EV Startup Lucid to Lay Off 1,300 Workers to Cut Costs, Will Incur Up to $30 Million in Related Charges

Electric car maker Lucid Group said on Tuesday it would lay off about 18% of its workforce, or about 1,300 employees, as part of a restructuring plan to cut costs.

The luxury sedan maker last month forecast 2023 production well below analysts’ expectations and reported a sharp drop in fourth-quarter orders.

The company plans to communicate with all employees about the plan within the next three days, Chief Executive Peter Rawlinson said in a letter, adding that its U.S. workforce will undergo layoffs at nearly every organization and level, including executives.

Lucid, which had about 7,200 employees as of the end of last year, will incur related expenses of $24 million (about Rs 200 crore) to $30 million (about Rs 250 crore). The company expects to substantially complete its restructuring plan by the end of the second quarter.

“We are also currently taking ongoing steps to manage our costs by reviewing all non-critical expenditure,” Rawlinson said.

With the central bank raising interest rates sharply, U.S. businesses are reining in spending to prepare for the coming recession.

Industry experts say price cuts by industry leader Tesla and the introduction of cheaper electric vehicle models by legacy automakers are weighing on demand for new vehicles from startups such as Lucid and Rivian Automotive.

Last month, Rivian said it would lay off 6% of its workforce to cut costs.

Lucid’s shares closed down about 7% in regular trading.

© Thomson Reuters 2023