Lucid Group, the US-based electric vehicle (EV) manufacturer, has announced that it will cut its workforce by 18% as part of its restructuring plan. The layoffs will affect 1,300 employees across the organization, including executive positions, and will be completed by the end of Q2.
Reasons behind Layoffs
According to CEO Peter Rawlinson, the restructuring plan is aimed at positioning the company to be “more resilient and agile” and strengthen it for the long term. The company is cutting jobs to reduce operating expenses in response to evolving business needs and productivity improvements. Rawlinson said that the layoffs are aligned with the cost-reduction announcement made in late February.
Lucid’s Severance Package Offered to Impacted Employees
Impacted employees will be offered a severance package, which includes access to career resources, Lucid-paid healthcare coverage continuation, and acceleration of equity. The company will incur about $24 million to $30 million in charges connected to the restructuring, including severance payments, employee benefits, and stock-based compensation.
Lucid Group’s Future Plans
Despite the layoffs, Lucid still intends to launch its threerow all-electric SUV named Gravity in 2024. Rawlinson said that this decision is part of their global expansion plans and their strategy to develop more models. However, last month Lucid reported Q4 and full-year 2022 earnings that missed Wall Street expectations and lowered its 2023 annual production target to 10,000 to 14,000 EVs. This production goal is lower than the originally anticipated 21,000 units for that same year.
Impact of EV Industry Trends on Lucid
The layoffs are taking place amid market trends that are reshaping the EV industry. Government incentives and falling prices have made EVs more affordable than ever. JD Power predicts that half of new car buyers in the US could have a viable EV option from a brand they like by the end of 2023. As a result, automakers are expanding their product lines to include more EVs.
Lucid Group Isn’t Alone
Lucid is not the only EV manufacturer to announce layoffs. Rivian, another EV startup, is reducing its workforce by 6%. Lucid has attributed decreased demand for startup vehicles as one of the reasons behind layoffs. This decreased demand is partly due to traditional automakers also offering affordable EVs with established brand recognition.
Lucid’s Response to Market Trends
Lucid’s response to market trends will be crucial in maintaining its position in the increasingly competitive EV market, where several established automakers such as Volkswagen and Ford are expanding their electric product lines. In response, Volvo plans to begin selling a threerow, electric SUV later this year. Meanwhile, Chinese automaker BYD reported an “11-fold” increase in Q4 profit and has expanded its range of electric products to overtake Volkswagen as China’s top-selling brand.
Michigan Governor Gretchen Whitmer spoke at the UAW union’s Special Bargaining Convention about her pro-labor record, including the repeal of Michigan’s right-to-work laws. These recent moves by state governments could profoundly shape how automakers navigate labor conflicts.
In conclusion, Lucid’s decision to downsize its workforce can be seen as part of a larger trend among startups in the EV industry struggling to contend with traditional automakers with more extensive resources and brand recognition. Despite these challenges, Lucid remains optimistic about its future plans and is dedicated to releasing its highly anticipated Gravity SUV in 2024.
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