Lucid, the struggling electric vehicle manufacturer, said in a regulatory filing on Tuesday that it expects to lay off around 18% of its personnel, or about 1,300 people, as part of a bigger restructure to slash costs as it attempts to scale up production of its Air luxury sedan.
Lucid said it would incur one-time expenses totaling $24 million to $30 million as a result of the layoffs, with the majority of that amount realised in the first quarter of 2023.
Insider broke the news of the layoffs earlier on Tuesday. After the Insider article, Lucid’s stock dropped more than 7% on Tuesday.
CEO Peter Rawlinson said in a message to staff that job losses would affect “virtually every organisation and level, including leaders,” and that affected employees will be contacted within the next three days. Rawlinson noted that severance packages would include continuous healthcare coverage paid for by Lucid as well as an acceleration of stock vesting.
Sherry House told CNBC last month, ahead of the company’s fourth-quarter earnings release, that Lucid finished 2022 with nearly $4.4 billion in cash on hand, enough to last until the first quarter of 2024. Nevertheless, there are indications that demand for the high-priced Air is falling short of Lucid’s internal estimates, and the firm may be struggling to convert early reservations into actual orders.
According to Lucid’s most recent statement on Feb. 21, it has more than 28,000 bookings for the air. Nevertheless, it also said that it intends to construct just 10,000 to 14,000 cars in 2023, significantly fewer than the approximately 27,000 projected by Wall Street analysts.
Lucid’s facility is now set up to produce around 34,000 cars per year, and the firm has warned that losses would continue.
“We have and will continue to suffer negative gross profit due to labour and overhead expenses while we construct cars in low numbers on manufacturing lines meant for bigger volumes,” House said during Lucid’s earnings call on Feb. 22.
The date for Lucid’s first-quarter earnings announcement has not yet been disclosed.