Battle Lines Drawn in Fight Over Quebec Consumption of Electric School Buses

July 29, 2021

TAN_1710 — Image courtesy of Lion Electric

While school bus manufacturers are generally on board with the government of Quebec’s plan to achieve greenhouse gas (GHG) emission goals through the electrification of student transportation, some of their dealers have gone on the record to note their displeasure with a stipulation that only electric school buses assembled in Canada are eligible for program funding.

Kelly Backholm, president and owner of Autobus Leeds Transit, an IC Bus dealer for Quebec and Ontario, said he supports electric vehicles and green technology, adding that there are significant upfront costs to transforming a fleet. “It has to start somewhere,” he added. “The school bus is a good application.”

But like others, he does not support the Canadian manufacturing requirement.

“I am in support of free trade. There’s always been room in the market for three or more distributors,” he commented. “We’ve been a bus dealer in Canada for more than 50 years, and to have us just with the stroke of a pen shut out of that market is shocking and was not expected, whatsoever.”

The 2030 Plan for a Green Economy unveiled by Quebec’s Ministry of Transportation on Nov. 16 set a target of a 37.5 percent reduction in GHG emissions below 1990 levels. As of January, 130 school buses in a province- wide fleet of more than 10,000 were electric. By 2030, electrification of 65 percent of the school bus fleet would prevent nearly 800,000 tons GHGs, according to Ministry of Transportation estimates.

The program provides financial assistance to school bus operators in the electrification of their fleets. Eligible vehicles are new, fully electric Type A, C and D school buses manufactured by the original manufacturer or with a Transport Canada national safety brand number, and they must comply with the Student Transportation Road Vehicle Regulations.

The point of contention within the manufacturing sector is the eligibility list only includes LionA, LionC and LionD models. The Micro Bird G5e also made the list.

The Canadian stipulation contrasts U.S. legislation in Congress that allows for 40 percent of an EV bus to be made out of the country.

“We support the government’s commitment to reducing GHGs through the deployment of electric school buses in Quebec, which it plans to do by requiring that two-thirds of buses be electric-powered by 2030,” wrote Michel Daneault, vice president of sales and service for Micro Bird dealer A. Girardin, Inc., in a recent letter to customers. “The plan is very ambitious and has significant requirements and restrictions on authorized suppliers of electric school buses and their vehicles that could be eligible. We are concerned that the program is intended to direct the majority of electric school bus purchases to one manufacturer.

“It is our view that the new program eliminates free competition to the point of discriminating against certain suppliers and their products, creating a preference that is difficult to overcome,” Daneault said, adding that the program does not appear to consider several factors that could significantly affect school transportation or the achievement of the objectives of electric school bus deployment and GHG reduction.

More bluntly, Daneault referred to the requirement as essentially creating a monopoly in favor of Lion Electric during a press conference last month.

The Ministry of Transportation did not respond to requests for comment. But Daneault pointed out that 99 percent of school buses that crisscross Quebec regions daily have been sold and are supported by Autobus Thomas (Thomas Built Buses), Autobus Leeds Transit (IC Bus) and Girardin (Blue Bird).

“Maintaining business and the after-sales service offered by all distributors is essential and even critical to the reliability and daily deployment of school transportation in Quebec,” he explained. “For the Girardin team, it is clear that the successful rollout of the government’s new electrification plan must be based on the collaboration of all manufacturers and distributors…to maintain a reliable and safe student service and to enable Quebec and its carriers to spread across North America.”

He noted that A. Girardin will continue to influence government authorities to amend certain terms of the program and eliminate what the company views as discriminatory requirements and restrictions toward the goal of free competition.

“Presently, we agree to electrify every bus on the road,” he said. “The problem is to force the customer to buy buses specifically from one distributor, Lion [Electric Company]. We agree that free market competition is the way to do business.”

Danault also proposed that the program should be postponed until the end of this year or next year, to provide more time to transition from gas and propane engines to move 100 percent to electric.

“The time frame is so short,” he said. “I don’t think this is attainable because the market will not be able to adjust to this to get the buses on time for the beginning of the school season in September.”

Steve Girardin, president of Micro Bird, concurred, noting that his company applauds Quebec’s initiative and significant investment to electrify school buses, but said that, “We believe the best way to electrify school buses will require a free and open market.

“The program in its current format limits the choice of manufacturers in favor of one brand/manufacturer while jeopardizing the existence of current school bus dealers and will threaten the reliability of the school transportation system,” he continued.

Locking U.S. manufacturers out of the Quebec market and potentially closing their respective dealer networks would most likely have significant impacts on student transportation services, Girardin added.

“The truth of the matter is that approximately 0.1 percent of school buses on the road will be electric by the end of this calendar year,” he explained. “The main challenge today is the technology’s inability to financially justify its total cost of ownership without significant and generous government grants. In order for electric school buses to evolve and succeed, customers and the industry must have the choice to experiment with different manufacturers, dealers, products, infrastructure, and services.”

In trying to mitigate the Ministry of Transportation’s decision to include collaboration of all manufacturers and distributors, Girardin suggested that directing most of the electric school bus orders to a resident manufacturer is counterintuitive to a massive and rapid electrification strategy.

“Micro Bird and Blue Bird will continue to collaborate with government and advocate our primary goal: the reduction of greenhouse gases through the electrification of school buses in an open and fair market to all manufacturers and their dealers,” he said.

In the meantime, Girardin said his company is encouraging all OEMs and their respective dealers to use Quebec as a showcase market for electrification of school buses and to “resist and lobby against protectionist measures in the school bus industry.” He advised that the OEMs continue to earn their business “by the merits and quality of their technology, products and services.

“This is our best chance to succeed our transition to a greener and reliable school transportation system,” he added.

Meanwhile, the Lion Electric Company debuted as a publicly traded company and began trading stocks on May 7 on the New York Stock Exchange and the Toronto Stock Exchange. The company also announced Joliet, Illinois, as the location of its new 900,000-square-foot production facility, for which it received a $7.9 million tax credit in return for $70 million in capital investments, according to the Illinois Department of Commerce and Economic Opportunity.

The new facility represents the largest dedicated production site for zero-emission medium and heavy-duty vehicles in the U.S. and Lion’s biggest footprint in the market, giving the company the ability to meet the increasing demand in the marketplace for ‘Made in America’ zero- emission vehicles, while bringing production closer to its customers, the company noted in its announcement.

Lion Electric spokesman Brian Alexander said the company declined to comment on other manufacturers’ concerns about the Quebec requirement on Canadian manufacturing, saying only that “Lion is in support of programs, which put more electric school buses on the roads today. More zero-emission buses now, means cleaner air for kids for generations to come.”

But concerns over Quebec’s stipulation also focus on job losses in Canada.

“Many people are going to lose jobs not only at my company, but at the other dealers,” contended Backholm at Autobus Leeds Transit. “There will be far more jobs lost in the short term than there will be created.”

Steve Girardin agreed, saying that the new program requirements for Canadian assembly will have a significant impact on existing Quebec school bus dealers representing U.S. manufacturers.

“Unless the OEMs start to assemble their buses in Canada, those Quebec dealers will be out of business,” he predicted. “There will be job losses. Student transportation could be impacted as there will no longer be dealers to support many of the 10,000 school buses in circulation in Quebec. U.S. manufacturers and their dealers are at the heart of Canada’s safe and reliable school transportation system.”

The transition transcends the purchase of the electric vehicle to incorporate significant investments of time and money in education, infrastructure and maintenance, said Girardin.

“Theories and ambitions will severely be put to the test over the next few years as politicians modify regulation and commit astronomical amounts of money to convert the school bus industry toward finding the right formula to significantly reduce GHG emissions,” he noted. “The reduction of GHG emissions is a collective problem that freely transcends borders. Customers must have the same freedom to explore and implement the best technologies and solutions no matter what side of the border they come from.”