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Lightning eMotors struggles to hang on in brutal market

Startup seeks to scale school bus and airport shuttle electrification

Lightning eMotors co-founder and CEO Tim Reeser leads the electric school bus maker in difficult times. (Photo: Lightning eMotors)

DETROIT — Lightning eMotors CEO Tim Reeser does not regret going for the easy money from a special purpose acquisition company merger two years ago. But like other transportation SPACs, the converter of small school buses to run on electricity is struggling to hang on.

“At the time, we needed a couple hundred million dollars to scale. We were in COVID. The markets were very difficult. The capital markets were willing to give us a great valuation. And we were able to get $230 million to scale,” Reeser said. “We couldn’t have done it any other way.”

The company is selling stock at a discount to a lender to get the money it needs to keep going. But Reeser is optimistic.

Lightning recently brought an electrified Class A school bus based on General Motors’ medium-duty 4500 HD truck to Belle Isle, a few miles east of GM’s headquarters. In ride-and-drives, it demonstrated why small school buses are a target-rich environment for commercial electric vehicles. 

“I’m telling you this is the fastest-growing EV segment, even faster than passenger vehicles even though it’s well behind passenger vehicles,” Reeser told a small group of reporters.

Lightning, founded by Reeser in 2008, has converted about 100 small school buses to date. With an addressable market of 10,000 such buses a year — and with generous federal and state incentives available — Reeser’s excitement is palpable.


Lightning eMotors is taking the bus route as its niche in the electric vehicle transition. Build on a General Motors 4500 chassis with a Collins Bus Cop. body, Lightning has delivered about 100 of the Type A buses. (Photo: Lightning eMotors)

Taking the bus route

“Through the COVID years, [school districts] didn’t buy any buses. So it’s an aging fleet that is trying to catch up and is starting to buy more vehicles. So this is where we’re focused,” he said.

The deal for the Navistar Inc.-built GM 4500 is solid, Reeser said, though the future of the plant in Springfield, Ohio, where it’s made, is iffy. Navistar appears to be focusing on leveraging truckmaking operations in San Antonio and Escobedo, Mexico. As for bus bodies, Lightning works with Collins Bus Corp. for the Type A bodies it uses.

“Long term, GM has told us it’s available for the next several years, so we believe we’re OK,” Reeser said. “But we’re coming out with our own e-chassis if they decide to discontinue this product.”

School and shuttle buses account for 80% of Lightning’s production. Ace Parking at San Diego International Airport operates 30 Lightning electric shuttles where they have amassed 1 million miles.

Major automakers dominate small Class 1-2 commercial vehicles. The Big 4 legacy truck manufacturers control Class 7-8 heavy-duties. 

“We’ve left that high-volume, low-customized space to the folks who are good at it,” Reeser said.

Class 4-6 attracts a lot of electrification players — Workhorse Group, Shyft Group and Daimler Truck’s Rizon brand to name a few.  

Reeser thinks Lightning can account for a significant portion of Class A school buses. They drive an average of less than 80 miles a day on defined routes. Chassis electrification rival Motiv Power Systems has offered an electrified Class A school bus since 2013.

Lightning also is producing a proprietary mobile charging system. The system is capable of direct-current (DC) fast charging of up to four buses simultaneously. It also can dispense alternating current, commonly referred to as Level 2 charging, for vehicles like buses that sit unused for long periods of time.

Four charging cables hang in the back of the trailer, which can get its energy from a variety of sources.

“All of our vehicles support both Level 2 and DC fast charging,” Reeser said. “ACE does both. For six hours of dwell time at night, they use Level 2. But during the day at lunchtime and breaks, they use a DC fast charge to make sure they keep [the shuttles] topped out throughout the day.”

Others like Xos and Tritium offer portable chargers, the latter a lease or purchase option from Nikola. Lightning sees portable chargers as a critical stopgap to help school maintenance garages waiting for fixed charging of rental car operations augmenting existing charging stations during heavy use in specific locations.

Lighting eMotors also is producing a proprietary mobile charging system to support school buses, shuttles and others needing Level 2 alternating current or Level 3 DC fast charging. (Photo: Lightning eMotors)

Incentives as a driver

Through the Bipartisan Infrastructure Law, the Environmental Protection Agency is allocating $1 billion a year for the next five years to help grow the number of battery-powered school buses. Colorado, where Lightning is based, offers a $200,000 rebate per bus purchased. California offers $100,000. And the federal Inflation Reduction Act tacks on $40,000 per copy.

With a typical dealer sale price of $220,000 — twice the cost of a diesel — electric school buses have a speedy payback.

“They are 80% cheaper to operate so even without grants [from] a TCO standpoint, they are compelling today,” Reeser said.

The money to scale

For all the advantages of being in the right market at the right time, Lightning has financial challenges. It went public in April 2021 during the SPAC frenzy when many companies chased the promise of big payouts from combining with a company created solely to find a merger partner.

Lighting chose GigCapital3 Inc., which valued the company at $586 million and raised $268 million that Lightning was promised at closing. Because 29% of the shareholders in GigCapital3’s initial public offering redeemed shares early, Lightning received about $230 million.

“One of my mantras is hindsight is not 20-20,” Reeser said. “For those of us who grew up in the ‘Back to the Future’ era, that movie first exploited this idea that if you change a couple things in the past, other unintended consequences might occur, and that’s true.”

Lightning cuts jobs to make cash last

Lightning cut employment from about 330 to 250 earlier this year. But being a public company requires meeting the requirements of being publicly traded. And that means having enough people to engineer products and enough to focus on compliance.

“When capital got very constrained, we said we’ve got to make sure we get to the finish line,” Reeser said. “We know we’ve got a great product. We know we’ve got great markets and niches. So we believe in the long term, but we’ve got to make it to the long term.”

While Reeser would prefer Lightning to remain independent, he doesn’t rule out an acquisition, perhaps by longtime financial backer British Petroleum. BP is expanding rapidly into electrification. It has stuck with Lightning since 2014.

“Two years ago there was plenty of public money and we all leveraged that and made a lot of investments with that public money,” Reeser said. “Now that there’s less public money available, a lot of us are looking at strategic partnerships.”

Dustup with Nikola

Lightning initially purchased batteries for its products from startup Romeo Power. When financially ailing Romeo — itself a SPAC-backed startup — was acquired by electric truck maker Nikola Corp. last August, Lightning’s battery supply dried up.

Nikola determined it would keep Romeo’s minuscule output for itself, spawning lawsuits from Lion Electric Co. and Lightning. Nikola has since moved the Romeo battery production in-house even as it pivots from battery-electric trucks to focus on fuel cell models that require fewer batteries.

“They vandalized us,” Reeser said. “It’s painful because from my perspective, it was a fixable problem. Nikola said in their last earnings report that they’re looking at everything, including potentially bankrupting Romeo, so we don’t know what’s going to happen.”

Nikola declined to comment on the Lightning lawsuit.

“We are evaluating a potential restructuring of Romeo,” Nikola said in its first-quarter 10-K filing with the Securities and Exchange Commission. “This restructuring may include the sale, license, transfer, or other disposition of some or all of Romeo’s assets, and may include [a bankruptcy filing].”

Editor’s note: Corrects to show Motiv Power Systems offers an electrified Class A school bus.

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Alan Adler

Alan Adler is an award-winning journalist who worked for The Associated Press and the Detroit Free Press. He also spent two decades in domestic and international media relations and executive communications with General Motors.