Lucid to lay off 1,300 workers amid signs of falling demand for electric vehicles

Struggling EV maker It’s clear said in the rules registration On Tuesday, the company plans to cut about 18% of its workforce, or roughly 1,300 employees, as part of a larger cost-cutting restructuring as it works to boost production of its Air luxury sedan.

Lucid said it will incur one-time costs totaling between $24 million and $30 million related to job cuts, with most of this amount recognized in the first quarter of 2023.

The news of job cuts was first reported insider earlier on Tuesday. Shares of Lucid fell more than 7% on Tuesday after the Insider report.

In a letter to employees, CEO Peter Rawlinson said the job cuts would affect “nearly all organizations and levels, including executives” and that affected employees would be notified within the next three days. The severance pay will include continued Lucid-paid health insurance, Rawlinson said, as well as an accelerated transfer of equity rights.

Lucid ended 2022 with about $4.4 billion in cash on hand, enough to last through the first quarter of 2024, CFO Sherry House told CNBC last month ahead of the company’s fourth-quarter earnings report. But there have been signs that demand for the pricey Air has not met Lucid’s internal expectations, and the company may be struggling to convert early reserves into sold orders.

Lucid said it had over 28,000 bookings on Air as of February 21, its most recent update. But he also said he plans to build between 10,000 and 14,000 vehicles in 2023, far short of the roughly 27,000 that Wall Street analysts expected.

With the Lucid plant currently set to produce around 34,000 vehicles a year, the company has warned of continued losses.

“Because we manufacture vehicles in low volume on high volume production lines, we have and will continue to generate negative gross margins related to labor and overhead,” House said during Lucid’s Feb. 22 earnings call.

Lucid has yet to announce the date for its first quarter earnings report.