Lucid (NASDAQ:LCID) is trading lower after the pure-play electric vehicle (EV) company announced a restructuring plan that involves parting ways with 6% of its workforce, equivalent to about 400 jobs. Lucid expects to complete the layoffs by the end of the third quarter.
According to an internal email from CEO Peter Rawlinson, hourly manufacturing and logistics employees will not be affected while other departments, including leadership and mid-level management, will be impacted. Lucid had 6,500 employees as of the end of 2023.
Lucid noted that the plan was in “response to evolving business needs and productivity improvements.” The layoffs are expected to cost the company between $21 million and $25 million and include costs such as severance payments and employee benefits. $19 million to $23 million of the costs are expected to be incurred in Q2 while most of the layoff cash charges will be paid by the end of Q3.
“As always we must remain vigilant about costs,” wrote Rawlinson. “We are optimizing our resources in a way we believe will best position the company for future success and growth opportunities as we focus on achieving our ambitious goals.”
LCID Stock: Lucid Announces 6% Staff Reduction
The announcement isn’t entirely surprising, as the EV market is highly competitive. This year, price wars have become quite common in the sector as consumers deal with lower-priced hybrid vehicles and high interest rates, which make auto loans more expensive.
In the internal email, Rawlinson noted three key company goals. The first is to sell more Lucid Airs by “expanding awareness” and increasing the amount of customer acquisitions. The second goal is to remain on track with the Gravity SUV and mid-size vehicle timeline. Rawlinson is looking to start Gravity production at the end of this year while the “midsize program” is slated for late 2026. Finally, the last goal is for the firm to be cost-efficient and not waste any resources.
Lucid’s Q1 results, announced earlier this month, yielded reiterated production guidance of 9,000 vehicles this year. That signals about 7% growth from 2023 production of 8,428 vehicles.
On the date of publication, Eddie Pan 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.
