Lucid Group Inc, the electric-vehicle maker, announced on Tuesday that it would be laying off approximately 18% of its workforce, which is around 1,300 employees. This decision comes as part of a restructuring plan aimed at cutting costs. Lucid is the maker of the Air luxury sedan and had forecasted 2023 production, which was significantly lower than what analysts had expected. The company also reported a major drop in orders during the fourth quarter.
A Step toward Restructuring
CEO Peter Rawlinson stated in a letter that the company plans to communicate with all its employees over the next three days regarding the plan, and its US workforce will see reductions in almost every organization and level, including executives. Lucid, which had about 7,200 employees at the end of last year, will incur between $24 million and $30 million in related charges. The company expects to substantially complete the restructuring plan by the end of the second quarter.
Rawlinson also mentioned that the company is taking continued steps to manage its costs by reviewing all non-critical spending at this time. Companies in the United States are cutting expenses as they prepare for a potential recession due to aggressive interest rate hikes by central banks.
What do the experts say?
Experts in the industry have suggested that price cuts by industry leader Tesla Inc and the availability of cheaper EV models from traditional automakers have contributed to decreased demand for new vehicles from startups such as Lucid and Rivian Automotive Inc. Last month, Rivian announced that it would be laying off 6% of its workforce as part of an effort to reduce costs.
Lucid’s shares closed down about 7% in regular trading following the announcement. The company’s restructuring plan is a result of the challenges it faces in an increasingly competitive market. However, the plan is expected to help the company stay competitive and prepare for the future.
Tackling Market Challenges
In conclusion, Lucid Group’s decision to lay off around 1,300 employees as part of a restructuring plan comes after the company forecasted lower production in 2023 than analysts had expected and reported a significant drop in orders. The restructuring plan is aimed at cutting costs and will result in related charges of between $24 million and $30 million. Lucid hopes to complete the restructuring plan by the end of the second quarter and stay competitive in an increasingly challenging market.