Lucid Motors, the luxury electric vehicle maker, is set to lay off approximately 18 percent of its workforce, or 1,300 employees and contractors, by the end of the second quarter. The move comes as part of a cost-cutting plan to reduce operating expenses in response to evolving business needs and productivity improvements, according to a filing submitted to the US Securities and Exchange Commission.
The layoffs will affect nearly every division of the company, including some executives. Lucid CEO Peter Rawlinson informed employees of the job cuts in a memo and stated that the company will spend $24 million to $30 million on severance payments, health insurance, and stock-based compensation for the affected workers.
While Lucid has experienced a sharp increase in revenue year-over-year, falling short of analyst forecasts and heightened competition in the EV market have contributed to the company’s decision to downsize. Lucid’s production goal of 14,000 EVs for 2023 is lower than the 21,000 units expected by experts, and the price cuts by Tesla and the availability of affordable EVs from traditional automakers have reduced demand for vehicles from startups like Lucid. Another EV startup, Rivian, announced a six percent workforce reduction in February for similar reasons.
Despite the layoffs, Lucid remains committed to expanding globally and developing new models, including the three-row Gravity electric SUV scheduled for release in 2024. However, the company must first navigate the challenges of an increasingly competitive market while balancing growth with financial stability.
