Lucid Group announced on Friday that it would cut its U.S. workforce by 6%, comprising around 400 employees, in a move that reflects a trend of job reductions due to slower growth among electric vehicle manufacturers.

Declining EV Growth

As consumers reduce spending on more expensive electric vehicles (EVs) and switch to less expensive hybrid options instead, car manufacturers are working to manage expenses amid high inflation and interest rates. 

Lucid's Layoff to Optimize Operations

According to its latest annual filing, Lucid had approximately 6,500 full-time employees worldwide as of December last year.

The layoffs, which are scheduled to be completed by the end of the third quarter, are anticipated to have a twenty-five million dollars impact. This will mainly include severance payments, employee benefits, transitions, and stock-based compensation to optimize operating expenses in response to changing business requirements and productivity enhancements.

CEO Peter Rawlinson emailed employees to inform them that the layoffs would affect leadership and mid-level management, except for the hourly manufacturing and logistics workforce. While Rawlinson acknowledged that letting go of talented team members was a difficult decision they did not take lightly, he emphasized the need to remain vigilant about cutting costs, particularly as they have not yet started generating revenue from the Gravity SUV. 

Rawlinson expressed optimism about Lucid's future, stating that he is confident they will continue to grow stronger. He encouraged employees to focus on selling Air sedans, prioritize the production of the Gravity, and ensure that the midsize vehicle remains on track for its 2026 launch.

The recent restructuring follows roughly a year after the previous one, when Lucid announced plans to cut 18% of its workforce in March 2023, which resulted in approximately 1,300 job losses.

Lucid manufactured 1,728 vehicles and reported revenues of one hundred seventy-two million seven hundred thousand dollars in the first quarter of the year. However, despite attempting to highlight the positive aspects of these figures, the company still incurred a net loss of over six hundred eighty million dollars.

Shares of the electric vehicle (EV) maker increased by 1% in premarket trading.

READ ALSO: Lucid's Senior VP of Digital Resigns As The Company Struggles to Find Consistent EV Demand

Electric Vehicle Sector's Layoff Trends

Rivian, a peer company in the sector, has also undergone two rounds of layoffs this year, with the most recent occurring last month when it reduced its workforce by 1% to improve margins. The electric vehicle leader, Tesla, also announced last month that it would lay off over 10% of its global workforce due to intensifying EV price war.

Earlier this month, Lucid projected increased annual capital expenditure as it focuses on expanding production capacity at its Arizona factory and constructing a new one in Saudi Arabia.

Supported by the Public Investment Fund of Saudi Arabia, Lucid is now preparing to commence production of a more affordable midsize car by late 2026, along with its Gravity SUV, later this year to attract a broader customer base.

RELATED ARTICLE: Tesla Grappling with Sales Decline to Layoff 10% Workforce Amid Intensifying EV Price War