Struggling battery-electric start-up Lucid Group will cut 400 jobs as it tries to slash mounting financial woes. It’s far from the only EV manufacturer responding to slowing sales growth by trimming its workforce, however. And still more cuts are expected to follow in the months ahead.
Lucid CEO Peter Rawlinson advised employees of the new job cuts in an e-mail.
Lucid will eliminate about 6% of its workforce, the automaker announced, as it continues to struggle to boost sales and reduce mounting losses, CEO Peter Rawlinson told employees via an e-mail.
In all, about 400 jobs will be eliminated in the months ahead. The Lucid Group had a full-time worldwide workforce of 6,500 at the end of 2023, that number including corporate and product development staff, as well as manufacturing employees.
The California-based automaker is just the latest EV manufacturer to hunker down as the EV market faces a sharp decline in its once-booming growth rate. Rivian has ordered several rounds of cuts and Tesla has now gone well beyond the 10% reduction in force CEO Elon Musk announced in April. Still more cuts are expected and several manufacturers – notably including Ford, General Motors and Stellantis — are expected to scale back the growth in EV employment as they trim or delay plans.
Lucid Pares Back
Lucid currently produces just one model, the Air sedan, though there’s a wide range of variants, including this $229,000 Air Sapphire.
The cuts at Lucid came as little surprise, according to several observers. The company has repeatedly fallen short of its sales targets and has responded with price cuts that, while boosting demand, could make it more difficult to trim its ongoing losses. It had a net deficit of $685 million for the first quarter of 2024. That was a modest improvement from the $780 million deficit posted a year earlier – but it was short of Wall Street analysts’ expectations.
Lucid did manage to generate $172.7 million in revenues for the latest quarter, 15% year-over-year improvement.
But it still is burning through cash at a prodigious rate, noted Sam Abuelsamid, principal auto analyst at Guidehouse Insights. It is currently being propped up by a series of cash injections from Saudi Arabia. The Mideast financial powerhouse’s Public Investment Fund now holds a majority stake in Lucid.
An uncertain future
Lucid hopes to gain ground with the launch of the Gravity SUV this year.
When the Saudi’s led a $3 billion investment round last year, Lucid indicated it was have enough cash to operate through 2027. Though some question that assessment, the company is betting that it can introduce several new products by then, models that would help significantly build demand.
Currently, Lucid produces only one model, the Air sedan, though it’s offered in a range of variants, ranging from $77,400 for the base EV to $249,000 for the extreme high-performance Sapphire package.
Later this year, the company plans to begin expanding its line-up with the launch of the Lucid Gravity. Its first all-electric SUV will go up against the likes of the Tesla Model X. Earlier this month, Lucid confirmed it will follow with a yet-unnamed model set to take on the smaller Tesla Model Y, that company’s best-selling product line. Insiders expect the compact model to be dubbed Lucid Earth.
“We’re already competing with Tesla,” Rawlinson said during Lucid’s first-quarter earnings call. “But, wait until our mid-size comes out in late ’26; that’s when we’ll have a car at $48,000-$50,000, and that is the big one, the one that’s going to be really exciting.”
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EV job cuts accelerate across the industry
Tesla CEO Elon Musk has now gone well past his initial plan for a 10% workforce reduction.
The job cuts announced by Lucid are part of a restructuring plan expected to deliver as much as a $25 million charge over the next several quarters. But there will be significant savings going forward.
Lucid is by no means the only EV manufacturer trimming jobs to prop up shaky balance sheets, however. Rivian has ordered several rounds of staff reductions over the past two years. The most recent move was announced in February, CEO and co-Founder R.J. Scaringe telling employees in an e-mail that “Team changes are the hardest decisions I have to make as CEO.”
Some of the most dramatic reductions have come at Tesla which said it would eliminate 10% of its workforce in April. It has continued to cut the numbers since then. The reductions have reached all the way to the highest corporate levels, including the heads of product development, human resources and the Supercharger department – the latter eliminated entirely by CEO Elon Musk.
More cuts coming
Ford is delaying or slowing down a number of EV projects, including the huge Blue Oval City complex going in near Memphis.
Industry analysts are warning future cuts could follow, depending upon where the EV market goes during the second half of this year. Demand grow more than eightfold between 2019 and 2023 but S&P Global Insights and other researchers expect the pace to drop to just 10% for all of 2024. And some believe that is an optimistic figure. New research by J.D. Power found the number of American motorists considering the purchase of an EV has dropped for the first time in recent months.
Manufacturers have not only cut jobs but delayed investments. Rivian, for one, now has put a second plant in Georgia on hold. Ford has delayed or trimmed back on plans for several new facilities and stretched out $11 billion in EV investments. GM has taken similar steps, including a more than year-long delay in reopening an assembly plant near Detroit.
In some cases, that means cuts to existing jobs. In others, plans to bring in new workers have been pared back. Ford originally planned to invest $3.5 billion at a new battery plant in Marshall, Michigan. That’s been reduced to $2.2 billion. The earlier goal was to hire 2,500 new employees there. That’s now down to 1,700.
While Stellantis has not announced any changes to its plans for the upcoming all-electric Ram REV pickup, the United Auto Workers Union has raised concerns that production may be pared back at a factory in Warren, Michigan, as well.
Nissan, meanwhile, announced it is rethinking plans to produce EVs in the U.S. It did not say whether this could impact employment, however.
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