The Lion Electric Company, a manufacturer of all-electric medium and heavy-duty urban vehicles, announced that it has entered into a four-year supply agreement with a top-tier supplier (the “Supplier”) for the supply of lithium-ion battery cells (the “Cell Supply Agreement”) to be used for the manufacturing of batteries for electric vehicles.

Subject to the terms and conditions of the Cell Supply Agreement, the Supplier has committed to supply, and Lion has committed to purchase, on a non-exclusive basis, lithium-ion battery cells at escalading volumes over calendar years 2023 and 2024, at agreed upon prices, subject to adjustments, including to account for increases in the prices of raw materials and changes in specifications. Volumes and unit prices for calendar years 2025 and 2026 remain to be agreed upon by the parties.

The Cell Supply Agreement currently provides that 39 million lithium battery cells are to be purchased by Lion in total over calendar years 2023 and 2024, subject to, among other things, the Supplier completing its internal cell qualification processes to validate satisfaction of Lion’s specification requirements. The Cell Supply Agreement provides for termination rights and penalties in favour of each party in the event that a specified percentage of the volume commitments set forth in the contract are not met for each applicable period defined thereunder.