EV startup Lucid will reduce its workforce by 18%

Lucid, a struggling EV maker, disclosed Tuesday that it plans to trim about 18% of its workforce, or roughly 1,300 employees, as part of a restructuring to reduce costs.

‍

Between $24 million and $30 million in one-time expenses linked to the employment cuts will be incurred, according to Lucid, with the majority of that sum being recognized in the first quarter of 2023.

‍

Insider broke the story of the layoffs first earlier on Tuesday. Following the Insider article, the price of Lucid's shares fell by more than 7% on Tuesday.

‍

CEO Peter Rawlinson wrote in a letter to employees that the layoffs will effect "virtually every organization and level, including executives" and that the affected workers will be informed over the following three days. As part of the severance agreements, Rawlinson said, Lucid will continue to pay for healthcare as well as accelerate equity vesting.

‍

Prior to the release of the company's fourth-quarter earnings report, CFO Sherry House told Trade Algo that Lucid ended 2022 with nearly $4.4 billion in cash on hand, enough to last until the first quarter of 2024. Yet there have been hints that the high-priced Air's demand hasn't met Lucid's internal goals, and the business may be having trouble turning early reservations into sold orders.

‍

As of its most recent update on February 21, according to Lucid, it had more than 28,000 reservations for the Air. Nevertheless, it also revealed that it would produce many fewer vehicles in 2023, between 10,000 to 14,000, than the 27,000 that Wall Street experts had predicted.

‍

The factory for Lucid is presently geared up to produce around 34,000 vehicles annually, but the business has issued a warning about more losses.

‍

During Lucid's earnings call on February 22, House stated, "We have and we will continue to suffer negative gross profit linked to labor and overhead costs as we produce vehicles at low numbers on manufacturing lines meant for bigger volumes."

‍

The release date for Lucid's first-quarter earnings report has not yet been announced.