Lucid joins Tesla, Rivian in laying off workers over EV demand

Despite getting an additional round of funding from its Saudi backers earlier this year, Lucid Motors is laying off hundreds of workers ahead of a crucial product launch.

The Newark, California-based electric vehicle maker said it would lay off 400 employees — or about 6% of its workforce — as part of restructuring, according to a Friday morning regulatory filing. Lucid expects to take a $21 million to $25 million hit in charges related to the plan, the majority of which will affect its second-quarter results. Such charges include severance and stock payouts.

Both contract and full-time workers will be affected by the headcount reductions, CEO Peter Rawlinson said in an email to staffers. He added that both “leadership and mid-level management” workers will be impacted.

“I’m confident Lucid will deliver the world’s best SUV and dramatically expand our total addressable market, but we aren’t generating revenue from the program yet,” Rawlinson said in the email. “We are optimizing our resources in a way we believe will best position the company for future success and growth opportunities as we focus on achieving our ambitious goals.”

Rawlinson outlined three priorities for the automaker going forward: selling more Lucid Air luxury sedans, staying on track to start production of the Gravity SUV by the end of 2024, and being “responsible” with funding.

In March 2023, Lucid laid off 1,300 employees as it worked to ramp up the production of its Air sedan. In February, Lucid told investors it expects to make 9,000 luxury EVs this year, compared to 8,500 in 2023, but well below Wall Street analysts’ expectations of 14,000.

The automaker has struggled to find buyers for its expensive sedan and has repeatedly slashed prices to drive up demand. Those cuts helped Lucid set a delivery record last quarter, when it shipped 1,967 sedans, or about 35 more than its prior best quarterly performance.

Lucid is betting on the three-row Gravity SUV to help boost its valuation, after it lost about 75% of its market value by the end of 2023. The Gravity is expected to open Lucid up to a new segment of the EV market and will directly compete with SUVs from firms such as BMW, Genesis, and Rivian.

But Lucid has a ways to go before it can start building the Gravity later this year and kick off its midsize program in late 2026.

The company said in March that it would raise $1 billion from an affiliate of the Public Investment Fund (PIF), Saudi Arabia’s wealth management fund, called Ayar Third Investment. Ayer is purchasing about 12% of Lucid’s outstanding Common stock, adding to Saudi Arabia’s existing 60% ownership, according to a regulatory filing.

Earlier this month, Lucid warned that its liquidity — a little more than $5 billion — can only cover the next 12 months, into the second quarter of 2025. The automaker reported a $684 million net loss for the first quarter of 2024, a smaller hit than the almost $780,000 loss it incurred in 2023.

“I believe there are two factors that set Lucid apart – our superior, in-house technology and the partnership with the PIF,” Rawlinson said earlier this month. “Our sales momentum is building, our focus upon cost remains relentless, and we believe Gravity is on track to become the best SUV in the world.”

In December, then-CFO Sherry House resigned just days after Lucid was kicked off the Nasdaq-100 Index. Lucid stock sank more than 2% in trading Friday before rebounding slightly. Shares have fallen more than 36% so far this year and currently trade at about $2.60 per share.

An electric slowdown

Lucid isn’t the only EV maker laying off workers in the face of slowed sales growth.

Elon Musk’s Tesla recently conducted four consecutive weeks of layoffs, which saw the elimination of at least one division.

At least 14,500 people were impacted by the layoffs, although that figure could actually be as high as 20,000, per Bloomberg.

At least six high-profile executives have either already resigned or plan to later this year, including former senior vice president of powertrain and energy Drew Baglino, and senior director of human resources for North America Allie Arebalo. Plus, Tesla revoked summer internship offers just weeks before their start dates.

“With [Tesla’s] rapid growth there has been duplication of roles and job functions in certain areas,” CEO Elon Musk told employees last month as he informed them of job cuts. “As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity.”

Fellow EV maker Rivian laid off 120 employees last month, including 89 workers in Irvine, California, where the company is headquartered. Earlier this year, Rivian said it would eliminate 10% of its salaried workforce, or more than 800 employees, and 100 workers at its Normal, Illinois, factory.

Rivian’s and Tesla’s stock both nudged above 3% during regular trading hours on Friday.