Lucid Motors, a California-based electric vehicle (EV) maker, has announced that it is laying off approximately 1,300 employees and contractors, which constitutes about 18% of its workforce. This comes as part of the company’s restructuring plan to reduce operating expenses.
Laying off across the organization
The job cuts will affect nearly every division in the US, including some executive positions. Lucid aims to complete the layoffs by the end of Q2.
Cost of layoffs and severance package
The cost of the layoffs will range from $24 million to $30 million, which will be spent on severance payments, company-paid health insurance, and stock-based compensation for affected workers. Impacted employees will be offered a severance package that includes access to career resources, continuation of Lucid-paid healthcare coverage, and acceleration of equity.
Reasons behind the layoffs
In a memo, CEO Peter Rawlinson informed employees that the layoffs are due to evolving business needs and productivity improvements. Despite implementing cost-cutting measures and reviewing non-critical spending after announcing its 2022 earnings results, those measures were not enough to achieve its objectives.
Lucid plans to expand globally and release new models
Despite the layoffs and cost-cutting measures, Lucid still intends to expand globally and release new models, including the three-row Gravity electric SUV in 2024.
Falling demand for EVs and aggressive Tesla pricing affect EV startups
Lucid experienced a sharp increase in revenue year-over-year but still fell short of analyst forecasts. The production goal for 2023 is much lower than the 21,000 units experts had expected. Lucid – along with other EV startups such as Rivian – is being affected by price cuts by Tesla and the availability of affordable EVs from traditional automakers, leading to less demand for their vehicles.
Future of EVs
Despite this, JD Power predicts that by the end of 2023, around half of new-car buyers in the US may have an EV option available to them at a price point they can afford and a size they want, due to falling EV prices and government incentives.
Lucid’s efforts to become more agile
The layoffs are part of the company’s broader restructuring plan designed to position itself as more resilient and agile while strengthening it for the long-term. This is not the first time that Lucid Motors has amended its production goals – in August 2021, the company lowered its annual production guidance to six to seven thousand vehicles for 2022, while in February 2022, they adjusted their production goal to 12,000 to 14,000 vehicles.
In conclusion, Lucid Motors’ decision to lay off a significant portion of its workforce is a painful but necessary move as it continues to tighten its belt amid growing competition from traditional automakers and aggressive pricing by Tesla. However, Lucid’s commitment to expand globally and release new models shows that it wants to remain a key player in the growing EV market.
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