American electric vehicle (EV) maker Lucid (NASDAQ:LCID) has decided to lay off about 1,300 employees or 18% of its workforce as part of its restructuring plan, which is expected to be completed by the end of the second quarter of 2023.
In an email to employees, CEO Peter Rawlinson cited “evolving business needs and productivity improvements” as the reasons for the job cuts. The company’s U.S. workforce will witness job reductions in almost every organization and level, including executives. The CEO added that the company is also taking initiatives to manage costs by reviewing all non-critical spending.
Lucid expects to incur charges of about $24 million to $30 million in connection with its restructuring plan. These charges are mainly related to employee transition, severance payments, employee benefits, and stock-based compensation. The company expects charges of about $22 million to $28 million to be recorded in Q1 2023, with most of these anticipated charges to be paid by the end of Q2 2023.
The CEO stated that the decision to reduce headcount was aligned with the cost discipline announcement made in late February, when the company reported its fourth-quarter earnings. Lucid reported lower-than-anticipated fourth-quarter revenue. Investors were also disappointed with the company’s 2023 production guidance range of 10,000 to 14,000 vehicles. Lucid produced 7,180 vehicles in 2022, way below its initial guidance of 20,000. It delivered 4,369 vehicles last year.
Adding to investors’ woes, this week, Lucid recalled 637 Air sedans due to a defect that could lead to a loss in power.
Is LCID Stock a Good Buy?
Wall Street’s Moderate Buy consensus rating for Lucid stock is based on four Buys, four Holds, and one Sell. The average price target of $9.64 implies 27.7% upside. Shares have risen over 10% since the start of this year.
