long-term debts and other debts of which suppliers has not received payments	—
Presented in long-term debts and other debts of which suppliers has received payments	4,363,520
Presented in long-term debts and other debts	4,363,520

12 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)

12.6 Credit facility for the supplier payment program (continued)

	December 31, 2023
Range of payment due date
Liabilities that are part of the arrangements	119 - 120 days after invoice date
Comparable trade payables that are not part of the arrangements	Net 30 days

The expected volatility was determined by reference to historical data of comparable share prices over the expected life of the conversion options on convertible debt instruments .

The Group has recognized the following conversion options on convertible debt instruments:

	December 31, 2023
	$
Beginning balance at July 19, 2023	30,342,059
Paid in kind interest	3,551,316
Fair value adjustment	(8,533,552)
Foreign currency translation adjustment	(325,750)
Ending balance	25,034,073

XML

SHARE WARRANT OBLIGATIONS (Tables)

12 Months Ended

Dec. 31, 2023

Subclassifications of assets, liabilities and equities [abstract]

Schedule of Disclosure of Fair Value Assumptions

The fair value of the Warrant was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	December 31, 2023	December 31, 2022
Exercise price ($)	5.66	5.66
Share price ($)	1.77	2.24
Volatility (%)	57%	43%
Risk-free interest rate (%)	3.30%	3.38%
Expected warrant life (years)	4.50	5.50

The fair value of the public warrants was determined using their market trading price as follows:

	December 31, 2023	December 31, 2022
Warrant price ($)	0.05	0.45

The fair value of the 2022 Warrants was determined using their market trading price as follows:

	December 31, 2023	December 31, 2022
Warrant price ($)	0.41	0.70

Schedule of Explanation of Significant Changes in Contract Assets and Share Warrant Obligation

The Group has recognized the following contract asset and share warrant obligation:

	December 31, 2023	December 31, 2022
	$	$
Contract asset
Beginning Balance	13,211,006	14,113,415
Foreign currency translation adjustment	317,640	(902,409)
Ending Balance	13,528,646	13,211,006

14 - SHARE WARRANT OBLIGATIONS (CONTINUED)

14.1 Warrants issued to a customer (continued)

Share warrant obligation
Beginning Balance	2,172,269	30,871,444
Fair value adjustment	(262,569)	(28,281,579)
Foreign currency translation adjustment	(11,909)	(417,596)
Ending Balance	1,897,791	2,172,269

Schedule of Disclosure of Fair Value of Private Warrants

The fair value of the private warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	December 31, 2023	December 31, 2022
Exercise price ($)	11.50	11.50
Share price ($)	1.77	2.24
Volatility (%)	53%	50%
Risk-free interest rate (%)	3.81%	3.68%
Expected warrant life (years)	2.33	3.33

The fair value of the warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	January 17, 2023	December 16, 2022
Exercise price ($)	2.80	2.80
Share price ($)	2.49	2.54
Volatility (%)	45%	44%
Risk-free interest rate (%)	2.95%	3.07%
Expected warrant life (years)	5.00	5.00

he fair value of the warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	December 31, 2023	July 19, 2023
Exercise price (C$)	2.81	2.81
Share price (C$)	2.36	2.78
Volatility (%)	57%	57%
Risk-free interest rate (%)	3.28%	3.76%
Expected warrant life (years)	4.54	5.00

The following table summarizes the weighted average values for the assumptions used in the Black-Scholes option pricing model for the stock option grants during the years ended December 31, 2023 and 2022:

	2023	2022
Expected dividends per share (C$)	—	—
Exercise price (C$)	2.78	6.94
Share price (C$)	2.78	6.94
Expected Volatility (%)	40%	40%
Risk-free interest rate (%)	3.19%	2.78%
Expected option life (years)	6.25	7.50

Schedule of Disclosure of Warrant Obligations

The Group has recognized the following warrant obligations:

	Public warrants	Private warrants	Total
	$	$	$
Beginning balance at January 1, 2023	7,075,767	914,881	7,990,648
Fair value adjustment	(6,173,511)	(727,873)	(6,901,384)
Foreign currency translation adjustment	3,481	(9,825)	(6,344)
Balance at December 31, 2023	905,737	177,183	1,082,920

	Public warrants	Private warrants	Total
	$	$	$
Beginning balance at January 1, 2022	42,961,675	32,392,815	75,354,490
Fair value adjustment	(35,011,131)	(31,200,119)	(66,211,250)
Exercised	(348)	—	(348)
Foreign currency translation adjustment	(874,429)	(277,815)	(1,152,244)
Balance at December 31, 2022	7,075,767	914,881	7,990,648

The Group has recognized the following warrant obligation:

	December 31, 2023
	$
Beginning balance at July 19, 2023	24,767,843
Fair value adjustment	(6,421,117)
Foreign currency translation adjustment	(303,300)
Ending balance	18,043,426

XML

EMPLOYEE BENEFITS EXPENSE (Tables)

12 Months Ended

Dec. 31, 2023

Employee Benefits [Abstract]

Schedule of Disclosure of Employee Benefits Expense

The following table summarizes the employee benefits expense recorded and included in administrative and selling expenses during the year ended December 31, 2023, and 2022:

	2023	2022
	$	$
Wages and salaries	56,381,455	35,576,358
Share-based compensation (Note 16)	5,203,521	12,362,070
	61,584,976	47,938,428

XML

SHARE-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangements [Abstract]

Schedule of Disclosure of Outstanding Options

The following table summarizes the outstanding options as at December 31, 2023 and 2022 and changes during the years then ended:

	2023		2022
	Number of stock options	Weighted average exercise price	Number of stock options	Weighted average exercise price
		C$		C$
Outstanding, beginning of year	9,547,185	2.11	9,072,149	1.82
Granted	1,921,151	2.78	558,697	6.94
Exercised(a)	—	—	(45,121)	0.93
Forfeited	(708,753)	10.79	(38,540)	6.91
Outstanding, end of year	10,759,583	1.65	9,547,185	2.11
Exercisable, end of year	8,746,808	1.19	7,615,432	1.25

a. Stock options exercised during the year ended December 31, 2022 had a weighted average share price of C$3.42 at the date of exercise.

Schedule of Disclosure of Information Relating to Stock Options Outstanding

he following table summarizes the information relating to stock options outstanding:

	As at December 31, 2023
	Number of stock options	Remaining contractual life (years)	Number of stock options exercisable
Exercise price
C$0.93 (issued in 2018)	4,747,277	3.96	4,747,277
C$0.93 (issued in 2019)	3,664,907	5.76	3,664,907
C$6.90 (issued in 2020)	289,023	6.71	216,767
C$15.45 (issued in 2021)	26,389	7.65	13,195
C$23.02 (issued in 2021)	10,013	7.49	5,007
C$13.29 (issued in 2021)	14,600	7.94	7,300
C$6.92 (issued in 2022)	304,335	8.36	76,084
C$7.05 (issued in 2022)	65,083	8.38	16,271
C$2.75 (issued in 2023)	1,260,598	9.22	—
C$2.89 (issued in 2023)	377,358	9.70	—
	10,759,583		8,746,808

	As at December 31, 2022
	Number of stock options	Remaining contractual life (years)	Number of stock options exercisable
Exercise price
C$0.93 (issued in 2018)	4,747,277	4.96	4,747,277
C$0.93 (issued in 2019)	3,664,907	6.76	2,649,930
C$6.90 (issued in 2020)	289,023	7.71	144,512
C$15.45 (issued in 2021)	26,389	8.65	6,597
C$23.02 (issued in 2021)	253,865	8.49	63,466
C$13.29 (issued in 2021)	14,600	8.94	3,650
C$6.92 (issued in 2022)	486,041	9.36	—
C$7.05 (issued in 2022)	65,083	9.38	—
	9,547,185		7,615,432

Schedule of Disclosure of Weighted Assumptions Used in the Black-Scholes Option Pricing Model

The fair value of the private warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	December 31, 2023	December 31, 2022
Exercise price ($)	11.50	11.50
Share price ($)	1.77	2.24
Volatility (%)	53%	50%
Risk-free interest rate (%)	3.81%	3.68%
Expected warrant life (years)	2.33	3.33

The fair value of the warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	January 17, 2023	December 16, 2022
Exercise price ($)	2.80	2.80
Share price ($)	2.49	2.54
Volatility (%)	45%	44%
Risk-free interest rate (%)	2.95%	3.07%
Expected warrant life (years)	5.00	5.00

he fair value of the warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:

	December 31, 2023	July 19, 2023
Exercise price (C$)	2.81	2.81
Share price (C$)	2.36	2.78
Volatility (%)	57%	57%
Risk-free interest rate (%)	3.28%	3.76%
Expected warrant life (years)	4.54	5.00

The following table summarizes the weighted average values for the assumptions used in the Black-Scholes option pricing model for the stock option grants during the years ended December 31, 2023 and 2022:

	2023	2022
Expected dividends per share (C$)	—	—
Exercise price (C$)	2.78	6.94
Share price (C$)	2.78	6.94
Expected Volatility (%)	40%	40%
Risk-free interest rate (%)	3.19%	2.78%
Expected option life (years)	6.25	7.50

Schedule of Disclosure of Share-based Payment Arrangements Compensation Expense

Compensation expense related to the share-based compensation was recognized in the consolidated statements of earnings (loss) and comprehensive loss as follows:

	2023	2022
	$	$
Administrative expenses	3,414,925	8,296,836
Selling expenses	240,720	2,765,645
	3,655,645	11,062,481

Compensation expense related to the RSUs was recognized in the consolidated statements of earnings (loss) and comprehensive loss as follows:

	2023	2022
	$	$
Administrative expenses	680,938	399,812
Selling expenses	(49,443)	123,063
	631,495	522,875

Compensation expense related to the DSUs was recognized in administrative expenses in the statements of consolidated earnings (loss) and comprehensive loss as follows with a corresponding increase in contributed surplus:

	2023	2022
	$	$
Administrative expenses	916,381	776,714

Schedule of Disclosure of Equity Instruments Measured at Fair Value

	2023		2022
	Number of restricted share units	Weighted average exercise price	Number of restricted share units	Weighted average exercise price
		C$		C$
Outstanding, beginning of year	297,658	8.35	36,247	18.59
Granted	811,458	2.75	276,584	6.93
Forfeited	(211,876)	5.39	(15,173)	6.92
Outstanding, end of year	897,240	3.99	297,658	8.35
Vested, end of year	—	—	—	—

	2023		2022
	Number of deferred share units	Weighted average exercise price	Number of deferred share units	Weighted average exercise price
		C$		C$
Outstanding, beginning of year	301,091	4.23	18,755	14.07
Granted	478,884	2.58	284,362	3.65
Settled	—	—	(2,026)	14.07
Outstanding, end of year	779,975	3.21	301,091	4.23
Vested, end of year	779,975	3.21	301,091	4.23

XML

RESTRUCTURING COSTS (Tables)

12 Months Ended

Dec. 31, 2023

Subclassifications of assets, liabilities and equities [abstract]

Schedule of Disclosure of Activities Related to the Restructuring

The following table summarizes the activities related to the restructuring for the year ended December 31, 2023:

	2023
	$
Expenses	1,426,487
Payments	(714,865)
Liability as of December 31, 2023	711,622

XML

FINANCE COSTS (Tables)

12 Months Ended

Dec. 31, 2023

Finance Costs [Abstract]

Schedule of Disclosure of Finance Costs

Finance costs for the reporting years consist of the following:

	2023	2022
	$	$
Interest on long-term debt and other debtsa	7,097,927	280,491
Interest on lease liabilitiesa	2,141,641	284,631
Accretion expense	5,663,365	—
Accretion and revaluation expense on balance of purchase price payable related to the acquisition of the dealership rights	—	82,850
Gain on derecognition of the balance of purchase price payable related to the acquisition of the dealership rightsb	—	(2,130,583)
Financing cost	3,752,505	2,489,123
Other	(762,994)	(51,090)
	17,892,444	955,422

a.Net of capitalized borrowing costs of $6,535,601 (Notes 6 and 8) for the year ended December 31, 2023 (December 31, 2022: $5,093,206), $4,021,208 included in interest on long-term debt and other debts and $2,514,393 in interest on lease liability, respectively (December 31, 2022: $2,214,906 included in interest on long-term debt and other debts,$2,878,300 in interest on lease liability, respectively). The weighted average interest rate used to capitalize the borrowing costs is 7.35% in 2023 (2022: 5.68%).

b.On May 7, 2022, the agreement with a private company relating to the previous acquisition of dealership rights in certain territories in the United States matured and the related financial liability was derecognized. The carrying amount of $2,130,583 was recognized as a gain under finance costs in the consolidated statements of earnings (loss) and comprehensive loss.

XML

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2023

Income Taxes [Abstract]

Schedule of Disclosure of Reconciliation of the Effective Tax Rate

The reconciliation of the effective tax rate is as follows:

	2023	2022
	$	$
Net earnings (loss) before income taxes	(103,766,137)	17,775,766
Combined statutory income tax rate in Canada	26.50%	26.50%
Expected income tax expense (recovery)	(27,498,026)	4,710,578
Non-deductible share-based employee remuneration	1,386,071	3,275,949
Change in fair value of share warrant obligations	(7,097,660)	(26,889,069)
Non-deductible accretion expense	1,525,199	16,529
Change in unrecognized deferred tax assets	31,505,502	18,596,751
Impact of US tax rate applicable to the subsidiary	173,834	173,323
Non-deductible expenses	62,703	114,518
Other	(57,623)	1,421
	—	—

Schedule of Disclosure of Components of Deferred Income Tax Assets and Liabilities

The components of the deferred income tax assets and (liabilities) are as follows:

	December 31, 2023	December 31, 2022
	$	$
Property, plant and equipment	2,138,000	(16,438,000)
Right-of-use assets	(24,258,000)	(16,202,000)
Intangible assets	(46,162,000)	(37,151,000)
Lease liabilities	23,681,000	16,051,000
Non-capital losses carry-forward	36,632,000	50,100,000
Deferred financing cost	(203,000)	(282,000)
Financing fees and other	8,172,000	3,922,000
	—	—

The Group has accumulated unrecognized deductible temporary differences, unused tax losses and unused research and development expenditures as follows:

	December 31, 2023	December 31, 2022
	$	$
Deductible temporary differences	5,486,000	6,059,000
Non-capital losses carry-forward	152,505,000	73,623,000
Research and development expenditures carry-forward	104,680,000	65,710,000
	262,671,000	145,392,000

The Group has accumulated unrecognized unused tax credits as follows:

	December 31, 2023	December 31, 2022
	$	$
Canadian Federal investment tax credits	16,000,000	10,307,000
Québec investment and innovation tax credit	437,000	64,000
	16,437,000	10,371,000

XML

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2023

Disclosure Of Earnings Per Share [Abstract]

Schedule of Disclosure of Outstanding Stock Options, Share Warrant Obligations, RSUs and DSUs

	2023	2022
	$	$
Net earnings (loss)	(103,766,137)	17,775,766
Basic weighted average number of common shares outstanding	224,311,227	193,113,983
Basic earnings (loss) per share	(0.46)	0.09
Basic weighted average number of common shares outstanding	224,311,227	193,113,983
Plus dilutive impact of stock options, RSUs, DSUs, and warrants	—	7,477,680
Diluted weighted average number of common shares outstanding	224,311,227	200,591,663
Diluted earnings (loss) per share	(0.46)	0.09

XML

SUPPLEMENTAL CASH FLOW DISCLOSURE (Tables)

12 Months Ended

Dec. 31, 2023

Statement of cash flows [abstract]

Schedule of Depreciation and Amortization

The depreciation and amortization is detailed as follows:

	2023	2022
	$	$
Depreciation – property, plant and equipment	10,820,442	5,038,092
Depreciation – right-of-use assets	8,037,341	3,454,353
Amortization – intangible assets	7,216,789	3,000,028
	26,074,572	11,492,473

Schedule of Change In Non-cash Working Capital Items

The net change in non-cash working capital is detailed as follows:

	2023	2022
	$	$
Inventories	(90,063,714)	(61,739,634)
Accounts receivable	(13,351,335)	(24,369,277)
Prepaid expenses	3,818,496	(940,816)
Trade and other payables (1)	24,056,908	27,926,974
Deferred revenue and other deferred liabilities	17,564,993	155,253
	(57,974,652)	(58,967,500)

21 - SUPPLEMENTAL CASH FLOW DISCLOSURE (CONTINUED)

(1)The net change in trade and other payables excludes trade and other payables as at December 31, 2023 related to the following non-cash working capital items: $634,331 related to the additions of intangible assets and $11,750,398 related to the acquisition of property, plant and equipment and includes trade and other payables as at December 31, 2022 related to the additions of intangible assets of $4,757,926 and related to the acquisition of property, plant and equipment of $16,229,912.

There were $554,310 outstanding payables related to the additions of intangible assets and $8,797,575 related to the acquisition of property, plant and equipment as at December 31, 2021.

Schedule of Change in Liabilities Arising From Financing Activities

The changes in the Group’s liabilities arising from financing activities can be classified as follows:

	Share warrant obligations	Conversion options on convertible debt instruments	Long-term debt and other debts	Lease liabilities	Total
Balance at January 1, 2023	23,243,563	—	110,673,348	63,520,215	197,437,126
Cash flows :
Repayment	—	—	(148,305,458)	(6,512,231)	(154,817,689)
Proceeds	27,675,069	30,342,059	259,498,434	—	317,515,562
Finance costs attributable to 2023 Debenture financing	—	—	(3,829,850)	—	(3,829,850)
Non-cash :
Accretion expense	—	—	5,663,365	—	5,663,365
Non-monetary additions (net of modification)	—	—	—	34,117,202	34,117,202
Change in fair value of share warrant obligations	(20,963,112)	—	—	—	(20,963,112)
Change in fair value of conversion options on convertible debt instruments and interest paid in kind	—	(4,982,236)	—	—	(4,982,236)
Unrealized foreign exchange gain	—	—	(2,568,295)	—	(2,568,295)
Foreign currency translation adjustment	(373,317)	(325,750)	3,810,821	831,400	3,943,154
Balance at December 31, 2023	29,582,203	25,034,073	224,942,365	91,956,586	371,515,227

	Share warrant obligations	Long-term debt and other debts	Lease liabilities	Total
Balance at January 1, 2022	106,225,934	13,077,670	62,209,317	181,512,921
Cash flows :
Repayment	—	(10,348,894)	(4,977,183)	(15,326,077)
Proceeds	19,913,196	111,576,513	—	131,489,709
Non-cash :
Accretion expense	—	82,850	—	82,850
Non-monetary additions (net of modification)	—	—	6,961,794	6,961,794
Gain on derecognition of dealership rights	—	(2,130,583)	—	(2,130,583)
Change in fair value of share warrant obligations	(101,468,186)	—	—	(101,468,186)
Contributed surplus	(3,798)	—	—	(3,798)
Unrealized foreign exchange loss	—	516,401	—	516,401
Foreign currency translation adjustment	(1,423,583)	(2,100,609)	(673,713)	(4,197,905)
Balance at December 31, 2022	23,243,563	110,673,348	63,520,215	197,437,126

XML

RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2023

Disclosure Of Related Party Transactions [Abstract]

Schedule of Related Party Transactions

Key management personnel remuneration includes the following expenses:

	2023	2022
	$	$
Salaries including bonuses	3,633,112	3,368,388
Share-based payments	3,737,017	8,878,755
Total remuneration	7,370,129	12,247,143

XML

ENTITY-WIDE DISCLOSURES (Tables)

12 Months Ended

Dec. 31, 2023

Entity Wide Disclosures [Abstract]

Schedule of Disclosure of Group's Revenue From External Customers That Are Divided Into Geographical Areas

The Group’s revenue from external customers is divided into the following geographical areas:

	2023	2022
Revenue from external customers	$	$
Canada	165,650,421	121,086,499
United States	87,845,180	18,827,971
	253,495,601	139,914,470

Schedule of Disclosure of Non-current Assets Allocated To Geographic Areas

The Group’s non-current assets are allocated to geographic areas as follows:

	December 31, 2023
	Canada	United States	Total
	$	$	$
Other non-current assets	6,812,370	182,445	6,994,815
Property, plant and equipment	94,684,032	103,852,651	198,536,683
Right-of-use assets	35,469,879	54,193,260	89,663,139
Intangible assets	167,106,057	8,597,200	175,703,257
Contract asset	13,528,646	—	13,528,646
	317,600,984	166,825,556	484,426,540

	December 31, 2022
	Canada	United States	Total
	$	$	$
Other non-current assets	708,440	364,786	1,073,226
Property, plant and equipment	81,602,840	79,153,488	160,756,328
Right-of-use assets	10,836,851	49,671,503	60,508,354
Intangible assets	144,213,010	7,151,013	151,364,023
Contract asset	13,211,006	—	13,211,006
	250,572,147	136,340,790	386,912,937

XML

FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT (Tables)

12 Months Ended

Dec. 31, 2023

Financial Instruments [Abstract]

Schedule of Disclosure of Foreign Currency Denominated Financial Assets and Liabilities Which Expose the Group to Currency Risk

Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those reported to key management, in US dollars:

	December 31, 2023		December 31, 2022
	Assets	Liabilities	Assets	Liabilities
	$	$	$	$
Cash	2,334,652	—	34,192,889	—
Trade and other payables	—	3,074,771	—	6,094,084
Long-term debt and other debts	—	119,019,843	—	35,000,000
	2,334,652	122,094,614	34,192,889	41,094,084

Schedule of Disclosure of Maturity of Contractual Obligations

The following tables set forth the maturity of the Group’s contractual obligations (including interest payments where applicable) as at December 31, 2023 and as at December 31, 2022:

	December 31, 2023
	Carrying amount		Undiscounted contractual cash flows	Less than 1 year		Between 1 and 3 years		Between 4 and 5 years		More than 5 years
	$		$	$		$		$		$
Trade and other payables	71,856,894		71,856,894	71,856,894		—		—		—
Long-term debt and other debts	224,942,365		322,891,324	37,571,684		85,120,218		154,644,192		45,555,230
Purchase and other obligations	—	—	72,781,793	58,681,793	—	14,100,000	—	—	—	—
Lease obligations	91,956,586		133,666,965	12,902,616		23,300,865		25,084,501		72,378,983
Total contractual obligations	388,755,845		601,196,976	181,012,987		122,521,083		179,728,693		117,934,213

25 - FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT (CONTINUED)

25.4 Liquidity risk analysis (continued)

	December 31, 2022
	Carrying amount		Undiscounted contractual cash flows	Less than 1 year		Between 1 and 3 years		Between 4 and 5 years		More than 5 years
	$		$	$		$		$		$
Trade and other payables	62,383,813		62,383,813	62,383,813		—		—		—
Long-term debt and other debts	110,673,348		118,341,134	2,450,141		96,150,078		—		19,740,915
Purchase and other obligations	—	—	149,591,363	70,523,901	—	75,154,748	—	3,439,748	—	472,966
Lease obligations	63,520,215		89,985,860	8,320,131		15,454,284		16,693,337		49,518,108
Total contractual obligations	236,577,376		420,302,170	143,677,986		186,759,110		20,133,085		69,731,989

Schedule of Disclosure of Amounts Managed by Capital Under Review

The amounts managed as capital by the Group for the reporting years under review are summarized as follows:

	December 31, 2023	December 31, 2022
	$	$
Long-term debt and other debts	224,942,365	110,673,348
Less: Cash	29,892,966	88,266,985
Total net indebtedness	195,049,399	22,406,363
Shareholders’ equity	358,913,991	437,116,773
Warrants issued as part of the business combination transaction, December 2022 Offering and 2023 Debenture Financing	27,684,412	21,071,294
Total net indebtedness	195,049,399	22,406,363
Total capitalization	581,647,802	480,594,430
Total net indebtedness to total capitalization ratio	34%	5%

XML

SUMMARY OF ACCOUNTING POLICIES - Narrative (Details)	12 Months Ended
	Dec. 31, 2023 segment
Disclosure of initial application of standards or interpretations [line items]
Lessee, operating lease, term of contract (in months)	12 months
Number of operating segments	1
Minimum
Disclosure of initial application of standards or interpretations [line items]
Period of guarantee for products against defects (in years)	1 year
Maximum
Disclosure of initial application of standards or interpretations [line items]
Period of guarantee for products against defects (in years)	8 years

XML

SUMMARY OF ACCOUNTING POLICIES - Schedule of Disclosure of Principal Subsidiaries, their Jurisdiction, and the Company's Percentage Ownership Share (Details)	12 Months Ended
	Dec. 31, 2023
Lion Holding USA Inc.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary (as a percent)	100.00%
The Lion Electric Co USA Inc.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary (as a percent)	100.00%
Lion Electric Manufacturing USA Inc.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary (as a percent)	100.00%

XML

SUMMARY OF ACCOUNTING POLICIES - Schedule of Disclosure of Subsequent Measurement of Finite-Live Intangible Assets (Details)	12 Months Ended
	Dec. 31, 2023
Machinery and equipment
Disclosure of detailed information about intangible assets [line items]
Estimated useful lives (in units)	7,000
Estimated useful lives (in years)	5 years
Rolling stock
Disclosure of detailed information about intangible assets [line items]
Estimated useful lives (in years)	5 years
Computer equipment
Disclosure of detailed information about intangible assets [line items]
Estimated useful lives (in years)	5 years
Furniture and office equipment
Disclosure of detailed information about intangible assets [line items]
Estimated useful lives (in years)	10 years
Production moulds
Disclosure of detailed information about intangible assets [line items]
Estimated useful lives (in units)	1,250
Master patterns and templates
Disclosure of detailed information about intangible assets [line items]
Estimated useful lives (in units)	7,000
Prototypes
Disclosure of detailed information about intangible assets [line items]
Estimated useful lives (in years)	3 years
Development costs
Disclosure of detailed information about intangible assets [line items]
Estimated useful lives (in units)	7,000
Software
Disclosure of detailed information about intangible assets [line items]
Estimated useful lives (in units)	5

XML

ACCOUNTS RECEIVABLE - Schedule of Accounts Receivable (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Disclosure of detailed information about financial instruments [line items]
Trade receivables, gross	$ 41,777,117	$ 25,935,309
Allowance for credit losses	(1,155,120)	(250,439)
Trade receivables, net	40,621,997	25,684,870
Financial assets	67,247,153	50,997,608
Commodity taxes receivable	4,028,472	4,557,779
Research and development tax credits receivable	4,366,155	7,416,155
Non-financial assets	8,394,627	11,973,934
Accounts receivable	75,641,780	62,971,542
Government Assistance Receivables
Disclosure of detailed information about financial instruments [line items]
Financial assets	$ 26,625,156	$ 25,312,738

XML

ACCOUNTS RECEIVABLE - Narrative (Details)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Customer 1
Disclosure of major customers [line items]
Percentage of total accounts receivable (as a percent)	13.40%	19.20%
Customer 2
Disclosure of major customers [line items]
Percentage of total accounts receivable (as a percent)		15.20%

XML

ACCOUNTS RECEIVABLE - Schedule of Incentives and Other Governance Assistance Receivable (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Disclosure of detailed information about financial instruments [line items]
Financial assets	$ 67,247,153	$ 50,997,608
Government Assistance Receivables
Disclosure of detailed information about financial instruments [line items]
Financial assets	26,625,156	25,312,738
Transport Canada Medium and Heavy-duty Zero-Emission Vehicles ("iMHZEV") Program
Disclosure of detailed information about financial instruments [line items]
Financial assets	3,702,540	5,020,673
U.S. Environmental Protection Agency ("EPA") School Bus Program
Disclosure of detailed information about financial instruments [line items]
Financial assets	0	3,767,713
Government of Quebec Ecocamionnage program
Disclosure of detailed information about financial instruments [line items]
Financial assets	4,376,726	4,118,060
Ministry of Transportation of Quebec Programme d'électrification du transport scolaire ("PETS")
Disclosure of detailed information about financial instruments [line items]
Financial assets	17,820,959	11,425,724
Other government assistance and incentives receivable
Disclosure of detailed information about financial instruments [line items]
Financial assets	$ 724,931	$ 980,568

XML

INVENTORIES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Inventories [Abstract]
Raw materials	$ 173,404,495	$ 135,656,954
Work in process	28,105,877	22,809,755
Finished goods	48,096,384	8,725,226
Inventories	249,606,756	167,191,935
Cost of inventories recognised as expense during period	243,927,490	144,405,153
Inventory write-down	12,022,984	$ 478,889
Current raw materials and current production supplies	$ 9,808,973

XML

PROPERTY, PLANT AND EQUIPMENT - Schedule of Rollforward of Property, Plant and Equipment (Details) - USD ($)	3 Months Ended	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2023	Dec. 31, 2022
Changes in property, plant and equipment [abstract]
Beginning balance		$ 160,756,328
Depreciation		10,820,442	$ 5,038,092
Ending balance	$ 198,536,683	198,536,683	160,756,328
GROSS CARRYING AMOUNT
Changes in property, plant and equipment [abstract]
Beginning balance		168,811,997	36,100,046
Additions		69,129,502	135,522,720
Additions - Borrowing costs (Note 18)		2,730,327	1,550,668
Transfer		0	0
Disposals and write-offs		(26,006,772)	(83,130)
Impairment		(1,625,452)
Foreign currency translation adjustment		2,375,090	(4,278,307)
Ending balance	215,414,692	215,414,692	168,811,997
ACCUMULATED DEPRECIATION
Changes in property, plant and equipment [abstract]
Beginning balance		(8,055,669)	(3,431,888)
Disposals and write-offs		2,092,822	58,142
Impairment		(206,032)
Depreciation		10,820,442	5,038,092
Foreign currency translation adjustment		(300,752)	356,169
Ending balance	(16,878,009)	(16,878,009)	(8,055,669)
Leasehold improvements
Changes in property, plant and equipment [abstract]
Beginning balance		49,874,131
Ending balance	64,452,027	64,452,027	49,874,131
Leasehold improvements | GROSS CARRYING AMOUNT
Changes in property, plant and equipment [abstract]
Beginning balance		52,688,714	17,054,605
Additions		16,166,380	35,455,356
Additions - Borrowing costs (Note 18)		0	0
Transfer		894,216	462,435
Disposals and write-offs		0	0
Impairment		0
Foreign currency translation adjustment		(42,698)	(283,682)
Ending balance	69,706,612	69,706,612	52,688,714
Leasehold improvements | ACCUMULATED DEPRECIATION
Changes in property, plant and equipment [abstract]
Beginning balance		(2,814,583)	(1,618,691)
Disposals and write-offs		0	0
Impairment		0
Depreciation		2,347,584	1,339,208
Foreign currency translation adjustment		(92,418)	143,316
Ending balance	(5,254,585)	(5,254,585)	(2,814,583)
Machinery and equipment
Changes in property, plant and equipment [abstract]
Beginning balance		56,326,036
Ending balance	76,652,377	76,652,377	56,326,036
Machinery and equipment | GROSS CARRYING AMOUNT
Changes in property, plant and equipment [abstract]
Beginning balance		58,166,555	6,421,141
Additions		22,470,851	52,807,971
Additions - Borrowing costs (Note 18)		1,371,166	515,919
Transfer		0	67,455
Disposals and write-offs		(1,487,289)	0
Impairment		(1,025,686)
Foreign currency translation adjustment		798,124	(1,645,931)
Ending balance	80,293,721	80,293,721	58,166,555
Machinery and equipment | ACCUMULATED DEPRECIATION
Changes in property, plant and equipment [abstract]
Beginning balance		(1,840,519)	(343,839)
Disposals and write-offs		1,487,289	0
Impairment		(38,301)
Depreciation		3,267,855	1,581,078
Foreign currency translation adjustment		(58,560)	84,398
Ending balance	(3,641,344)	(3,641,344)	(1,840,519)
Rolling stock
Changes in property, plant and equipment [abstract]
Beginning balance		2,094,156
Ending balance	4,232,863	4,232,863	2,094,156
Rolling stock | GROSS CARRYING AMOUNT
Changes in property, plant and equipment [abstract]
Beginning balance		2,531,772	1,308,726
Additions		3,728,406	1,317,358
Additions - Borrowing costs (Note 18)		0	0
Transfer		0	0
Disposals and write-offs		(28,205)	(83,130)
Impairment		(291,420)
Foreign currency translation adjustment		45,625	(11,182)
Ending balance	5,986,178	5,986,178	2,531,772
Rolling stock | ACCUMULATED DEPRECIATION
Changes in property, plant and equipment [abstract]
Beginning balance		(437,616)	(224,406)
Disposals and write-offs		43,763	58,142
Impairment		(99,210)
Depreciation		1,449,581	278,078
Foreign currency translation adjustment		(9,091)	6,726
Ending balance	(1,753,315)	(1,753,315)	(437,616)
Computer equipment
Changes in property, plant and equipment [abstract]
Beginning balance		6,005,928
Ending balance	7,225,482	7,225,482	6,005,928
Computer equipment | GROSS CARRYING AMOUNT
Changes in property, plant and equipment [abstract]
Beginning balance		7,470,595	2,992,982
Additions		2,132,104	4,745,673
Additions - Borrowing costs (Note 18)		0	0
Transfer		0	0
Disposals and write-offs		0	0
Impairment		0
Foreign currency translation adjustment		140,834	(268,060)
Ending balance	9,743,533	9,743,533	7,470,595
Computer equipment | ACCUMULATED DEPRECIATION
Changes in property, plant and equipment [abstract]
Beginning balance		(1,464,667)	(758,100)
Disposals and write-offs		0	0
Impairment		0
Depreciation		1,001,617	781,479
Foreign currency translation adjustment		(51,767)	74,912
Ending balance	(2,518,051)	(2,518,051)	(1,464,667)
Furniture and office equipment
Changes in property, plant and equipment [abstract]
Beginning balance		863,759
Ending balance	3,149,177	3,149,177	863,759
Furniture and office equipment | GROSS CARRYING AMOUNT
Changes in property, plant and equipment [abstract]
Beginning balance		1,010,711	513,344
Additions		2,484,595	529,882
Additions - Borrowing costs (Note 18)		0	0
Transfer		0	0
Disposals and write-offs		(184,839)	0
Impairment		0
Foreign currency translation adjustment		21,963	(32,515)
Ending balance	3,332,430	3,332,430	1,010,711
Furniture and office equipment | ACCUMULATED DEPRECIATION
Changes in property, plant and equipment [abstract]
Beginning balance		(146,952)	(96,809)
Disposals and write-offs		184,839	0
Impairment		0
Depreciation		218,077	57,878
Foreign currency translation adjustment		(3,063)	7,735
Ending balance	(183,253)	(183,253)	(146,952)
Production moulds
Changes in property, plant and equipment [abstract]
Beginning balance		2,230,350
Ending balance	1,885,529	1,885,529	2,230,350
Production moulds | GROSS CARRYING AMOUNT
Changes in property, plant and equipment [abstract]
Beginning balance		3,304,058	1,462,683
Additions		1,189,208	1,978,942
Additions - Borrowing costs (Note 18)		0	0
Transfer		0	0
Disposals and write-offs		(353,564)	0
Impairment		0
Foreign currency translation adjustment		74,452	(137,567)
Ending balance	4,214,154	4,214,154	3,304,058
Production moulds | ACCUMULATED DEPRECIATION
Changes in property, plant and equipment [abstract]
Beginning balance		(1,073,708)	(246,449)
Disposals and write-offs		273,951	0
Impairment		0
Depreciation		1,470,615	864,400
Foreign currency translation adjustment		(58,253)	37,141
Ending balance	(2,328,625)	(2,328,625)	(1,073,708)
Master patterns and templates
Changes in property, plant and equipment [abstract]
Beginning balance		1,187,374
Ending balance	1,220,310	1,220,310	1,187,374
Master patterns and templates | GROSS CARRYING AMOUNT
Changes in property, plant and equipment [abstract]
Beginning balance		1,327,362	965,937
Additions		180,450	433,228
Additions - Borrowing costs (Note 18)		0	0
Transfer		0	0
Disposals and write-offs		0	0
Impairment		0
Foreign currency translation adjustment		30,288	(71,803)
Ending balance	1,538,100	1,538,100	1,327,362
Master patterns and templates | ACCUMULATED DEPRECIATION
Changes in property, plant and equipment [abstract]
Beginning balance		(139,988)	(64,885)
Disposals and write-offs		0	0
Impairment		0
Depreciation		170,750	81,543
Foreign currency translation adjustment		(7,052)	6,440
Ending balance	(317,790)	(317,790)	(139,988)
Prototypes
Changes in property, plant and equipment [abstract]
Beginning balance		64,536
Impairment	(1,419,420)
Ending balance	3,212,267	3,212,267	64,536
Prototypes | GROSS CARRYING AMOUNT
Changes in property, plant and equipment [abstract]
Beginning balance		202,172	78,709
Additions		4,273,619	135,627
Additions - Borrowing costs (Note 18)		0	0
Transfer		0	0
Disposals and write-offs		(139,531)	0
Impairment		(308,346)
Foreign currency translation adjustment		65,399	(12,164)
Ending balance	4,093,313	4,093,313	202,172
Prototypes | ACCUMULATED DEPRECIATION
Changes in property, plant and equipment [abstract]
Beginning balance		(137,636)	(78,709)
Disposals and write-offs		102,980	0
Impairment		(68,521)
Depreciation		894,363	54,428
Foreign currency translation adjustment		(20,548)	(4,499)
Ending balance	(881,046)	(881,046)	(137,636)
Building
Changes in property, plant and equipment [abstract]
Beginning balance		0
Ending balance	33,876,757	33,876,757	0
Building | GROSS CARRYING AMOUNT
Changes in property, plant and equipment [abstract]
Beginning balance		0	0
Additions		11,984,946	0
Additions - Borrowing costs (Note 18)		1,359,161	0
Transfer		43,592,543	0
Disposals and write-offs		(23,813,344)	0
Impairment		0
Foreign currency translation adjustment		753,451	0
Ending balance	33,876,757	33,876,757	0
Building | ACCUMULATED DEPRECIATION
Changes in property, plant and equipment [abstract]
Beginning balance		0	0
Disposals and write-offs		0	0
Impairment		0
Depreciation		0	0
Foreign currency translation adjustment		0	0
Ending balance	0	0	0
Construction in progress
Changes in property, plant and equipment [abstract]
Beginning balance		42,110,058
Ending balance	2,629,894	2,629,894	42,110,058
Construction in progress | GROSS CARRYING AMOUNT
Changes in property, plant and equipment [abstract]
Beginning balance		42,110,058	5,301,919
Additions		4,518,943	38,118,683
Additions - Borrowing costs (Note 18)		0	1,034,749
Transfer		(44,486,759)	(529,890)
Disposals and write-offs		0	0
Impairment		0
Foreign currency translation adjustment		487,652	(1,815,403)
Ending balance	2,629,894	2,629,894	42,110,058
Construction in progress | ACCUMULATED DEPRECIATION
Changes in property, plant and equipment [abstract]
Beginning balance		0	0
Disposals and write-offs		0	0
Impairment		0
Depreciation		0	0
Foreign currency translation adjustment		0	0
Ending balance	$ 0	$ 0	$ 0

XML

PROPERTY, PLANT AND EQUIPMENT - Narrative (Details) - USD ($)	3 Months Ended	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2023	Dec. 31, 2022
Prototypes
Disclosure of detailed information about property, plant and equipment [line items]
Impairment	$ 1,419,420
Development costs
Disclosure of detailed information about property, plant and equipment [line items]
Impairment	$ 34,578,703
Government Assistance Receivables
Disclosure of detailed information about property, plant and equipment [line items]
Reduction in property, plant and equipment		$ 3,849,847	$ 3,063,476
Construction in progress
Disclosure of detailed information about property, plant and equipment [line items]
Reduction in property, plant and equipment		1,374,516	1,132,297
Machinery and equipment
Disclosure of detailed information about property, plant and equipment [line items]
Reduction in property, plant and equipment		$ 2,475,331	$ 1,931,179

XML

PROPERTY, PLANT AND EQUIPMENT - Schedule of Depreciation and Amortization (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Disclosure of detailed information about property, plant and equipment [line items]
Depreciation	$ 10,820,442	$ 5,038,092
Cost of sales
Disclosure of detailed information about property, plant and equipment [line items]
Depreciation	6,028,565	2,581,448
Administrative expenses
Disclosure of detailed information about property, plant and equipment [line items]
Depreciation	3,986,583	2,456,644
Selling expenses
Disclosure of detailed information about property, plant and equipment [line items]
Depreciation	$ 805,294	$ 0

XML

RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS - Narrative (Details)			12 Months Ended
	Feb. 02, 2023 USD ($)	Feb. 02, 2023 CAD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Purchase price	$ 20,909,566	$ 28,000,000
Net proceeds	20,506,589
Selling and legal expenses	484,994
Additions	$ 3,306,755		$ 39,880,488	$ 7,401,691
Lease term (in years)	20 years	20 years
Bottom of Range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Lease term (in years)			1 year
Top of Range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Lease term (in years)			40 years

XML

RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS - Schedule of Right-of-use Assets (Details) - USD ($)		12 Months Ended
	Feb. 02, 2023	Dec. 31, 2023	Dec. 31, 2022
Disclosure of detailed information about property, plant and equipment [line items]
Right-of-use assets, beginning balance		$ 60,508,354	$ 60,902,362
Additions	$ 3,306,755	39,880,488	7,401,691
Modifications		(2,428,089)	(439,897)
Depreciation expense		(9,118,583)	(6,684,764)
Foreign currency translation adjustment		820,969	(671,038)
Right-of-use assets, end balance		89,663,139	60,508,354
Premises
Disclosure of detailed information about property, plant and equipment [line items]
Right-of-use assets, beginning balance		59,375,131	60,297,423
Additions		29,560,843	6,661,404
Modifications		(2,401,574)	(450,567)
Depreciation expense		(7,766,903)	(6,497,931)
Foreign currency translation adjustment		799,545	(635,198)
Right-of-use assets, end balance		79,567,042	59,375,131
Rolling stock
Disclosure of detailed information about property, plant and equipment [line items]
Right-of-use assets, beginning balance		1,133,223	604,939
Additions		956,364	740,287
Modifications		(31,868)	10,670
Depreciation expense		(468,994)	(186,833)
Foreign currency translation adjustment		21,424	(35,840)
Right-of-use assets, end balance		1,610,149	1,133,223
Equipment
Disclosure of detailed information about property, plant and equipment [line items]
Right-of-use assets, beginning balance		0	0
Additions		9,363,281	0
Modifications		5,353	0
Depreciation expense		(882,686)	0
Foreign currency translation adjustment		0	0
Right-of-use assets, end balance		$ 8,485,948	$ 0

XML

RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS - Schedule of Deprecation Recognized in Right-of-use Assets (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Disclosure of attribution of expenses by nature to their function [line items]
Depreciation expense	$ 9,118,583	$ 6,684,764
Cost of sales
Disclosure of attribution of expenses by nature to their function [line items]
Depreciation expense	6,248,180	1,348,589
Administrative expenses
Disclosure of attribution of expenses by nature to their function [line items]
Depreciation expense	459,161	278,995
Selling expenses
Disclosure of attribution of expenses by nature to their function [line items]
Depreciation expense	1,330,000	1,826,769
Capitalized to property, plant and equipment
Disclosure of attribution of expenses by nature to their function [line items]
Depreciation expense	$ 1,081,242	$ 3,230,411

XML

RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS - Schedule of Lease Liabilities (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Lessee, Leases [Abstract]
Lease liabilities, beginning balance	$ 63,520,215	$ 62,209,317
Additions	36,573,733	7,401,691
Lease payments	(6,512,231)	(4,977,183)
Modifications	(2,456,531)	(439,897)
Foreign currency translation adjustment	831,400	(673,713)
Lease liabilities, ending balance	91,956,586	63,520,215
Current portion	7,984,563	5,210,183
Non-current portion	$ 83,972,023	$ 58,310,032

XML

RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS - Schedule of Amounts Recognised in Administrative Expenses in Lease (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Disclosure of quantitative information about right-of-use assets [abstract]
Expense relating to variable lease payments, short-term leases and low-value assets not included in lease liabilities	$ 4,309,208	$ 1,159,705

XML

INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Reconciliation of changes in intangible assets other than goodwill [abstract]
Beginning balance	$ 151,364,023
Amortization	(7,216,789)	$ (3,000,028)
Ending balance	175,703,257	151,364,023
Payments for earn-out agreement		3,778,203
Borrowing costs capitalised	6,535,601	5,093,206
Software
Reconciliation of changes in intangible assets other than goodwill [abstract]
Beginning balance	7,631,036
Ending balance	6,407,909	7,631,036
Development costs
Reconciliation of changes in intangible assets other than goodwill [abstract]
Beginning balance	138,510,358
Ending balance	164,072,719	138,510,358
Decrease through government assistance	5,602,949	2,373,217
Dealership rights
Reconciliation of changes in intangible assets other than goodwill [abstract]
Beginning balance	5,222,629
Ending balance	5,222,629	5,222,629
GROSS CARRYING AMOUNT
Reconciliation of changes in intangible assets other than goodwill [abstract]
Beginning balance	156,277,331	84,031,997
Additions, separately acquired	6,393	5,178,497
Additions, internally developed	58,242,044	71,590,428
Impairment	(34,578,703)
Foreign currency translation adjustment	4,334,677	(8,066,129)
Ending balance	188,087,016	156,277,331
GROSS CARRYING AMOUNT | Borrowing Costs
Reconciliation of changes in intangible assets other than goodwill [abstract]
Additions, borrowing costs	3,805,274	3,542,538
GROSS CARRYING AMOUNT | Software
Reconciliation of changes in intangible assets other than goodwill [abstract]
Beginning balance	10,137,374	4,217,288
Additions, separately acquired	6,393	5,178,497
Additions, internally developed	726,027	1,258,813
Impairment	0
Foreign currency translation adjustment	243,580	(517,224)
Ending balance	11,113,374	10,137,374
GROSS CARRYING AMOUNT | Software | Borrowing Costs
Reconciliation of changes in intangible assets other than goodwill [abstract]
Additions, borrowing costs	0	0
GROSS CARRYING AMOUNT | Development costs
Reconciliation of changes in intangible assets other than goodwill [abstract]
Beginning balance	140,917,328	74,279,002
Additions, separately acquired	0	0
Additions, internally developed	57,516,017	70,331,615
Impairment	(34,578,703)
Foreign currency translation adjustment	4,091,097	(7,235,827)
Ending balance	171,751,013	140,917,328
GROSS CARRYING AMOUNT | Development costs | Borrowing Costs
Reconciliation of changes in intangible assets other than goodwill [abstract]
Additions, borrowing costs	3,805,274	3,542,538
GROSS CARRYING AMOUNT | Dealership rights
Reconciliation of changes in intangible assets other than goodwill [abstract]
Beginning balance	5,222,629	5,535,707
Additions, separately acquired	0	0
Additions, internally developed	0	0
Impairment	0
Foreign currency translation adjustment	0	(313,078)
Ending balance	5,222,629	5,222,629
GROSS CARRYING AMOUNT | Dealership rights | Borrowing Costs
Reconciliation of changes in intangible assets other than goodwill [abstract]
Additions, borrowing costs	0	0
ACCUMULATED DEPRECIATION
Reconciliation of changes in intangible assets other than goodwill [abstract]
Beginning balance	(4,913,308)	(2,132,167)
Amortization	7,216,789	3,000,028
Foreign currency translation adjustment	(253,662)	218,887
Ending balance	(12,383,759)	(4,913,308)
ACCUMULATED DEPRECIATION | Software
Reconciliation of changes in intangible assets other than goodwill [abstract]
Beginning balance	(2,506,338)	(1,177,575)
Amortization	2,095,740	1,451,393
Foreign currency translation adjustment	(103,387)	122,630
Ending balance	(4,705,465)	(2,506,338)
ACCUMULATED DEPRECIATION | Development costs
Reconciliation of changes in intangible assets other than goodwill [abstract]
Beginning balance	(2,406,970)	(954,592)
Amortization	5,121,049	1,548,635
Foreign currency translation adjustment	(150,275)	96,257
Ending balance	(7,678,294)	(2,406,970)
ACCUMULATED DEPRECIATION | Dealership rights
Reconciliation of changes in intangible assets other than goodwill [abstract]
Beginning balance	0	0
Amortization	0	0
Foreign currency translation adjustment	0	0
Ending balance	$ 0	$ 0

XML

INTANGIBLE ASSETS - Schedule of Amortization (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Disclosure of detailed information about intangible assets [line items]
Amortization – intangible assets	$ 7,216,789	$ 3,000,028
Cost of sales
Disclosure of detailed information about intangible assets [line items]
Amortization – intangible assets	5,121,049	1,548,636
Administrative expenses
Disclosure of detailed information about intangible assets [line items]
Amortization – intangible assets	$ 2,095,740	$ 1,451,392

XML

FINANCIAL ASSETS AND LIABILITIES - Schedule of Classification of Financial Instruments (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Disclosure of detailed information about financial instruments [line items]
FINANCIAL ASSETS	$ 67,247,153	$ 50,997,608
Amortized cost | Trade and other payables
Disclosure of detailed information about financial instruments [line items]
FINANCIAL LIABILITIES	71,856,894	62,383,813
Amortized cost | Long-term debt and other debts | Long-term debt and other debts
Disclosure of detailed information about financial instruments [line items]
FINANCIAL LIABILITIES	224,942,365	110,673,348
Amortized cost | Conversion options on convertible debt instruments
Disclosure of detailed information about financial instruments [line items]
FINANCIAL LIABILITIES	25,034,073	0
FVTPL | Share warrant obligations
Disclosure of detailed information about financial instruments [line items]
FINANCIAL LIABILITIES	29,582,203	23,243,563
Incentives and other government assistance receivable
Disclosure of detailed information about financial instruments [line items]
FINANCIAL ASSETS	17,820,959	11,425,724
Amortized cost | Cash
Disclosure of detailed information about financial instruments [line items]
FINANCIAL ASSETS	29,892,966	88,266,985
Amortized cost | Trade receivables
Disclosure of detailed information about financial instruments [line items]
FINANCIAL ASSETS	40,621,997	25,684,870
Amortized cost | Incentives and other government assistance receivable
Disclosure of detailed information about financial instruments [line items]
FINANCIAL ASSETS	$ 26,625,156	$ 25,312,738

XML

FINANCIAL ASSETS AND LIABILITIES - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Share Price
Disclosure of detailed information about financial instruments [line items]
Sensitivity analysis, increase in share price (as a percent)	5.00%
Sensitivity analysis, decrease in share price (as a percent)	5.00%
Share Price | Warrant
Disclosure of detailed information about financial instruments [line items]
Impact of 5% increase (decrease) in value of share price	$ 1,694,344	$ (398,922)
Impact of 5% decrease in value of share price	1,654,197	(374,263)
Warrant Price | Warrant
Disclosure of detailed information about financial instruments [line items]
Impact of 5% increase (decrease) in value of share price	(473,190)	(1,007,825)
Conversion Option Price | Warrant
Disclosure of detailed information about financial instruments [line items]
Impact of 5% increase (decrease) in value of share price	(2,080,274)	0
Impact of 5% decrease in value of share price	2,034,988	0
SIF and IQ Loan | Amortized cost | Borrowings
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	38,697,354	16,571,800
SIF and IQ Loan | FVTPL | Borrowings
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	$ 27,744,314	$ 15,026,548

XML

TRADE AND OTHER PAYABLES (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Subclassifications of assets, liabilities and equities [abstract]
Trade accounts	$ 54,351,734	$ 46,355,352
Accrued liabilities payable (also refer to Note 17)	17,505,160	16,028,461
Financial liabilities	71,856,894	62,383,813
Allowance for warranties	6,439,324	2,752,398
Salaries and vacations payable	10,197,794	7,267,172
Deductions at source	1,942,437	1,384,223
Sales taxes payable	1,988,512	1,434,436
Non-financial liabilities	20,568,067	12,838,229
Trade and other payables	$ 92,424,961	$ 75,222,042

XML

DEFERRED REVENUE AND OTHER DEFERRED LIABILITIES- Schedule of Deferred Revenue and Other Deferred Liability (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Disclosure of detailed information about borrowings [line items]
Deferred revenue and other deferred liabilities	$ 18,267,139	$ 634,971
Environmental Protection Agency Fund Availability
Disclosure of detailed information about borrowings [line items]
Deferred revenue and other deferred liabilities	16,293,067	0
Development of a Mobilizing Project
Disclosure of detailed information about borrowings [line items]
Deferred revenue and other deferred liabilities	1,622,433	0
Other Deferred Liabilities
Disclosure of detailed information about borrowings [line items]
Deferred revenue and other deferred liabilities	$ 351,639	$ 634,971

XML

DEFERRED REVENUE AND OTHER DEFERRED LIABILITIES - Narrative (Details)	12 Months Ended
	Dec. 31, 2023 USD ($)	Sep. 28, 2023 USD ($)	Jul. 19, 2023 CAD ($)	Apr. 25, 2023 USD ($)	Apr. 24, 2023 USD ($)	Apr. 21, 2023 USD ($)	Apr. 21, 2023 CAD ($)	Mar. 20, 2023 CAD ($)	Dec. 31, 2022 USD ($)	May 31, 2022 USD ($)	Jul. 01, 2021 CAD ($)
Disclosure of detailed information about borrowings [line items]
Borrowings	$ 224,942,365								$ 110,673,348
Investissement Quebec Loan
Disclosure of detailed information about borrowings [line items]
Borrowings	23,573,074		$ 50,000,000					$ 26,991,772	$ 10,381,986		$ 50,000,000
Government assistance						$ 7,013,566	$ 9,446,572
Investissement Quebec Loan | Government Assistance Receivables
Disclosure of detailed information about borrowings [line items]
Increase (decrease) in intangible assets other than goodwill	$ (5,391,133)
Environmental Protection Agency Fund Availability
Disclosure of detailed information about borrowings [line items]
Undrawn borrowing facilities		$ 500,000,000		$ 400,000,000	$ 945,000,000					$ 500,000,000

XML

LONG-TERM DEBT AND OTHER DEBTS - Schedule of Borrowings (Details)	Dec. 31, 2023 USD ($)	Jul. 19, 2023 CAD ($)	Mar. 20, 2023 CAD ($)	Dec. 31, 2022 USD ($)	Aug. 19, 2021 CAD ($)	Jul. 01, 2021 CAD ($)
Disclosure of detailed information about borrowings [line items]
Borrowings	$ 224,942,365			$ 110,673,348
Current portion of long-term debt and other debts	27,056,476			24,713
Long-term portion of long-term debt and other debts	197,885,889			110,648,635
Credit Agreement with Banking Syndicate, secured, maturing August 11, 2025 (Note 12.1)
Disclosure of detailed information about borrowings [line items]
Borrowings	70,000,000			71,916,716
Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.2)
Disclosure of detailed information about borrowings [line items]
Borrowings	23,573,074	$ 50,000,000	$ 26,991,772	10,381,986		$ 50,000,000
Strategic Innovation Fund of the Government of Canada unsecured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.3)
Disclosure of detailed information about borrowings [line items]
Borrowings	15,124,280			6,189,814	$ 49,950,000
Loans on research and development tax credits and subsidies receivable (Note 12.4)
Disclosure of detailed information about borrowings [line items]
Borrowings	22,682,595			22,150,030
Secured loans for the acquisition of rolling stock, maturing between December 2023 and August 2024 (Note 12.5)
Disclosure of detailed information about borrowings [line items]
Borrowings	10,361			34,802
Credit facility for the supplier payment program (Note 12.6)
Disclosure of detailed information about borrowings [line items]
Borrowings	4,363,520			0
Non-Convertible Debentures issued as part of 2023 Debenture Financing (Note 12.7, Note 12.7.1)
Disclosure of detailed information about borrowings [line items]
Borrowings	44,532,212			0
Convertible Debentures issued as part of 2023 Debenture Financing (Note 12.7, Note 12.7.2)
Disclosure of detailed information about borrowings [line items]
Borrowings	$ 44,656,323			$ 0

XML

LONG-TERM DEBT AND OTHER DEBTS - Narrative (Details)							12 Months Ended
	Jul. 19, 2023 CAD ($)	Feb. 08, 2023 USD ($)	Nov. 08, 2022 USD ($)	Nov. 08, 2022 CAD ($)	Aug. 19, 2021 CAD ($)	Jul. 01, 2021 CAD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Jul. 31, 2023 CAD ($)	Jul. 19, 2023 USD ($)	Jul. 19, 2023 CAD ($)	Mar. 20, 2023 CAD ($)	Jan. 25, 2022 USD ($)	Aug. 11, 2021 USD ($)
Disclosure of detailed information about borrowings [line items]
Borrowings							$ 224,942,365	$ 110,673,348
Development costs
Disclosure of detailed information about borrowings [line items]
Decrease through government assistance							310,311	163,219
Government Assistance Receivables
Disclosure of detailed information about borrowings [line items]
Reduction in property, plant and equipment							3,849,847	3,063,476
Revolving Credit Facility, Revolving Credit Agreement
Disclosure of detailed information about borrowings [line items]
Notional amount													$ 200,000,000	$ 100,000,000
Debt, extended maturity (in years)													1 year
Borrowings availability llock									$ 10,000,000
Borrowings availability block, threshold (as a percent)									30.00%
Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.2)
Disclosure of detailed information about borrowings [line items]
Borrowings						$ 50,000,000	23,573,074	10,381,986			$ 50,000,000	$ 26,991,772
Proportion of amount disbursed forgiven (as a percent)						30.00%
Eligible reimbursement on incurred debt cost	$ 50,000,000
Borrowings, interest rate (as a percent)						4.41%
Borrowings maturity, term (in years)						10 years
Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.2) | Bottom of Range
Disclosure of detailed information about borrowings [line items]
Non-compliance financial penalties											3,000,000
Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.2) | Top of Range
Disclosure of detailed information about borrowings [line items]
Non-compliance financial penalties											$ 15,000,000
Strategic Innovation Fund of the Government of Canada unsecured loan related to Battery Manufacturing Plant and Innovation Center (Note 12.3)
Disclosure of detailed information about borrowings [line items]
Notional amount							21,982,156	9,358,929
Borrowings					$ 49,950,000		$ 15,124,280	6,189,814
Proportion of amount disbursed forgiven (as a percent)					30.00%
Borrowings maturity, term (in years)					15 years
Discount rate (as a percent)							4.03%
Borrowings, fair value							$ 7,329,216	3,226,695
Loans on research and development tax credits and subsidies receivable (Note 12.4)
Disclosure of detailed information about borrowings [line items]
Borrowings							22,682,595	22,150,030
Borrowings, interest rate (as a percent)				10.95%
Maximum borrowing capacity				$ 30,000,000
Advances			$ 22,233,751	$ 30,000,000
Secured loans for the acquisition of rolling stock, maturing between December 2023 and August 2024 (Note 12.5)
Disclosure of detailed information about borrowings [line items]
Notional amount							19,283	41,472
Borrowings							$ 10,361	$ 34,802
Borrowings, interest rate (as a percent)							2.35%
Secured loans for the acquisition of rolling stock, maturing between December 2023 and August 2024 (Note 12.5) | Bottom of Range
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate (as a percent)							2.35%
Secured loans for the acquisition of rolling stock, maturing between December 2023 and August 2024 (Note 12.5) | Top of Range
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate (as a percent)							4.25%
Credit Facility
Disclosure of detailed information about borrowings [line items]
Borrowings		$ 5,000,000
Credit Facility | Bottom of Range
Disclosure of detailed information about borrowings [line items]
Borrowings maturity, term (in years)		30 days
Credit Facility | Top of Range
Disclosure of detailed information about borrowings [line items]
Borrowings maturity, term (in years)		120 days
Secured Overnight Financing Rate (SOFR)
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate (as a percent)		1.50%
Non Convertible Debentures
Disclosure of detailed information about borrowings [line items]
Borrowings							$ 44,532,212			$ 42,237,853
Borrowings, interest rate (as a percent)										11.00%	11.00%
Borrowings maturity, term (in years)	30 days
Maximum borrowing capacity										$ 44,148,002
Borrowings, interest rate (as a percent)										100.00%	100.00%
Debt instrument, covenant, default period (in days)	15 days
Convertible Debenture
Disclosure of detailed information about borrowings [line items]
Borrowings							$ 44,656,323			$ 41,743,240
Borrowings, interest rate (as a percent)										0.75%	0.75%
Maximum borrowing capacity										$ 43,662,941
Borrowings, interest rate (as a percent)							150.00%
Senior Unsecured Convertible Debentures
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate (as a percent)										13.00%	13.00%
Maximum borrowing capacity										$ 74,005,000
Debt instrument, covenant, default period (in days)	15 days

XML

LONG-TERM DEBT AND OTHER DEBTS - Schedule of Weighted Average All-In Interest Rate (Details)	Dec. 31, 2023 USD ($)	Dec. 31, 2022 CAD ($)	Dec. 31, 2022 USD ($)
Disclosure of detailed information about borrowings [line items]
Long-term debt, carrying amount	$ 224,942,365		$ 110,673,348
Revolving Credit Facility, Revolving Credit Agreement | Weighted Average
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate (as a percent)	6.96%	5.46%	5.46%
Revolving Credit Facility, Revolving Credit Agreement, US
Disclosure of detailed information about borrowings [line items]
Long-term debt, carrying amount	$ 70,000,000		$ 35,000,000
Revolving Credit Facility, Revolving Credit Agreement, US | Top of Range
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate (as a percent)	6.98%	5.80%	5.80%
Revolving Credit Facility, Revolving Credit Agreement, US | Bottom of Range
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate (as a percent)	6.94%	4.42%	4.42%
Revolving Credit Facility, Revolving Credit Agreement, US | Stamping Fee Rate
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate (as a percent)	1.50%	1.50%	1.50%
Revolving Credit Facility, Revolving Credit Agreement, CA
Disclosure of detailed information about borrowings [line items]
Long-term debt, carrying amount		$ 50,000,000
Revolving Credit Facility, Revolving Credit Agreement, CA | Top of Range
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate (as a percent)		4.71%	4.71%
Revolving Credit Facility, Revolving Credit Agreement, CA | Bottom of Range
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate (as a percent)		3.67%	3.67%
Revolving Credit Facility, Revolving Credit Agreement, CA | Stamping Fee Rate
Disclosure of detailed information about borrowings [line items]
Borrowings, interest rate (as a percent)		1.50%	1.50%

XML

LONG-TERM DEBT AND OTHER DEBTS - Schedule of Credit Facility (Details)	Dec. 31, 2023 USD ($)
Presented in long-term debts and other debts of which suppliers has not received payments
Disclosure of detailed information about borrowings [line items]
Carrying amount	$ 0
Presented in long-term debts and other debts of which suppliers has received payments
Disclosure of detailed information about borrowings [line items]
Carrying amount	4,363,520
Credit facility for the supplier payment program (Note 12.6)
Disclosure of detailed information about borrowings [line items]
Carrying amount	$ 4,363,520

XML

LONG-TERM DEBT AND OTHER DEBTS - Schedule of Senior Secured Non-Convertible Debentures Issued as Part of the 2023 Debenture Financing (Details)		12 Months Ended
	Jul. 19, 2023 USD ($) shares	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Jul. 19, 2023 CAD ($)
Disclosure of detailed information about borrowings [line items]
Proceeds from the 2023 Debentures Financing		$ 142,920,845	$ 0
Finance costs		(17,892,444)	(955,422)
Borrowings		224,942,365	$ 110,673,348
2023 Debenture Financing
Disclosure of detailed information about borrowings [line items]
Proceeds from the 2023 Debentures Financing	$ 142,920,845
Financing fees	6,235,509
Finance costs	2,405,659
Borrowings	30,342,059	25,034,073
Convertible Debenture
Disclosure of detailed information about borrowings [line items]
Maximum borrowing capacity	43,662,941
Financing fees	$ 1,919,701
Borrowings, interest rate (as a percent)	0.75%			0.75%
Default threshold amount for payment acceleration	$ 15,000,000
Borrowings	$ 41,743,240	44,656,323
Effective interest rate (as a percent)	21.02%			21.02%
Issuance of shares though "at-the-market" equity program (in shares) | shares	258,155
Conversion Option on Convertible Debentures
Disclosure of detailed information about borrowings [line items]
Maximum borrowing capacity	$ 30,342,059
Non-Convertible Debentures and July 2023 Warrants
Disclosure of detailed information about borrowings [line items]
Maximum borrowing capacity	68,915,845			$ 90,900,000
Non Convertible Debentures, July 2023 Warrants
Disclosure of detailed information about borrowings [line items]
Maximum borrowing capacity	24,767,843
Non Convertible Debentures
Disclosure of detailed information about borrowings [line items]
Maximum borrowing capacity	44,148,002
Financing fees	$ 1,910,149
Borrowings, interest rate (as a percent)	11.00%			11.00%
Borrowings maturity, term (in years)	30 days
Default threshold amount for payment acceleration	$ 15,000,000
Borrowings	$ 42,237,853	$ 44,532,212
Effective interest rate (as a percent)	22.54%			22.54%
Senior Unsecured Convertible Debentures
Disclosure of detailed information about borrowings [line items]
Maximum borrowing capacity	$ 74,005,000
Borrowings, interest rate (as a percent)	13.00%			13.00%

XML

LONG-TERM DEBT AND OTHER DEBTS - Schedule of Convertible and Non-Convertible Debentures (Details) - USD ($)	5 Months Ended	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2023
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Beginning balance		$ 110,673,348
Ending balance	$ 224,942,365	224,942,365
Convertible Debenture
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Beginning balance	41,743,240
Accretion expense	2,913,083
Ending balance	44,656,323	44,656,323
Non Convertible Debentures
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Beginning balance	42,237,853
Accretion expense	2,346,874
Foreign currency translation adjustment	(52,515)
Ending balance	44,532,212	44,532,212
SIF Loan
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Beginning balance		6,189,814
Addition		8,903,080
Accretion expense		403,408
Foreign currency translation adjustment		(372,022)
Ending balance	$ 15,124,280	$ 15,124,280

XML

CONVERSION OPTION ON CONVERTIBLE DEBT INSTRUMENTS - Narrative (Details)		12 Months Ended
	Jul. 19, 2023 tradingDay	Dec. 31, 2023 USD ($) $ / shares	May 06, 2021 $ / shares
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Warrant, exercise price (in USD per share) | $ / shares		$ 2.58	$ 11.50
Weighted average share (as a percent)		20.00%
Weighted average price consecutive trading days | tradingDay	5
2023 Debenture Financing
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Transaction costs | $		$ 1,334,030
Convertible Debenture
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Borrowings, interest rate (as a percent)		150.00%

XML

CONVERSION OPTION ON CONVERTIBLE DEBT INSTRUMENTS - Schedule of Disclosure of Fair Value Assumptions (Details) - Option Pricing Model		12 Months Ended
	Jul. 19, 2023 $ / shares	Dec. 31, 2023 $ / shares	Dec. 31, 2022 $ / shares
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Share price ($) (in USD per share)		$ 1.77	$ 2.24
Convertible Debenture | Derivatives
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Exercise price ($) (in USD per share)	$ 2.58	2.58
Share price ($) (in USD per share)	$ 2.12	$ 1.77
Expected warrant life (years)	5 years	4 years 6 months 14 days
Convertible Debenture | Volatility (%) | Derivatives
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Warrant assumptions (as a percent)	0.57	0.57
Convertible Debenture | Risk-free interest rate (%) | Derivatives
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Warrant assumptions (as a percent)	0.0376	0.0328

XML

CONVERSION OPTION ON CONVERTIBLE DEBT INSTRUMENTS - Schedule of Conversion Options on Convertible Debt Instruments (Details) - USD ($)	5 Months Ended	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2023
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Beginning balance		$ 110,673,348
Ending balance	$ 224,942,365	224,942,365
2023 Debenture Financing
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Beginning balance	30,342,059
Paid in kind interest	3,551,316
Fair value adjustment	(8,533,552)
Foreign currency translation adjustment	(325,750)
Ending balance	$ 25,034,073	$ 25,034,073

XML

SHARE WARRANT OBLIGATIONS - Narrative (Details)						12 Months Ended
	Jul. 19, 2023 shares tradingDay $ / shares	Jan. 17, 2023 USD ($) shares	Dec. 16, 2022 $ / shares shares	May 06, 2021 d $ / shares shares	Jul. 01, 2020 $ / shares shares	Dec. 31, 2023 USD ($) shares $ / shares	Dec. 31, 2022 USD ($) shares
Asset Acquisition [Line Items]
Weighted average share price, warrant (in USD per share) | $ / shares					$ 5.66
Number of stock options, Exercisable (in shares)						0	45,121
Remaining contractual life (in years)						10 years
Number of securities called by each warrant (in shares)				1
Warrant, exercise price (in USD per share) | $ / shares				$ 11.50		$ 2.58
Warrants outstanding (in shares)						27,111,323	27,111,323
Proceeds from the issuance of warrants through the December 2022 Offering | $						$ 2,907,226	$ 19,913,196
Weighted average price consecutive trading days | tradingDay	5
Non-Convertible Debentures, Warrants
Asset Acquisition [Line Items]
Transaction costs | $						$ 1,071,629
Over-Allotment Option
Asset Acquisition [Line Items]
Issuance of shares though "at-the-market" equity program (in shares)		2,952,755
Public warrants
Asset Acquisition [Line Items]
Number of securities called by each warrant (in shares)			1	1
Warrant, exercise price (in USD per share) | $ / shares			$ 2.80	$ 11.50
Warrants, expiration period (in years)			5 years
Warrants outstanding (in shares)						15,972,364	15,972,364
Warrants, company option, exercise price (in USD per share) | $ / shares				0.01
Warrants, company option, minimum share price, enabling company option (in USD per share) | $ / shares				$ 18.00
Warrants, company option, number of trading day period, in which share price is above required threshold | d				20
Warrants, company option, total trading day period | d				30
Number of warrants issued (in shares)			19,685,040
Proceeds from the issuance of warrants through the December 2022 Offering | $		$ 2,907,226
Warrant issue related cost | $		247,586
Legal and other professional fees | $		58,916
Fee and commission expense | $		$ 188,670
Private warrants
Asset Acquisition [Line Items]
Warrants outstanding (in shares)						11,138,959	11,138,959
Warrant, Debenture Financing
Asset Acquisition [Line Items]
Weighted average share price, warrant (in USD per share) | $ / shares	$ 2.81
Number of stock options, Exercisable (in shares)	22,500,000
Warrants maturity, term (in months)	6 months
Weighted average price consecutive trading days | tradingDay	5
Northern Genesis Acquisition Corp.
Asset Acquisition [Line Items]
Warrants outstanding (in shares)				27,111,741
Minimum
Asset Acquisition [Line Items]
Spending of warrant | $						$ 1,200,000,000
The Warrant
Asset Acquisition [Line Items]
Number of stock options, Exercisable (in shares)						5,302,511	5,302,511
Remaining contractual life (in years)						8 years
The Warrant | Maximum
Asset Acquisition [Line Items]
Number of shares outstanding (in shares)					35,350,003
Northern Genesis Acquisition Corp. | Warrant
Asset Acquisition [Line Items]
Shares issued (in shares)				27,111,741
Northern Genesis Acquisition Corp. | Public warrants
Asset Acquisition [Line Items]
Shares issued (in shares)				15,972,672
Northern Genesis Acquisition Corp. | Private warrants
Asset Acquisition [Line Items]
Shares issued (in shares)				11,139,069

XML

SHARE WARRANT OBLIGATIONS - Schedule of Fair Value Assumptions (Details)				12 Months Ended
	Jul. 19, 2023 $ / shares	Jan. 17, 2023 $ / shares	Dec. 16, 2022 $ / shares	Dec. 31, 2023 $ / shares	Dec. 31, 2022 $ / shares	Dec. 31, 2023 $ / shares
Public warrants
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Warrant price ($) (in USD per share)				$ 0.41	$ 0.7
Northern Genesis Acquisition Corp.
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Warrant price ($) (in USD per share)				0.05	0.45
Option Pricing Model
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Exercise price ($) (in USD per share)				11.50	11.50
Share price ($) (in USD per share)				$ 1.77	$ 2.24
Expected warrant life (years)				2 years 3 months 29 days	3 years 3 months 29 days
Option Pricing Model | Public warrants
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Exercise price ($) (in USD per share) | (per share)	$ 2.81	$ 2.80	$ 2.80			$ 2.81
Share price ($) (in USD per share) | (per share)	$ 2.78	$ 2.49	$ 2.54			$ 2.36
Expected warrant life (years)	5 years	5 years	5 years	4 years 6 months 14 days
Option Pricing Model | Warrant | Volatility (%) | Public warrants
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Warrant assumptions (as a percent)	0.57	0.45	0.44	0.57		0.57
Option Pricing Model | Warrant | Volatility (%) | Northern Genesis Acquisition Corp.
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Warrant assumptions (as a percent)				0.53	0.50	0.53
Option Pricing Model | Warrant | Risk-free interest rate (%) | Public warrants
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Warrant assumptions (as a percent)	0.0376	0.0295	0.0307	0.0328		0.0328
Option Pricing Model | Warrant | Risk-free interest rate (%) | Northern Genesis Acquisition Corp.
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Warrant assumptions (as a percent)				0.0381	0.0368	0.0381
Amazon Logistics, Inc. | Option Pricing Model
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Exercise price ($) (in USD per share)				$ 5.66	$ 5.66
Share price ($) (in USD per share)				$ 1.77	$ 2.24
Expected warrant life (years)				4 years 6 months	5 years 6 months
Amazon Logistics, Inc. | Option Pricing Model | Warrant | Volatility (%)
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Warrant assumptions (as a percent)				0.57	0.43	0.57
Amazon Logistics, Inc. | Option Pricing Model | Warrant | Risk-free interest rate (%)
Disclosure of significant unobservable inputs used in fair value measurement of liabilities [line items]
Warrant assumptions (as a percent)				0.0330	0.0338	0.0330

XML

SHARE WARRANT OBLIGATIONS - Schedule of Change in Contract Asset and Share Warrant Obligation (Details) - USD ($)	5 Months Ended	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2023	Dec. 31, 2022
Contract asset
Beginning Balance		$ 13,211,006
Ending Balance	$ 13,528,646	13,528,646	$ 13,211,006
Share warrant obligation
Beginning balance		21,071,294
Additions		2,907,226	0
Ending balance	27,684,412	27,684,412	21,071,294
Public warrants
Share warrant obligation
Beginning balance		13,080,646	19,913,196
Foreign currency translation adjustment		(7,378,042)	(6,975,357)
Foreign currency translation adjustment		(51,764)	142,807
Ending balance	8,558,066	8,558,066	13,080,646
Public warrants | Non-Convertible Debentures, Warrants
Share warrant obligation
Beginning balance	24,767,843
Foreign currency translation adjustment	(6,421,117)
Foreign currency translation adjustment	(303,300)
Ending balance	18,043,426	18,043,426
Northern Genesis Acquisition Corp.
Share warrant obligation
Beginning balance		7,990,648	75,354,490
Foreign currency translation adjustment		(6,901,384)	(66,211,250)
Exercised			(348)
Foreign currency translation adjustment		(6,344)	(1,152,244)
Ending balance	1,082,920	1,082,920	7,990,648
Northern Genesis Acquisition Corp. | Public warrants
Share warrant obligation
Beginning balance		7,075,767	42,961,675
Foreign currency translation adjustment		(6,173,511)	(35,011,131)
Exercised			(348)
Foreign currency translation adjustment		3,481	(874,429)
Ending balance	905,737	905,737	7,075,767
Northern Genesis Acquisition Corp. | Private warrants
Share warrant obligation
Beginning balance		914,881	32,392,815
Foreign currency translation adjustment		(727,873)	(31,200,119)
Exercised			0
Foreign currency translation adjustment		(9,825)	(277,815)
Ending balance	177,183	177,183	914,881
Amazon Logistics, Inc.
Contract asset
Beginning Balance		13,211,006	14,113,415
Foreign currency translation adjustment		317,640	(902,409)
Ending Balance	13,528,646	13,528,646	13,211,006
Share warrant obligation
Beginning balance		2,172,269	30,871,444
Foreign currency translation adjustment		(11,909)	(417,596)
Foreign currency translation adjustment		(262,569)	(28,281,579)
Ending balance	$ 1,897,791	$ 1,897,791	$ 2,172,269

XML

EMPLOYEE BENEFITS EXPENSE (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Employee Benefits [Abstract]
Wages and salaries	$ 56,381,455	$ 35,576,358
Share-based compensation (Note 16)	5,203,521	12,362,070
Employee benefits expense	$ 61,584,976	$ 47,938,428

XML

SHARE-BASED COMPENSATION - Narrative (Details)	12 Months Ended
	Dec. 31, 2023 USD ($)	Dec. 31, 2023 USD ($) $ / shares	Dec. 31, 2022 USD ($)	Dec. 31, 2022 USD ($) $ / shares
Disclosure of terms and conditions of share-based payment arrangement [line items]
Authorization for the grant of options for the purchase of common shares (as a percent)	10.00%
Remaining contractual life (in years)	10 years
Award vesting period (in years)	3 years
Weighted average fair value at measurement date, share options granted	$ 1,755,912	$ 1,755,912	$ 1,428,004	$ 1,428,004
Share price (C$) | (per share)	0.91	$ 2.78		$ 6.94
Transaction costs	3,655,645		11,062,481
Share-based compensation	5,203,521		12,349,758
Contributed surplus
Disclosure of terms and conditions of share-based payment arrangement [line items]
Share-based compensation	$ 5,203,521		$ 12,349,758
Stock Option Plan The Plan
Disclosure of terms and conditions of share-based payment arrangement [line items]
Award vesting period (in years)	4 years
Restricted Stock Unit
Disclosure of terms and conditions of share-based payment arrangement [line items]
Remaining contractual life (in years)	1 year 9 months 18 days		1 year 10 months 24 days
Transaction costs	$ 631,495		$ 522,875

XML

SHARE-BASED COMPENSATION - Schedule of Outstanding Options (Details)	3 Months Ended		12 Months Ended
	Dec. 31, 2022 $ / shares	Dec. 31, 2022 $ / shares	Dec. 31, 2023 shares $ / shares	Dec. 31, 2023 $ / shares	Dec. 31, 2023 $ / shares	Dec. 31, 2022 shares $ / shares	Dec. 31, 2022 $ / shares
Share-Based Payment Arrangements [Abstract]
Number of stock options, outstanding, beginning of year (in shares)			9,547,185		9,547,185	9,072,149
Number of stock options, granted (in shares) | shares			1,921,151			558,697
Number of stock options, Exercisable (in shares) | shares			0			45,121
Number of stock options, forfeited (in shares) | shares			(708,753)			(38,540)
Number of stock options, outstanding, end of year (in shares)		9,547,185	10,759,583			9,547,185
Number of stock options, outstanding, end of year (in shares)		7,615,432	8,746,808			7,615,432
Weighted average exercise price of stock options outstanding, beginning of year (in CA$ per share)				$ 2.11			$ 1.82
Weighted average exercise price of stock options granted (in CA$ per share)				2.78			6.94
Weighted average exercise price of stock options exercised (in CA$ per share)	$ 3.42			0			0.93
Weighted average exercise price of stock options forfeited (in CA$ per share)				10.79			6.91
Weighted average exercise price of stock options exercisable, end of year (in CA$ per share)	1.25	$ 1.25	$ 1.19	1.19	$ 1.19	$ 1.25	1.25
Weighted average exercise price of stock options outstanding, end of year (in CA$ per share)	$ 2.11			$ 1.65			$ 2.11

XML

SHARE-BASED COMPENSATION - Schedule of Disclosure of Information Relating to Stock Options Outstanding (Details)	12 Months Ended
	Dec. 31, 2023 shares $ / shares	Dec. 31, 2022 shares	Dec. 31, 2022 $ / shares	Dec. 31, 2022	Dec. 31, 2021 shares
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Number of stock options (in shares)	10,759,583	9,547,185		9,547,185	9,072,149
Remaining contractual life (in years)	10 years
Number of stock options exercisable (in shares)	8,746,808	7,615,432		7,615,432
C$0.93 (issued in 2018)
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Number of stock options (in shares)	4,747,277			4,747,277
Remaining contractual life (in years)	3 years 11 months 15 days	4 years 11 months 15 days
Number of stock options exercisable (in shares)	4,747,277			4,747,277
Exercise price of outstanding share options (in dollars per share)	$ 0.93		$ 0.93
C$0.93 (issued in 2019)
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Number of stock options (in shares)	3,664,907			3,664,907
Remaining contractual life (in years)	5 years 9 months 3 days	6 years 9 months 3 days
Number of stock options exercisable (in shares)	3,664,907			2,649,930
Exercise price of outstanding share options (in dollars per share)	$ 0.93		0.93
C$6.90 (issued in 2020)
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Number of stock options (in shares)	289,023			289,023
Remaining contractual life (in years)	6 years 8 months 15 days	7 years 8 months 15 days
Number of stock options exercisable (in shares)	216,767			144,512
Exercise price of outstanding share options (in dollars per share)	$ 6.90		6.90
C$15.45 (issued in 2021)
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Number of stock options (in shares)	26,389			26,389
Remaining contractual life (in years)	7 years 7 months 24 days	8 years 7 months 24 days
Number of stock options exercisable (in shares)	13,195			6,597
Exercise price of outstanding share options (in dollars per share)	$ 15.45		15.45
C$23.02 (issued in 2021)
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Number of stock options (in shares)	10,013			253,865
Remaining contractual life (in years)	7 years 5 months 26 days	8 years 5 months 26 days
Number of stock options exercisable (in shares)	5,007			63,466
Exercise price of outstanding share options (in dollars per share)	$ 23.02		23.02
C$13.29 (issued in 2021)
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Number of stock options (in shares)	14,600			14,600
Remaining contractual life (in years)	7 years 11 months 8 days	8 years 11 months 8 days
Number of stock options exercisable (in shares)	7,300			3,650
Exercise price of outstanding share options (in dollars per share)	$ 13.29		13.29
C$6.92 (issued in 2022)
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Number of stock options (in shares)	304,335			486,041
Remaining contractual life (in years)	8 years 4 months 9 days	9 years 4 months 9 days
Number of stock options exercisable (in shares)	76,084			0
Exercise price of outstanding share options (in dollars per share)	$ 6.92		6.92
C$7.05 (issued in 2022)
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Number of stock options (in shares)	65,083			65,083
Remaining contractual life (in years)	8 years 4 months 17 days	9 years 4 months 17 days
Number of stock options exercisable (in shares)	16,271			0
Exercise price of outstanding share options (in dollars per share)	$ 7.05		$ 7.05
C$2.75 (issued in 2023)
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Number of stock options (in shares) | shares	1,260,598
Remaining contractual life (in years)	9 years 2 months 19 days
Number of stock options exercisable (in shares) | shares	0
Exercise price of outstanding share options (in dollars per share)	$ 2.75
C$2.89 (issued in 2023)
Disclosure of number and weighted average remaining contractual life of outstanding share options [line items]
Number of stock options (in shares) | shares	377,358
Remaining contractual life (in years)	9 years 8 months 12 days
Number of stock options exercisable (in shares) | shares	0
Exercise price of outstanding share options (in dollars per share)	$ 2.89

XML

SHARE-BASED COMPENSATION - Schedule of Disclosure of Weighted Assumptions Used in the Black-Scholes Option Pricing Model (Details)	12 Months Ended
	Dec. 31, 2023 $ / shares	Dec. 31, 2023 $ / shares USD ($)	Dec. 31, 2022 $ / shares	Dec. 31, 2021 $ / shares
Share-Based Payment Arrangements [Abstract]
Exercise price (CA $) (in CA$ per share)	$ 1.65	$ 1.65	$ 2.11	$ 1.82
Share price (C$) | (per share)	$ 2.78	$ 0.91	$ 6.94
Expected Volatility (%)	40.00%	40.00%	40.00%
Risk-free interest rate (%)	3.19%	3.19%	2.78%
Expected option life (years)	6 years 3 months	6 years 3 months	7 years 6 months

XML

SHARE-BASED COMPENSATION - Schedule of Weighted Assumptions Used in the Black-Scholes Option Pricing Model (Details)	12 Months Ended
	Dec. 31, 2023 USD ($) $ / shares	Dec. 31, 2023 $ / shares	Dec. 31, 2022 $ / shares
Share-Based Payment Arrangements [Abstract]
Expected dividends per share (C$)	$ 0	$ 0	$ 0
Exercise price (C$)		2.78	6.94
Share price (C$) | (per share)	$ 0.91	$ 2.78	$ 6.94
Expected Volatility (%)	40.00%	40.00%	40.00%
Risk-free interest rate (%)	3.19%	3.19%	2.78%
Expected option life (years)	6 years 3 months	6 years 3 months	7 years 6 months

XML

SHARE-BASED COMPENSATION - Schedule of Compensation Expense (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Disclosure of terms and conditions of share-based payment arrangement [line items]
Transaction costs	$ 3,655,645	$ 11,062,481
Restricted Stock Unit
Disclosure of terms and conditions of share-based payment arrangement [line items]
Transaction costs	631,495	522,875
Administrative expenses
Disclosure of terms and conditions of share-based payment arrangement [line items]
Transaction costs	3,414,925	8,296,836
Administrative expenses | Restricted Stock Unit
Disclosure of terms and conditions of share-based payment arrangement [line items]
Transaction costs	680,938	399,812
Administrative expenses | Deferred Share Units
Disclosure of terms and conditions of share-based payment arrangement [line items]
Transaction costs	916,381	776,714
Selling expenses
Disclosure of terms and conditions of share-based payment arrangement [line items]
Transaction costs	240,720	2,765,645
Selling expenses | Restricted Stock Unit
Disclosure of terms and conditions of share-based payment arrangement [line items]
Transaction costs	$ (49,443)	$ 123,063

XML

SHARE-BASED COMPENSATION - Schedule of Outstanding Options For RSUs and DSUs (Details)	12 Months Ended
	Dec. 31, 2023 shares $ / shares	Dec. 31, 2022 shares $ / shares
Disclosure of terms and conditions of share-based payment arrangement [line items]
Weighted average exercise price of stock options outstanding, beginning of year (in CA$ per share)	$ 2.11	$ 1.82
Weighted average exercise price of stock options granted (in CA$ per share)	2.78	6.94
Weighted average exercise price of stock options forfeited (in CA$ per share)	10.79	6.91
Weighted average exercise price of stock options outstanding, end of year (in CA$ per share)	$ 1.65	$ 2.11
Restricted Stock Unit
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of units outstanding, beginning of year (in shares) | shares	297,658	36,247
Granted (in shares) | shares	811,458	276,584
Forfeited (in shares) | shares	(211,876)	(15,173)
Number of units outstanding, end of year (in shares) | shares	897,240	297,658
Vested (in shares) | shares	0	0
Weighted average exercise price of stock options outstanding, beginning of year (in CA$ per share)	$ 8.35	$ 18.59
Weighted average exercise price of stock options granted (in CA$ per share)	2.75	6.93
Weighted average exercise price of stock options forfeited (in CA$ per share)	5.39	6.92
Weighted average exercise price of stock options outstanding, end of year (in CA$ per share)	3.99	8.35
Weighted average exercise price of stock options vested, end of year (in $CA per option)	$ 0	$ 0
Deferred Share Units
Disclosure of terms and conditions of share-based payment arrangement [line items]
Number of units outstanding, beginning of year (in shares) | shares	301,091	18,755
Granted (in shares) | shares	478,884	284,362
Settled (in shares) | shares	0	2,026
Number of units outstanding, end of year (in shares) | shares	779,975	301,091
Vested (in shares) | shares	779,975	301,091
Weighted average exercise price of stock options outstanding, beginning of year (in CA$ per share)	$ 4.23	$ 14.07
Weighted average exercise price of stock options granted (in CA$ per share)	2.58	3.65
Weighted average exercise price of stock options settled (in CA$ per option)	0	14.07
Weighted average exercise price of stock options outstanding, end of year (in CA$ per share)	3.21	4.23
Weighted average exercise price of stock options vested, end of year (in $CA per option)	$ 3.21	$ 4.23

XML

RESTRUCTURING COSTS (Details)	1 Months Ended	12 Months Ended
	Dec. 31, 2023 USD ($)	Dec. 31, 2023 USD ($)
Subclassifications of assets, liabilities and equities [abstract]
Expenses	$ 1,426,487	$ 1,426,487
Payments	(714,865)
Restructuring Costs, Liability	$ 711,622	$ 711,622

XML

FINANCE COSTS (Details) - USD ($)		12 Months Ended
	May 07, 2022	Dec. 31, 2023	Dec. 31, 2022
Disclosure of detailed information about borrowings [line items]
Interest on lease liabilities		$ 2,141,641	$ 284,631
Accretion expense		5,663,365	0
Accretion and revaluation expense on balance of purchase price payable related to the acquisition of the dealership rights		0	82,850
Gain on derecognition of the balance of purchase price payable related to the acquisition of the dealership rights	$ (2,130,583)	0	(2,130,583)
Financing cost		3,752,505	2,489,123
Other		(762,994)	(51,090)
Finance costs		17,892,444	955,422
Borrowing costs capitalised		6,535,601	5,093,206
Interest On Long-Term Debt and Other Debts
Disclosure of detailed information about borrowings [line items]
Borrowing costs capitalised		4,021,208	2,214,906
Interest On Lease Liability
Disclosure of detailed information about borrowings [line items]
Borrowing costs capitalised		$ 2,514,393	$ 2,878,300
Minimum
Disclosure of detailed information about borrowings [line items]
Capitalisation rate of borrowing costs eligible for capitalisation (as a percent)		7.35%	5.68%
Long-Term Debt
Disclosure of detailed information about borrowings [line items]
Interest on long-term debt and other debts		$ 7,097,927	$ 280,491

XML

INCOME TAXES - Schedule of Reconciliation of Effective Tax Rate (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Taxes [Abstract]
Earnings (loss) before income taxes	$ (103,766,137)	$ 17,775,766
Combined statutory income tax rate in Canada	26.50%	26.50%
Expected income tax expense (recovery)	$ (27,498,026)	$ 4,710,578
Non-deductible share-based employee remuneration	1,386,071	3,275,949
Change in fair value of share warrant obligations	(7,097,660)	(26,889,069)
Non-deductible accretion expense	1,525,199	16,529
Change in unrecognized deferred tax assets	31,505,502	18,596,751
Impact of US tax rate applicable to the subsidiary	173,834	173,323
Non-deductible expenses	62,703	114,518
Other	(57,623)	1,421
Income taxes	$ 0	$ 0

XML

INCOME TAXES - Schedule of Components of Deferred Income Tax Assets and Liabilities (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Deferred tax liability (asset)	$ 0	$ 0
Unused tax losses for which no deferred tax asset recognised	262,671,000	145,392,000
Unused tax credits for which no deferred tax asset recognised	16,437,000	10,371,000
Property, plant and equipment
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Deferred tax liability (asset)	2,138,000	(16,438,000)
Right-of-use assets
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Deferred tax liability (asset)	(24,258,000)	(16,202,000)
Intangible assets
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Deferred tax liability (asset)	(46,162,000)	(37,151,000)
Lease liabilities
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Deferred tax liability (asset)	23,681,000	16,051,000
Non-capital losses carry-forward
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Deferred tax liability (asset)	36,632,000	50,100,000
Unused tax losses for which no deferred tax asset recognised	152,505,000	73,623,000
Deferred financing cost
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Deferred tax liability (asset)	(203,000)	(282,000)
Financing fees and other
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Deferred tax liability (asset)	8,172,000	3,922,000
Deductible temporary differences
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unused tax losses for which no deferred tax asset recognised	5,486,000	6,059,000
Research and development expenditures carry-forward
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unused tax losses for which no deferred tax asset recognised	104,680,000	65,710,000
Canadian Federal investment tax credits
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unused tax credits for which no deferred tax asset recognised	16,000,000	10,307,000
Québec investment and innovation tax credit
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unused tax credits for which no deferred tax asset recognised	$ 437,000	$ 64,000

XML

INCOME TAXES - Narrative (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unused tax losses for which no deferred tax asset recognised	$ 262,671,000	$ 145,392,000
Non-capital losses carry-forward
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unused tax losses for which no deferred tax asset recognised	152,505,000	73,623,000
Research and Development Expenditures, Canadian Subsidiaries
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unused tax losses for which no deferred tax asset recognised	104,680,000	65,710,000
Non-Capital Losses Carried Forward, Canadian Subsidiaries
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unused tax losses for which no deferred tax asset recognised	111,132,000	47,545,000
Subsidiaries in the United States of America
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unused tax losses for which no deferred tax asset recognised	41,373,000	26,077,000
Non-refundable Investment Tax Credits
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unused tax losses for which no deferred tax asset recognised	16,000,000	10,307,000
Research and development expenditures carry-forward
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unused tax losses for which no deferred tax asset recognised	$ 104,680,000	$ 65,710,000

XML

EARNINGS PER SHARE (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Disclosure Of Earnings Per Share [Abstract]
Net earnings (loss)	$ (103,766,137)	$ 17,775,766
Basic weighted average number of common shares outstanding (in shares)	224,311,227	193,113,983
Basic earnings (loss) per share (in USD per share)	$ (0.46)	$ 0.09
Plus dilutive impact of stock options, RSUs, DSUs, and warrants (in shares)	0	7,477,680
Diluted weighted average number of common shares outstanding (in shares)	224,311,227	200,591,663
Diluted earnings (loss) per share (in USD per share)	$ (0.46)	$ 0.09

XML

SUPPLEMENTAL CASH FLOW DISCLOSURE - Schedule of Depreciation and Amortization (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Statement of cash flows [abstract]
Depreciation – property, plant and equipment	$ 10,820,442	$ 5,038,092
Depreciation – right-of-use assets	8,037,341	3,454,353
Amortization – intangible assets	7,216,789	3,000,028
Depreciation and amortization	$ 26,074,572	$ 11,492,473

XML

SUPPLEMENTAL CASH FLOW DISCLOSURE - Schedule of Change in Non-cash Working Capital Items (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Statement of cash flows [abstract]
Inventories	$ (90,063,714)	$ (61,739,634)
Accounts receivable	(13,351,335)	(24,369,277)
Prepaid expenses	3,818,496	(940,816)
Trade and other payables	24,056,908	27,926,974
Deferred revenue and other deferred liabilities	17,564,993	155,253
Net change in non-cash working capital items	(57,974,652)	(58,967,500)
Payables, acquisition of intangible assets	634,331	4,757,926	$ 554,310
Payables, acquisition of property, plant and equipment	$ 11,750,398	$ 16,229,912	$ 8,797,575

XML

SUPPLEMENTAL CASH FLOW DISCLOSURE - Schedule of change in liabilities arising from financing activities (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Disclosure Of Supplemental Cash Flow Information [Line Items]
Liabilities arising from financing activities at beginning of period	$ 197,437,126
Liabilities arising from financing activities at beginning of period	197,437,126	$ 181,512,921
Repayment	(154,817,689)	(15,326,077)
Proceeds	317,515,562	131,489,709
Finance costs attributable to 2023 Debenture financing	(3,829,850)
Accretion expense	5,663,365	82,850
Non-monetary additions (net of modification)	34,117,202	6,961,794
Change in fair value of share warrant obligations	(20,963,112)	(101,468,186)
Change in fair value of conversion options on convertible debt instruments and interest paid in kind	(4,982,236)
Unrealized foreign exchange gain	(2,568,295)	516,401
Foreign currency translation adjustment	3,943,154	(4,197,905)
Liabilities arising from financing activities at end of period	371,515,227	197,437,126
Gain on derecognition of dealership rights		(2,130,583)
Contributed surplus		(3,798)
Share warrant obligations
Disclosure Of Supplemental Cash Flow Information [Line Items]
Liabilities arising from financing activities at beginning of period	23,243,563
Repayment	0
Proceeds	27,675,069
Finance costs attributable to 2023 Debenture financing	0
Accretion expense	0
Non-monetary additions (net of modification)	0
Change in fair value of share warrant obligations	(20,963,112)
Change in fair value of conversion options on convertible debt instruments and interest paid in kind	0
Unrealized foreign exchange gain	0
Foreign currency translation adjustment	(373,317)
Liabilities arising from financing activities at end of period	29,582,203	23,243,563
Conversion options on convertible debt instruments
Disclosure Of Supplemental Cash Flow Information [Line Items]
Liabilities arising from financing activities at beginning of period	0
Repayment	0
Proceeds	30,342,059
Finance costs attributable to 2023 Debenture financing	0
Accretion expense	0
Non-monetary additions (net of modification)	0
Change in fair value of share warrant obligations	0
Change in fair value of conversion options on convertible debt instruments and interest paid in kind	(4,982,236)
Unrealized foreign exchange gain	0
Foreign currency translation adjustment	(325,750)
Liabilities arising from financing activities at end of period	25,034,073	0
Share warrant obligations
Disclosure Of Supplemental Cash Flow Information [Line Items]
Liabilities arising from financing activities at beginning of period	23,243,563	106,225,934
Repayment		0
Proceeds		19,913,196
Accretion expense		0
Non-monetary additions (net of modification)		0
Change in fair value of share warrant obligations		(101,468,186)
Unrealized foreign exchange gain		0
Foreign currency translation adjustment		(1,423,583)
Gain on derecognition of dealership rights		0
Contributed surplus		(3,798)
Long-term debt and other debts
Disclosure Of Supplemental Cash Flow Information [Line Items]
Liabilities arising from financing activities at beginning of period	110,673,348
Liabilities arising from financing activities at beginning of period	110,673,348	13,077,670
Repayment	(148,305,458)	(10,348,894)
Proceeds	259,498,434	111,576,513
Finance costs attributable to 2023 Debenture financing	(3,829,850)
Accretion expense	5,663,365	82,850
Non-monetary additions (net of modification)	0	0
Change in fair value of share warrant obligations	0	0
Change in fair value of conversion options on convertible debt instruments and interest paid in kind	0
Unrealized foreign exchange gain	(2,568,295)	516,401
Foreign currency translation adjustment	3,810,821	(2,100,609)
Liabilities arising from financing activities at end of period	224,942,365	110,673,348
Gain on derecognition of dealership rights		(2,130,583)
Contributed surplus		0
Lease liabilities
Disclosure Of Supplemental Cash Flow Information [Line Items]
Liabilities arising from financing activities at beginning of period	63,520,215
Liabilities arising from financing activities at beginning of period	63,520,215	62,209,317
Repayment	(6,512,231)	(4,977,183)
Proceeds	0	0
Finance costs attributable to 2023 Debenture financing	0
Accretion expense	0	0
Non-monetary additions (net of modification)	34,117,202	6,961,794
Change in fair value of share warrant obligations	0	0
Change in fair value of conversion options on convertible debt instruments and interest paid in kind	0
Unrealized foreign exchange gain	0	0
Foreign currency translation adjustment	831,400	(673,713)
Liabilities arising from financing activities at end of period	$ 91,956,586	63,520,215
Gain on derecognition of dealership rights		0
Contributed surplus		$ 0

XML

RELATED PARTY TRANSACTIONS (Details) - Related parties - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Disclosure of transactions between related parties [line items]
Salaries including bonuses	$ 3,633,112	$ 3,368,388
Share-based payments	3,737,017	8,878,755
Total remuneration	$ 7,370,129	$ 12,247,143

XML

SHARE CAPITAL (Details) - USD ($)			12 Months Ended
	Jan. 17, 2023	Jun. 17, 2022	Dec. 31, 2023	Dec. 31, 2022
Disclosure of classes of share capital [line items]
Sale of stock, number of shares authorized for sale, value		$ 125,000,000
Sale of stock, price per share (in usd per share)			$ 1.93	$ 3.74
Proceeds from issuance of shares through "at-the-market" equity program, net of issuance costs			$ 8,580,405	$ 29,351,308
Gross consideration for shares sold			9,430,894
Payments for share issue costs			850,489	29,351,308
Proceeds from the issuance of units through the December 2022 Offering - Common Shares, net of issuance costs			$ 4,175,836	$ 27,264,038
Over-Allotment Option
Disclosure of classes of share capital [line items]
Issuance of shares though "at-the-market" equity program (in shares)	2,952,755
Sale of stock, price per share (in usd per share)	$ 2.54
Gross consideration for shares sold	$ 7,499,998
Payments for share issue costs	664,522
Proceeds from the issuance of units through the December 2022 Offering - Common Shares, net of issuance costs	$ 6,835,476
December 2022 Offering
Disclosure of classes of share capital [line items]
Issuance of shares though "at-the-market" equity program (in shares)			2,952,755
Proceeds from issuance of shares through "at-the-market" equity program, net of issuance costs			$ 4,175,836
Gross consideration for shares sold			4,592,772
Payments for share issue costs			416,936
Commission Costs
Disclosure of classes of share capital [line items]
Payments for share issue costs			141,462
Commission Costs | December 2022 Offering
Disclosure of classes of share capital [line items]
Payments for share issue costs			302,642
Legal Costs
Disclosure of classes of share capital [line items]
Payments for share issue costs			709,027
Legal Costs | December 2022 Offering
Disclosure of classes of share capital [line items]
Payments for share issue costs			$ 114,294
Share capital
Disclosure of classes of share capital [line items]
Issuance of shares though "at-the-market" equity program (in shares)			4,894,060	8,346,789
Proceeds from issuance of shares through "at-the-market" equity program, net of issuance costs			$ 8,580,405	$ 29,351,308

XML

ENTITY-WIDE DISCLOSURES - Narrative (Details) - segment	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Disclosure of disaggregation of revenue from contracts with customers [line items]
Number of reportable operating segments	1
Percentage of entity's revenue (as a percent)	0.00%	35.00%
Major Customer 1
Disclosure of disaggregation of revenue from contracts with customers [line items]
Percentage of entity's revenue (as a percent)		100.00%

XML

ENTITY-WIDE DISCLOSURES - Schedule of Group's Revenue From External Customers That Are Divided Into Geographical Areas (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Disclosure of disaggregation of revenue from contracts with customers [line items]
Revenue from external customers	$ 253,495,601	$ 139,914,470
Canada
Disclosure of disaggregation of revenue from contracts with customers [line items]
Revenue from external customers	165,650,421	121,086,499
United States
Disclosure of disaggregation of revenue from contracts with customers [line items]
Revenue from external customers	$ 87,845,180	$ 18,827,971

XML

ENTITY-WIDE DISCLOSURES -Schedule of Disclosure of Non-current Assets Allocated To Geographic Areas (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Disclosure of Disaggregation of Non-current assets [Line Items]
Other non-current assets	$ 6,994,815	$ 1,073,226
Property, plant and equipment	198,536,683	160,756,328
Right-of-use assets	89,663,139	60,508,354	$ 60,902,362
Intangible assets	175,703,257	151,364,023
Contract asset	13,528,646	13,211,006
Non-current assets	484,426,540	386,912,937
Canada
Disclosure of Disaggregation of Non-current assets [Line Items]
Other non-current assets	6,812,370	708,440
Property, plant and equipment	94,684,032	81,602,840
Right-of-use assets	35,469,879	10,836,851
Intangible assets	167,106,057	144,213,010
Contract asset	13,528,646	13,211,006
Non-current assets	317,600,984	250,572,147
United States
Disclosure of Disaggregation of Non-current assets [Line Items]
Other non-current assets	182,445	364,786
Property, plant and equipment	103,852,651	79,153,488
Right-of-use assets	54,193,260	49,671,503
Intangible assets	8,597,200	7,151,013
Contract asset	0	0
Non-current assets	$ 166,825,556	$ 136,340,790

XML

FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT - Schedule of Disclosure of Foreign Currency Denominated Financial Assets and Liabilities Which Expose the Group to Currency Risk (Details) - Currency Risk - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Trade and other payables
Disclosure of nature and extent of risks arising from financial instruments [line items]
Risk exposure associated with instruments sharing characteristic	$ 3,074,771	$ 6,094,084
Long-term debt and other debts
Disclosure of nature and extent of risks arising from financial instruments [line items]
Risk exposure associated with instruments sharing characteristic	119,019,843	35,000,000
Total Financial Liabilities
Disclosure of nature and extent of risks arising from financial instruments [line items]
Risk exposure associated with instruments sharing characteristic	122,094,614	41,094,084
Cash
Disclosure of nature and extent of risks arising from financial instruments [line items]
Risk exposure associated with instruments sharing characteristic	2,334,652	34,192,889
Total Financial Assets
Disclosure of nature and extent of risks arising from financial instruments [line items]
Risk exposure associated with instruments sharing characteristic	$ 2,334,652	$ 34,192,889

XML

FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Financial Instruments [Abstract]
Foreign currency increase (decrease) (as a percent)	10.00%
Impact of foreign currency increase (decrease)	$ (11,735,536)	$ (718,280)
Change in interest rates (as a percent)	1.00%
Impact of increase (decrease) in interest rates	$ 2,250,000	$ 1,107,000

XML

FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT - Schedule of Disclosure of Maturity of Contractual Obligations (Details) - Liquidity Risk - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Financial liabilities	$ 388,755,845	$ 236,577,376
Non-derivative financial liabilities, undiscounted cash flows	601,196,976	420,302,170
Trade and other payables
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Financial liabilities	71,856,894	62,383,813
Non-derivative financial liabilities, undiscounted cash flows	71,856,894	62,383,813
Long-term debt and other debts
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Financial liabilities	224,942,365	110,673,348
Non-derivative financial liabilities, undiscounted cash flows	322,891,324	118,341,134
Purchase and other obligations
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Financial liabilities	0	0
Non-derivative financial liabilities, undiscounted cash flows	72,781,793	149,591,363
Lease obligations
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Financial liabilities	91,956,586	63,520,215
Non-derivative financial liabilities, undiscounted cash flows	133,666,965	89,985,860
Less than 1 year
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	181,012,987	143,677,986
Less than 1 year | Trade and other payables
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	71,856,894	62,383,813
Less than 1 year | Long-term debt and other debts
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	37,571,684	2,450,141
Less than 1 year | Purchase and other obligations
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	58,681,793	70,523,901
Less than 1 year | Lease obligations
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	12,902,616	8,320,131
Between 1 and 3 years
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	122,521,083	186,759,110
Between 1 and 3 years | Trade and other payables
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	0	0
Between 1 and 3 years | Long-term debt and other debts
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	85,120,218	96,150,078
Between 1 and 3 years | Purchase and other obligations
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	14,100,000	75,154,748
Between 1 and 3 years | Lease obligations
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	23,300,865	15,454,284
Between 4 and 5 years
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	179,728,693	20,133,085
Between 4 and 5 years | Trade and other payables
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	0	0
Between 4 and 5 years | Long-term debt and other debts
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	154,644,192	0
Between 4 and 5 years | Purchase and other obligations
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	0	3,439,748
Between 4 and 5 years | Lease obligations
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	25,084,501	16,693,337
More than 5 years
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	117,934,213	69,731,989
More than 5 years | Trade and other payables
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	0	0
More than 5 years | Long-term debt and other debts
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	45,555,230	19,740,915
More than 5 years | Purchase and other obligations
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	0	472,966
More than 5 years | Lease obligations
Disclosure Of Maturity Analysis For Derivative And Non-Derivative Financial Liabilities [Line Items]
Non-derivative financial liabilities, undiscounted cash flows	$ 72,378,983	$ 49,518,108

XML

FINANCIAL INSTRUMENT RISK AND CAPITAL MANAGEMENT - Schedule of Disclosure of Amounts Managed by Capital Under Review (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Disclosure of Amounts Managed by Capital Under Review [Line Items]
Less: Cash	$ 29,892,966	$ 88,266,985
Total net indebtedness	195,049,399	22,406,363
Shareholders’ equity	358,913,991	437,116,773	$ 368,681,834
Warrants issued as part of the business combination transaction, December 2022 Offering and 2023 Debenture Financing	27,684,412	21,071,294
Total capitalization	$ 581,647,802	$ 480,594,430
Total net indebtedness to total capitalization ratio (as a percent)	34.00%	5.00%
Long-term debt and other debts | Amortized cost | Borrowings
Disclosure of Amounts Managed by Capital Under Review [Line Items]
Long-term debt and other debts	$ 224,942,365	$ 110,673,348