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A new force announced layoffs!

2024-06-25 Update From: AutoBeta NAV: AutoBeta > News >


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On May 24th, Lucid, a new force in American car building, announced that it would lay off 6 per cent of its workforce. According to statistics, as of December 2023, Lucid has about 6500 full-time employees worldwide. According to this calculation, about 400 employees will be affected in this layoff.

According to regulatory documents, the layoff is one of Lucid's measures to address market challenges and carry out internal restructuring, while optimizing the company's operating expenses and improving productivity, which is expected to be completed by the end of the third quarter. Lucid estimates that the total costs associated with the plan are about $21 million to $25 million, including mainly those related to severance pay, employee benefits, employee transition and stock compensation. Lucid expects approximately $19 million to $23 million in fees to be recognized mainly in the second quarter of 2024, most of which are expected to be paid by the end of the third quarter of 2024.

It is important to note that this is not the first time Lucid has initiated layoffs. In august 2023, Lucid announced that it would cut 1300 jobs, cutting almost all positions, including executives, and cutting 18% of its workforce because Lucid hopes to save cash by cutting operating costs before the launch of its second model this year.

As a luxurious new American car-building brand, the development path of Lucid is very similar to that of Tesla, but the development of Lucid is not smooth and there is a huge funding gap, and the volume of sales can not be compared with Tesla.

According to the data, for the whole year of 2023, Lucid produced 8428 vehicles, with a cumulative delivery of 6001 vehicles; the net loss was $2.83 billion, an increase of 117% over the same period last year, which means that Lucid lost about $336000 for every car it produced, based on a net loss of $2.83 billion. In other words, Lucid is still in the stage of building cars at a loss.

In September 2020, Lucid officially launched its first production model, the Lucid Air Pure, which starts at $87400 and mainly competes with luxury brands, including Tesla Model S, Audi, BMW and Mercedes-Benz. On February 16th, Lucid cut the price of its models by 1%, by 10%. Among them, the entry-level model Air Pure fell by $7500, or nearly 10%, to a starting price of $69900 (about 504000 yuan); the price of Air Touring fell from $85900 to $77900 (about 562000 yuan); and the price of the top model, Air Grand Touring, fell by $1000 to $109900 (about 792000 yuan). The industry believes that behind the price reduction is the continued sharp drop in delivery volume.

In fact, not only Lucid, but also Fisker and Rivian, both new American power brands, are having a hard time. In April, Fisker announced the possibility of bankruptcy in a regulatory filing, which showed that Fisker expected to have to file for bankruptcy within the next 30 days if it could not get relief from creditors or raise additional cash; also in April, Rivian announced layoffs of 1 per cent to reduce costs in the face of a general slowdown in demand for electric vehicles. The previous February, Rivian announced that it would cut 10 per cent of its workforce because of slowing demand for electric vehicles and lower costs. No matter it is Lucid, Fisker or Rivian, they all face the crisis of lack of money.

Turning to Lucid, Lucid CEO Peter Rawlinson (Peter Rawlinson) said in an internal email: "We must be vigilant about costs and we are optimizing resources to help the company achieve success and growth opportunities in the future." Before that, in June 2022, Elon Musk, chief executive of Tesla, said bluntly that Lucid showed signs of bankruptcy and that unless the company could slash costs, it would go bankrupt.

Now, Lucid has also reached the moment of life and death, and the important problems facing Lucid are sales volume and production capacity. According to the plan, Lucid expects to produce 9000 cars this year, well below analysts' expectations of 14000. With the increasingly fierce competition in the electric vehicle market, Lucid may have to face more restructuring and adjustment if it wants to get a piece of the market.

On May 6th, Lucid announced its results for the quarter ended March. The results showed that first-quarter Lucid revenue was $172.7 million, while analysts expected $158.9 million; adjusted EBITDA lost $598.4 million, while analysts expected a loss of $505.1 million; and delivered 1967 vehicles in the first quarter, higher than analysts' expectations of 1698, an increase of 39.9 percent over the same period last year. In its financial report, Lucid reiterated its target of maintaining annual electric vehicle production at about 9000 vehicles.

At the close of trading on may 24th, Lucid shares closed at $2.780, up 2.21%, with a total market capitalization of $6.414 billion.

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