Montreal, December 3, 2021— Propulsion Québec, the cluster for electric and intelligent transportation, unveiled today a brand-new study entitled "Diagnostic of the financing chain in the electric and intelligent transportation sector in Quebec." Through its financing workstream, the cluster has the mandate to help align companies in Quebec's electric and intelligent transportation sector with stakeholders involved in the financing chain in order to enable access to the financing necessary for the different phases of company growth, while respecting societal objectives such as the fight against climate change.
It is in this context that Propulsion Québec commissioned the firm EY, in collaboration with a steering committee made up of Quebec financial stakeholders, to carry out this large study and mobilization project of the sector's business ecosystem and financial actors in order to identify and address certain financing-related issues.
The project benefited from exceptional ecosystem support and depth of analysis:
- 60 companies contacted
- 25 interviews with CEOs / Chief Financial Officers
- 20 interviews with local and international investors
- More than 3,000 transactions analyzed (US, Canada, Quebec)
Overview, needs, sources and action plan
The objective: to take stock of the financing chain and produce a diagnostic, to better understand companies' financial needs to ensure their growth, and to define the local and international financing sources accessible for the electric and intelligent transportation sector. A financing directory including the different sources available to Quebec companies has also been created and presented at the unveiling. The results of this project helped establish the foundations of a strategy and an action plan to contribute to addressing financing challenges in the electric and intelligent transportation sector.
First, the study shows that currently in Quebec, financing is one of the main issues hindering the development of companies operating in the electric and intelligent transportation sector, particularly for the critical seed and start-up phases. Second, Quebec companies in this sector operate in a North American financing environment that is highly competitive. Several factors are at play, among them a slower financing velocity and investment ticket sizes smaller than those observed elsewhere in North America. Third, the sector's capital needs are significant. Indeed, over a 5-year horizon, the total shortfall to meet the capital needs of companies in the sector is estimated at approximately CAD 1.4 billion.
To increase the supply of financing, Propulsion Québec therefore recommends the creation of a private, sector-focused investment fund of at least CAD 100 million dedicated to electric and intelligent transportation. This envelope could be structured into different funds to help support companies during the critical and risky seed and start-up (Series A) phases in order to ensure the growth of Quebec's electric and intelligent transportation ecosystem and to help position Quebec as a global leader in this sector.
Quotes
"This study reveals fifteen issues and essential avenues of solutions to implement to support the development of Quebec's business ecosystem in the electric and intelligent transportation sector, at all stages of their development. Adequate financing of companies in our sector at every stage of their development is crucial to achieve our goals of positioning Quebec as a leader, of creating a solid core of companies across the different links of the value chain and thus making the province a prime location to design, test and commercialize low-GHG-emission electric and intelligent mobility products and solutions," said Sarah Houde, President and CEO of Propulsion Québec, the cluster for electric and intelligent transportation.
"Thanks to the study carried out by Propulsion Québec, we have a complementary picture of the financing issues in the electric and intelligent transportation industry. Investissement Québec offers several financial solutions to support companies in this sector. Consequently, I invite investors to mobilize to enhance this offering and thus contribute to making Quebec a leader in the transition to the transportation of the future," said Pierre Fitzgibbon, Minister of the Economy and Innovation and Minister responsible for Regional Economic Development.
Moreover,exclusive video capsulespresenting different financing journeys of Quebec companies in electric and intelligent transportation were produced.
Acknowledgements
This exercise was carried out in collaboration with a steering committee made up of Quebec financial stakeholders and thanks to the financial support of the Government of Quebec, the Caisse de dépôt et placement du Québec, the Desjardins Movement, MacKinnon, Bennett & Company, Investissement Québec, the Fonds de solidarité FTQ, Fondaction and Langlois Avocats.
To view the results of the study:
About Propulsion Québec
Quebec's cluster for electric and intelligent transportation mobilizes all players in the sector around coordinated projects aimed at positioning Quebec among the leaders in the development and deployment of land-based modes of transportation that promote electric and intelligent mobility. Created in 2017, Propulsion Québec now has more than 230 members from various sectors and deploys its resources across seven distinct workstreams aimed at developing and supporting innovative projects. The cluster benefits from the financial support of the Government of Quebec, the Government of Canada, the Montreal Metropolitan Community (CMM), ATTRIX, the Desjardins Movement, the Fonds de solidarité FTQ, Hydro-Québec and Québecor.
