LCID Stock Alert: Why Lucid Motors Just Cut 400 Jobs

Clear (NASDAQ:LCID) is trading lower after the pure-play electric vehicle company announced a restructuring plan that includes laying off 6% of its workforce, equivalent to about 400 jobs. Lucid expects to complete the layoffs by the end of the third quarter.

According to an internal email from CEO Peter Rawlinson, hourly workers in production and logistics will not be affected, while other departments, including executive and middle management, will be. Lucid employed 6,500 people at the end of 2023.

Lucid noted that the plan is a “response to evolving business needs and productivity improvements.” The layoffs are expected to cost the company between $21 million and $25 million and include costs such as severance and benefits. $19 million to $23 million of the costs are expected to be incurred in the second quarter, while most of the layoff costs will be paid by the end of the third quarter.

“As always, we must keep an eye on costs,” Rawlinson wrote. “We are optimizing our resources in a way that we believe best positions the company for future success and growth opportunities as we focus on achieving our ambitious goals.”

LCID share: Lucid announces 6% staff cuts

The announcement comes as no surprise, as the electric car market is highly competitive. Price wars have been rife in the industry this year as consumers grapple with cheaper hybrid vehicles and high interest rates that make car loans more expensive.

In the internal email, Rawlinson outlined three key company goals. The first is to sell more Lucid Airs by “raising awareness” and increasing the number of new customers. The second goal is to meet the schedule for the Gravity SUV and mid-size vehicle. Rawlinson wants to start production of the Gravity at the end of this year, while the “mid-size program” is planned for late 2026. Finally, the last goal is for the company to be cost-efficient and not waste resources.

Lucid’s first-quarter results, announced earlier this month, showed a reiterated production forecast of 9,000 vehicles this year, representing about 7% growth over production of 8,428 vehicles in 2023.

At the time of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing guidelines.