Ready to cut 1,300 workers amid signs of flagging demand for electric cars
- Lucid said in a regulatory filing that it is cutting about 18% of its workforce, or about 1,300 workers.
- In a letter to staff, chief executive Peter Rawlinson said the job cuts would affect “almost every organization and level, including managers”.
- The company expects to take charges of $24 million to $30 million related to the cuts, most of it in the first quarter.
Lucid Motors CEO Peter Rawlinson poses at the Nasdaq MarketSite as Lucid Motors (Nasdaq: LCID) begins trading on the Nasdaq exchange after completing its business combination with Churchill Capital Corp IV in New York City, New York, on July 26, 2021.
Andrew Kelly | Reuters
Struggling electric car maker Lucid said in a regulatory filing on Tuesday that it plans to cut about 18% of its workforce, or roughly 1,300 employees, as part of a larger restructuring to reduce costs as it works to ramp up production of its Air luxury sedan.
Lucid said it will incur one-time costs totaling between $24 million and $30 million related to the job cuts, with most of that amount recognized in the first quarter of 2023.
News of the job cuts was first reported by Insider earlier Tuesday. Lucid’s shares closed down over 7% on Tuesday following the Insider report.
In a letter to staff, chief executive Peter Rawlinson said the job cuts would affect “almost every organization and level, including managers”, and that affected staff would be notified within the next three days. Severance packages will include continued health coverage paid for by Lucid, as well as an acceleration of vesting equity, Rawlinson wrote.
Lucid ended 2022 with about $4.4 billion in cash on hand, enough to last through the first quarter of 2024, CFO Sherry House told CNBC last month ahead of the company’s fourth-quarter earnings report. But there have been signs that demand for the high-priced Air has fallen short of Lucid’s internal expectations, and the company may struggle to convert early reservations into sold orders.
Lucid said it had more than 28,000 reservations for Air as of Feb. 21, the last update. But it also said it plans to build just 10,000 to 14,000 vehicles in 2023, far fewer than the 27,000 or so that Wall Street analysts had expected.
With Lucid’s factory set to build around 34,000 vehicles per year, the company has warned of continued losses.
“As we produce low-volume vehicles on production lines designed for higher volume, we have and will continue to experience negative gross margins related to labor and fixed costs,” House said during Lucid’s Feb. 22 earnings call.
Lucid has yet to announce a date for its first quarter earnings report.
