The 2023 job cuts trend is spreading to the electric vehicle (EV) sector now. Lucid Motors (NASDAQ:LCID) just announced that it will be laying off 1,300 workers within the coming months. This amounts to roughly 18% of the company’s workforce.
CEO Peter Rawlinson addressed the Lucid Motors layoffs in a recent company-wide email. Rawlinson said the cuts will impact “nearly every organization and level, including executives.” Initially, LCID stock reacted to the news by falling, then rising in pre-market trading today. As of this writing, however, LCID is back on the decline. Shares are down about 3% for the day.
Let’s dive deeper into what this news could mean for investors — and the EV sector in general.
The Lucid Motors Layoffs: A Closer Look
It has been a difficult start to the year for LCID stock, which has been fairly volatile lately. That said, the Lucid Motors layoffs may be good for the company. These job cuts are clearly part of a broader restructuring effort, an initiative likely needed after the difficult six months that Lucid has had. And most of Lucid’s bad news — like its recent recall –hasn’t held shares down for long.
With that in mind, it is unlikely that the recent layoffs will pose any long-term negative effects for LCID stock investors. As Rawlinson noted in the email:
“This action is aligned with the cost discipline announcement we made in late February when we reported earnings […] We are also taking continued steps to manage our costs by reviewing all non-critical spending at this time.”
This seems like a necessary step when we consider that multiple experts have expressed concern regarding Lucid’s cash burn. Restructuring in the form of layoffs across multiple divisions should help the company trim operating expenses and redirect funds where they’re needed.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
