Lucid Motors is joining the growing list of EV makers forced to trim down on their operations. With the ambition of challenging Tesla, the American electric carmaker is to cut about 1 300 jobs or nearly one-fifth (18 percent) of its workforce.

Lucid CEO Peter Rawlinson calls it “a painful but necessary decision”. He expects the restructuring to be largely completed by the end of the second quarter, costing between $24 million and $30 million. The reorganisation will affect operations at any level and in any corner of the company.

Major drop in orders

Business isn’t going as planned, as Lucid Motors fell short of meeting analysts’ targets and registered a significant drop in orders in Q4 of 2022. That year, Lucid began the mass production of its electric luxury cars, but it also piled up a loss of $1,3 billion, or 1,2 billion euros. There are currently 7 200 people working for the EV start-up. The company is co-funded by the Public Investment Fund of Saudi Arabia and is listed on the stock exchange.

To news agency Reuters, Rawlinson added that his company is “also taking continued steps to manage costs by reviewing all non-critical spending at this time.” The production target for 2023 is 10 000 to 14 000 units, which underwhelmed business analysts, as its factory in Arizona has doubled that capacity.

A growing pattern?

A pattern of heavy braking appears among EV start-ups, while some of them even collapse over their growing pains. For example, Rivian recently announced it was streamlining 6% of its staff (though not in the production area), while electric van start-up Arrival announced cutting 800 jobs.

Dutch solar EV pioneer Lightyear filed for bankruptcy at the beginning of the year. At the same time, the colleagues from Sono Motors failed to raise the necessary funding to continue their project.

In most cases, ramping up the organization for full-scale production seems to be the main inhibitor. Still, there are also specific instigators. Arrival aims at re-orienting its business in the US, where it can apply for a subsidy under the Biden Inflation Reduction Act.

Lucid revising its expenses can also be attributed to the bank crisis in the US, which was triggered by the bankruptcy of the Silicon Valley Bank (SVB) earlier this month, specializing in financial lifelines for disruptive start-ups.

Lucid Motors develops its own batteries and electric motors. The latter is used in Formula E. Its first car, the Air, has one  of the longest ranges in the industry (up to 883 kilometers). The first European cars were delivered at the end of last year.