The Taiga performance team takes their Nomad Utility Snowmobile out on the trail in Saint-Faustin-Lac-Carre, Que.,, on March 2.Christinne Muschi/The Globe and Mail
Ever since Taiga Motors Corp. TAIG-T began doing demonstrations of its all-electric snowmobiles and watercraft several years ago, the Quebec manufacturer has won plaudits from powersports fanatics and award-givers alike for bringing a dose of climate consciousness to an industry hooked on revving engines.
But now, qualms about whether Taiga vehicles have the range necessary to match their gasoline-powered counterparts and convert the masses are being eclipsed by a more serious anxiety over the health of the company itself. Every new manufacturing startup spends money to make money, but supply chain trouble has hit Taiga particularly hard. With a cash-crunch looming, can the visionary company go the distance?
Taiga’s third-quarter results reported last November lay out both how far the electric vehicle maker has come since its founding in 2015 – and how shaky its finances are at a critical time in its development. Without new sources of funding, it could run out of cash just as it aims to increase its production cadence. Even if it gets new cash, it’s not likely to come cheap as rising interest costs spell bad news for businesses that need to borrow to fund operations. And so, the future of one of Canada’s brightest electric-vehicle hopefuls remains fraught with risk.
Montreal-based Taiga is today the only manufacturer in the world building and selling EV snowmobiles and personal watercraft. And it’s proving electric doesn’t necessarily mean slow, with maximum speeds for its off-road vehicles topping well over 100 km/h, depending on the model. The top performance setting on each vehicle is called “wild mode,” which appears to have won over even the most skeptical, thrill-seeking motorsports enthusiast.
Taiga has a first-mover advantage over established incumbents such as Yamaha Motor Co., BRP Inc., Polaris Inc. and Textron Inc.’s Arctic Cat. Eventually, that will disappear as rivals bring their own electric products to market. But Taiga is counting on two things to help maintain its advantage: The fact it is electric only and has no legacy gasoline-powered products to worry about, which it says will allow it to drive innovation further; and the sheer length of its head start. Even if the company insists there will be room enough for everyone in the EV market, it wants to get as far ahead as it can before rivals catch up.
Samuel Bruneau, co-founder and CEO of Taiga Motors, poses in their head offices in LaSalle, Que.Christinne Muschi/Christinne Muschi/The Globe and
“The pressure is really on us right now to be ramping up production,” Taiga founder and chief executive Samuel Bruneau said in an interview. “It’s going to take more investments along the way, as we disclosed. But we’re seeing really strong investor interest behind off-road electrification and behind Taiga in particular.”
It’s clear the business case projections prepared for Taiga’s initial public offering in 2021 were overly optimistic. Among other things, the forecasts said the company would scale up its Montreal R&D assembly facility to be able to produce 2,000 vehicles annually by the end of that September, and get a new factory in Shawinigan, Que., six times bigger, up and running the same year – on the way to annual output capacity for 60,000 vehicles and 20,000 powertrain assemblies by 2025. It also planned to launch a side-by-side off-road model in 2022.
The reality: Taiga had managed to build and deliver only 68 vehicles through the first 9 months of 2022 after running into what Mr. Bruneau called production “agonies,” including problems sourcing key parts. Production of its two build-ready vehicles is now increasing but it expects to ship no more than 3,500 units this year. Plans for the Shawinigan facility have been delayed as the company focuses on getting things right in Montreal. And the side-by-side? Still in development.
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Taiga went public in spring 2021 with an implied market capitalization of $537-million, including an upsized private placement anchored by institutional investors such as Toronto-based Northern Private Capital. That June, it had $125.5-million in cash available to pursue its strategy and almost no debt. The company said it did not expect to need additional financing to accomplish its production objectives.
By last November, when Taiga published third-quarter results – its most recent earnings report – its cash position had dwindled to $31-million. After the quarter closed, it secured access to another $10-million under a $50-million government support program announced for the company in July, 2021.
The EV maker has been burning through cash at a rate of about $15-million to $20-million per quarter and might sell stock as part of its effort to raise more funds, National Bank analyst Cameron Doerksen said. Its share price has crashed, however, and the company has a market value today of barely $87-million. That could make it more difficult to raise the kind of capital needed.
Still, there is good news. Taiga began deliveries of its second EV model during the three-month period that ended Sept. 30, shipping out 40 Orca personal watercraft in addition to Nomad snowmobiles – its first commercial product. Quarterly revenue broke the $1-million mark for the first time. And Mr. Bruneau says he believes his team has a good handle now on the manufacturing trouble.
One of the big things that hurt the company over the past 18 months was a shortage of electronic processors, the CEO says. “We actually had to redesign our whole printed circuit board layout and shift our firmware to a new architecture to allow us to ramp up into production,” he said. “That was a tremendous effort by the company.”
Since then, the company has secured enough inventory of electronic components to build 5,000 vehicles. And it cemented relationships with key suppliers that Mr. Bruneau says are now up to speed on what Taiga needs for growth. Its Montreal plant is currently making snowmobiles and watercraft simultaneously.
Meanwhile, the company continues to earn acclaim for bringing change to an industry that’s often been in denial over its impact on the environment. Both Taiga vehicles landed on TIME Magazine’s Best Inventions of 2022 list. Earlier in the year, Fast Company named Taiga a winner of its World Changing Ideas Awards.
“I think it’s going to catch people by surprise how fast the industry is going to tip” toward EVs, Mr. Bruneau said. Thirty per cent of Taiga customers have never previously owned a powersports vehicle, he said.
The accolades will probably help generate more consumer interest in the brand, which has already been growing. At the end of the quarter Taiga had preorders (which require a deposit) for 3,267 vehicles, up 7 per cent from the previous quarter. Business customers for its snowmobiles include Sépaq, Quebec’s provincial parks authority, as well as Swedish leisure company SkiStar AB and Taos Ski Valley resort in New Mexico.
“We have to give a lot of credit to Taiga for stepping it up,” said Steven Salowsky, a gearhead who tested the Nomad for YouTube channel Now Let’s Review. He said the company’s noise-reducing products could open access to an unknown number of outdoor areas shut to gasoline-powered snowmobiles and watercraft in recent years.
So pervasive have internal combustion engines become in the snowmobile community that the noise they make when riders hit the throttle has filtered into common language. It’s called “braaap.”
“That’s just what it is. It’s just a loud ‘braaap’ noise,” said Mr. Salowsky. “It’s wild to think that can change in the next decade.”