Lucid Group (NASDAQ:LCID) announced on Friday its decision to reduce its workforce in the United States by 6%, affecting approximately 400 employees. The move reflects the broader trend in the electric vehicle (EV) industry, where companies are grappling with slower growth and seeking to manage costs effectively.
As consumer preferences shift amid elevated inflation and high interest rates, there has been a noticeable slowdown in demand for relatively pricier EVs, leading some automakers to pivot towards more affordable hybrid alternatives.
In an email to employees, CEO Peter Rawlinson stated that the layoffs at Lucid would impact personnel across all levels, including leadership and mid-level management. However, he reassured that the hourly manufacturing and logistics workforce would not be affected by these cuts.
According to its latest annual filing, Lucid had approximately 6,500 full-time employees globally as of December last year.
Despite the workforce reduction, shares of the EV maker rose by 1% in premarket trading following the announcement.
Lucid anticipates incurring charges of approximately $21 million to $25 million related to the workforce reduction and aims to complete the plan by the end of the third quarter of 2024.
This move follows similar actions taken by sector peers, including Rivian, which underwent two rounds of layoffs this year, and Tesla, which announced layoffs affecting more than 10% of its global workforce last month.
In addition to cost-saving measures, Lucid is focused on expanding its production capacity, particularly at its Arizona factory, and is in the process of building a new factory in Saudi Arabia. Supported by Saudi Arabia’s Public Investment Fund, Lucid aims to introduce a more affordable mid-size car by late 2026 and launch its Gravity SUV later this year to broaden its customer base.
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