Electric Snowmobile Maker Taiga Lays Off 70, Pauses Production

The Taiga Motors Corporation’s plans to electrify the snowmobile and personal watercraft markets is hitting some bumps in the trail, resulting in the temporary layoff of 70 people for the Quebec-based company. The company is also pausing its production processes.

On Tuesday, April 2, the publicly traded company released its fourth quarter and full-year 2023 financial results. They included some good news, and some bad.

Taiga proudly announced it had produced 417 total electric powered snowmobiles and personal watercraft in the fourth quarter. The total build for 2023 reached 1,056 vehicles.

Meanwhile, it reported sales of 242 vehicles in the quarter and 592 for the year. That represented $6.1 million (all dollar figures in Canadian) and $16.1 million respectively in sales. Those fourth quarter production numbers reflected 123 Nomad snowmobiles and 119 Orca PWC.

The math on the last two paragraphs leaves a lot to be desired. The company, though, also announced it has more than 2,400 pre-orders for future vehicles, and it said it has opened some new markets.

However, like many start-ups, the challenge is in the financials and the amount of cash it takes to do initial builds. Taiga recorded net losses of $22.2 million for the fourth quarter and $72.5 million for the calendar year. The warm winter weather did not help.

“In view of the current economic context combined with an unusually mild winter that negatively impacted the snowmobile business, Taiga is in the process of taking several steps to adjust its operations to better align seasonal production timing with dealer inventory levels,” Taiga said in a press release (which is posted in its entirety below. “As such, the Company announced today that it is temporarily pausing its vehicle production and temporarily reducing its workforce accordingly by approximately 70 people. In addition, Taiga is committed to further reducing its operating burn in 2024 and will continue to adjust the scale of its operations to the current market reality while maintaining the Company’s focus on expanding sales.”

The company’s stock price sunk to $0.44 on Tuesday. Remember, though, the layoffs and production changes were labeled as “temporary” and “pause.” So, it may be pre-mature to write off the company at this point.

Here’s the full press release from Taiga.

Taiga Announces Fourth Quarter and Full Year 2023 Results

• Produced 417 vehicles during the fourth quarter of 2023, resulting in 1,056 vehicles produced during the full year 2023.
• Recorded $6.1 million of revenue in the fourth quarter of 2023 and $16.1 million during the full year 2023.
• Began deployment of enhanced omnichannel sales model with distribution to key international markets in the U.A.E. and South America.
• Completed production launch on optimized high volume Orca^TM Performance PWC and Nomad^TM snowmobile product platforms achieving over 50 unit per week production on both product lines.

MONTREAL, April 2, 2024 /CNW/ – Taiga Motors Corporation (TSX: TAIG) (“Taiga” or the “Company“), a leading electric off-road vehicle manufacturer, today reported its financial and operating results for the year ended December 31, 2023.

Taiga reported $16.1 million from the sale of 592 vehicles during the full year of 2023 and $6.1 million from the sale of 242 vehicles during the fourth quarter ended December 31, 2023. Nomad snowmobile production started in November 2023 for the 2023/2024 winter season.

During the quarter, Taiga continued to build its sales channels and commenced distribution to international markets in South America and the U.A.E. alongside the continued development of its Taiga Service Provider (“TSP”) network to 40 locations across Canada and the United States as of December 31, 2023. To further accelerate its market penetration and better support customers in their local markets, the Company intends to further evolve its omnichannel model, by expanding sales through dealers alongside distribution and direct to customer sales.

Fourth Quarter 2023 Operational Updates

• Produced 417 vehicles, of which 243 were Orca Performance watercraft and 174 were Nomad snowmobiles.
• Sold and delivered 242 vehicles, including 119 Orca PWC and 123 Nomad snowmobiles.
• Pre-order level stood at 2,442 as at December 31, 2023, as the Company focuses on maintaining a pre-order level and sales pipeline in line with its production plan.¹
• Taiga Service Provider (TSP) network growth in 2023, with 30 TSPs onboarded as of December 31, 2023, covering 40 locations in North America.
• Initiated international PWC distribution in the U.A.E. and in South America as well as snowmobile deliveries across multiple fleet operators in Sweden.
• Completed production launch on optimized high volume Orca Performance PWC and Nomad snowmobile product platforms achieving over 50 unit per week production on both product lines.
• Launched the new Cloud Connected Mobile App, enhancing customers’ experience and further solidify Taiga as a technology leader in the off-road industry.

Fourth Quarter 2023 Financial Highlights 

(All amounts in Canadian dollars unless indicated otherwise)

• Recorded revenue of $6.1 million during the fourth quarter of 2023, compared to $1.4 million in the fourth quarter of 2022.
• Recorded Cost of Sales of $15.6 million during the fourth quarter of 2023, compared to $17.1 million in the fourth quarter of 2022.
• Research & Development (R&D) expense (net of tax credits) increased to $3.1 million in the fourth quarter of 2023 from $2.0 million in the fourth quarter of 2022.
• General & Administration (G&A) expense increased to $6.2 million from $4.9 million compared to the fourth quarter of 2022.
• Sales & Marketing (S&M) expense of $1.0 million remained relatively stable with no change compared to the fourth quarter of 2022.
• Net loss for the period decreased to $22.2 million compared to $23.8 million in the fourth quarter of 2022.

Full-Year 2023 Financial Highlights 

(All amounts in Canadian dollars unless indicated otherwise)

• Revenue of $16.1 million recorded during 2023, compared to $3.2 million recorded in 2022.
• Cost of Sales of $43.0 million recorded during 2023, compared to $29.2 million reported in 2022.
• Research & Development (R&D) expense (net of tax credits) increased to $15.4 million from $9.4 million compared 2022.
• General & Administration (G&A) expense increased to $20.9 million from $19.8 million in 2022.
• Sales & Marketing (S&M) expense increased to $5.1 million from $4.3 million in 2022.
• Net loss for 2023 increased to $72.5 million compared to $59.5 million in 2022.
• Additions to Property and Equipment decreased to $11.4 million compared to $12.1 million in 2022.
• Cash and cash equivalents of $5.3 million as at December 31, 2023, compared to $22.8 million as at December 31, 2022.
• Inventory increased to $33.2 million as at December 31, 2023, compared to $20.8 million as at December 31, 2022.

2024 Priorities

After making major investments in 2022-2023 on new product launches and to support the Company’s rapid production ramp-up, Taiga is now focused on driving cost efficiency throughout the business and on deploying its omnichannel sales model to support sustainable growth. In view of the current economic context combined with an unusually mild winter that negatively impacted the snowmobile business, Taiga is in the process of taking several steps to adjust its operations to better align seasonal production timing with dealer inventory levels. As such, the Company announced today that it is temporarily pausing its vehicle production and temporarily reducing its workforce accordingly by approximately 70 people. In addition, Taiga is committed to further reducing its operating burn in 2024 and will continue to adjust the scale of its operations to the current market reality while maintaining the Company’s focus on expanding sales.

Furthermore, given the transition period in which Taiga currently finds itself as well as the Company’s current overall operational, market and financial circumstances, the Company has decided that it does not currently intend to provide any forward-looking guidance, production or sales outlook in respect of the fiscal year ending December 31, 2024 nor for any subsequent period.

Investors should read in their entirety the Company’s 2023 annual disclosure documents filed on April 2, 2024, including but not limited to the 2023 Annual MD&A and 2023 Annual Information Form.

Taiga will not be hosting a conference call to discuss its fourth quarter and full year 2023 results. Analysts and investors may contact Taiga’s Chief Financial Officer by writing to eric.bussieres@taigamotors.ca.

About Taiga

Taiga (TSX: TAIG) is a Canadian company reinventing the powersports landscape with breakthrough electric off-road vehicles. Through a clean-sheet engineering approach, Taiga has pushed the frontiers of electric technology to achieve extreme power-to-weight ratios and thermal specifications required to outperform comparable high-performance combustion powersports vehicles. The first models released include a lineup of electric snowmobiles and personal watercraft to deliver on a rapidly growing demand from recreational and commercial customers who are seeking better ways to explore the great outdoors without compromise. For more information, visit www.taigamotors.com

Forward-Looking Statements

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Such forward-looking information includes, but is not limited to, information with respect to our objectives and the strategies to achieve these objectives, the expected operations, financial results and condition of the Company, expectations regarding market trends, the Company’s growth rates, the Company’s future objectives and strategies to achieve those objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, estimates and intentions.

This forward-looking information is identified by the use of terms and phrases such as “may”, “would”, “should”, “could”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe”, and “continue”, as well as the negative of these terms and similar terminology, including references to assumptions, although not all forward-looking information contains these terms and phrases. Forward-looking information is provided for the purposes of assisting the reader in understanding the Company and its business, its financial position, operations, prospects and risks at a point in time in the context of historical and possible future developments and therefore the reader is cautioned that such information may not be appropriate for other purposes.

We draw your attention to the “Financial Position” section of the Company’s management’s discussion and analysis for the fiscal year ended December 31, 2023, and to note 2 of our consolidated financial statements which indicate the existence of material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern.

Both during the upcoming fiscal quarter and over the next twelve months, and despite having announced earlier in March 2024 that Export Development Canada had agreed to upsize its funding facility with Taiga and that the Company was able to draw down an additional $3.75 million under the upsized facility, the Company will require additional financing in the immediate term in order to fund its existing and future operations and obligations, including through the issuance of equity, equity-related or debt securities or through obtaining credit from government or financial institutions.

See the “Subsequent events” section of the Company’s management’s discussion and analysis for the fiscal year ended December 31, 2023 for additional details. At the present time and despite having deployed significant efforts to seek any form of additional funding, there is significant doubt that the Company will be able to secure any meaningful amount of additional third-party funding or financing in the immediate, near and medium terms.

All of the foregoing indicate that there exists a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern. Given all of the above, Taiga is in the process of taking a number of steps to restructure its operations and to reduce its operating expenses, including by significantly downsizing the scale of its operations and by reducing, even significantly, the number of its employees, and the Company may well be required to take additional restructuring measures in the near term.

However, there can be no assurance that any such downsizing efforts and initiatives currently underway or that may be undertaken by the Company in the near term will prove to be effective in sufficiently reducing the Company’s operating burn and, as such, there can be no assurance that the Company will be able to continue as a going concern and continue to pay its obligations and liabilities as they become due.

Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those that are disclosed in, or implied by, such forward-looking information.

These risks and uncertainties include, but are not limited to, the Company’s continuing negative operating cash flows and the limited prospects for the Company to obtain a meaning amount of additional funding or financing, limited operating history, delays in the ramp-up and commissioning of our assembly and production facilities, development of the network of dealers, supply chain dependence and disruptions and the impact of such disruptions on our ability to fulfil orders, quality control concerns, regulatory compliance, future capital requirements, warranty and product recalls, product and those described in the Company’s management’s discussion and analysis for the fiscal year ended December 31, 2023, and under the “Risk Factors” section of the Company’s annual information form filed on April 2, 2024 on the Company’s SEDAR+ profile at sedarplus.ca.

Forward-looking statements reflect management’s current beliefs, expectations and assumptions and are based on information currently available to management. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the future circumstances, outcomes or results anticipated or implied by such forward-looking statements will occur or that plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve known and unknown risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated by such statements.

All of the forward-looking information contained in this press release is qualified by the foregoing cautionary statements, and there can be no guarantee that the results or developments that we anticipate will be realized or, even if substantially realized, that they will have the expected consequences or effects on our business, financial condition or results of operation. Unless otherwise noted or the context otherwise indicates, the forward-looking information contained herein is provided as of the date hereof, and we do not undertake to update or amend such forward-looking information whether as a result of new information, future events or otherwise, except as may be required by applicable law.

¹Pre-orders for new Taiga vehicles are cancelable and the deposit fully refundable, and there can be no assurance that such pre-orders will be converted into sales.

SOURCE Taiga Motors Corporation