As companies trim their workforces to cut costs and prepare for a possible recession, electric vehicle makers are no exception. In fact, luxury EV maker Lucid just announced a large round of layoffs, saying it will be cutting a large portion of its workforce to account for a slowdown in the EV market and lower its costs.
Such is what Lucid announced in an 8-K filing with the Securities Exchange Commission filed on May 23. In that report, it announced that it would be trimming 6% of its workforce, or 400 of its employees, and that it will complete the layoff plan by the third quarter of this year. Those job cuts will come to management as well as the workforce.
In the filing, it said, “On May 24, 2024, Lucid Group, Inc. (the “Company”) announced a restructuring plan (the “Plan”) intended to optimize the Company’s operating expenses in response to evolving business needs and productivity improvements through a reduction of the Company’s current employee workforce by approximately 400 employees, or approximately 6%. The Company expects to substantially complete the Plan by the end of the third quarter of 2024, subject to local law and consultation requirements.”
Continuing, the filing provided that it would incur millions in severance costs, saying, “The Company estimates that it will incur a total of approximately $21 million to $25 million in charges in connection with the Plan, which consist primarily of charges related to severance payments, employee benefits, employee transition, and stock-based compensation.”
It then added that those charges would largely come in the second quarter, though the plan won’t be complete until the third. It noted, “The Company expects that charges of approximately $19 million to $23 million will be recognized primarily in the second quarter of 2024, with the majority of such charges anticipated to be paid by the end of the third quarter of 2024. Substantially all of these charges are expected to result in cash expenditures. The charges related to stock-based compensation are not expected to be material.”
Concluding that section of the report, Lucid provided, “The estimates of the charges and expenditures that the Company expects to incur in connection with the Plan, and the timing thereof, are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates. The Company may also incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the Plan.”
Lucid’s filing comes as the EV industry sees a slowdown in 2024, with consumers largely declining to adopt EVs. In fact, EV market share fell compared to internal combustion engine vehicles, falling from 7.6% to 7.1%. Further, EV sales grew at a quite small rate, rising by just 2.7% in the first quarter compared to a much larger 47% growth the previous year, the Daily Caller reports.
That slowdown comes amidst other EV company layoffs, with Tesla announcing in April of 2024 that it will lay off about 10% of its massive 140,00 person workforce, citing slower-than-expected sales as the reason. Rivian announced layoffs as well, though only 1% of its current workforce. Further, Ford recently announced huge losses on every EV sold.
Watch Biden give the Ford Lightning a test drive here: