Lucid Motors announced plans to lay off 1,300 employees as part of a restructuring plan aimed at helping cut costs.
The move covers about a fifth of the EV maker’s workforce, and the company said it will incur charges between $24 million and $30 million related to the move.
As has been the case for many of the EV startups, production levels are below what’s been predicted. There are several factors for it, including trouble with the supply chain as well as issues with the company’s factory setup.
Considered by some to be Tesla’s top competitor, the company saw a significant decline in its order book during the fourth quarter of last year as inflation crimped the ability of some buyers to afford a six-figure EV. It doesn’t help that the company’s products are not eligible for the new $7,500 federal tax credit from last year’s Inflation Reduction Act.
As for its competitor, Tesla reported full year sales of more than 1 million vehicles as well as a full year profit. In fact, EV sales overall were up more than 60% in 2022.
Struggling to meet expectations
Lucid reported fourth-quarter revenue of $26.4 million, and full-year revenue $257.7 million on Wednesday, falling short of Wall Street projections of $303 million. The company reported, it produced 7,180 Air premium electric sedans last year, above its forecasted production of 6,000 to 7,000 units, and delivered 4,369 units.
Last month, during its earnings results, Lucid officials said they anticipate producing 10,000 to 14,000 high-end electric vehicles in 2023, this is less than analysts’ projection of more than 20,000 vehicles, which led to a near 13% stock price decline in pre-market trading Thursday.
Yet more than just expectations are making people on the Street uneasy. As of Feb. 21, bookings totaled 28,000 units, down from the 34,000 units as of Nov. 8.
The company reported a 28-cent per share loss, less than the 64-cent loss per share a year reported a year ago. The company ended the quarter and the year with $500 million in available credit and $4.4 billion in cash, with the Public Investment Fund of Saudi Arabia having contributed $1.5 billion to the company during the fourth quarter, giving it a 62% stake in the automaker. This has fueled speculation the Saudi entity would buy the automaker, leading to the company’s stock price surge in January.
A tough market
Certainly, the company is facing the same challenges as other EV automakers. The Fed sees rates peaking this year, although when that might be remains unsaid. And although federal officials favor slowing the rate of increases, the auto industry is affected by each ratchet upward.
In addition to higher interest rates, Lucid raised the price of the base Pure model in May by about $10,000, now starting at $89,050, while the Grand Touring jumped more than $15,000 to $155,650.
Nevertheless, both Tesla and Ford have cut the prices of their EVs, as the Inflation Reduction Act imposes price caps for its $7,500 Federal tax credit. Vehicles with an MSRP more than $55,000 for passenger cars and $80,000 for trucks and SUVs were not eligible in 2023. This has Wall Street worried, as a price could be on the horizon, one that’s already taking place in China.
The price war impacts all automakers, but Tesla least of all; it has some of the industry’s highest margins.
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