by Lucid cuts 18% of US staff: new round of layoffs four months later
Lucid continues to fight for survival and accelerate the market launch of the Cosmos crossover. However, before that, the electric vehicle manufacturer is again reducing its workforce and, it seems, once again trying to reset its strategy. Just four months after laying off 12% of employees, Lucid announced a cut of another 18% of its US employees. Simultaneously, the company is halting one of the production shifts at its Arizona factory.
These changes will affect both salaried employees and contractors, as well as hourly workers. The manufacturer’s main problem, it appears, is not production or development, but finding buyers.
Leadership changes and financial implications
The reduction was announced Monday, along with the immediate dismissal of former interim CEO and COO Marc Winterhoff. The company is eliminating the COO position entirely as part of a broader restructuring under new CEO Silvio Napoli, who officially took the role on June 1.
According to Lucid, the layoffs are expected to generate annual savings of approximately $158 million, though severance and related costs will amount to about $32 million.
“These are difficult decisions made to align production with demand, reduce inventory, and adapt to worsening market conditions. They are part of broader efforts to streamline the company, increase efficiency, and position Lucid to become more competitive over time,” a Lucid representative said in a statement to CNBC.
The mention of demand is a key point in this statement.
Sales and production issues
Lucid has already proven it can create world-class electric vehicles. The Air model is a truly impressive electric sedan. The Gravity applies this formula to a three-row SUV, praised for its range, luxury, and performance. Despite this, none of the brand’s models have delivered the sales volume needed to support a company with thousands of employees and ambitions to be a major industry player.
The cancellation of the second shift at the AMP-1 plant in Casa Grande, Arizona, vividly illustrates the problem. Automakers typically do not halt production capacity when demand exceeds supply. Earlier this year, Lucid produced approximately 5,500 vehicles in the first quarter but delivered only slightly more than 3,000, leading to higher-than-desired inventory levels.
Hope for the Cosmos crossover
That is why the upcoming Cosmos crossover is so important for the company. Increasing overall demand is now vital for Lucid. The Cosmos is expected to cost under $50,000, which automatically opens access to a completely new demographic of buyers.
If Lucid can lure some buyers away from Tesla and other competitors, these layoffs may over time look like a very smart cost-cutting move. If not, they will become just another step away from the success the company once hoped for.
Image Credits: Lucid
The situation around Lucid demonstrates the harsh reality of the electric vehicle market: even a technologically perfect product does not guarantee commercial success. The company finds itself in a classic growth trap, where production capacity and workforce were scaled for much higher demand than actually exists. New CEO Silvio Napoli appears to be betting on radical cost-cutting and a focus on the more affordable Cosmos model. However, the success of this strategy will depend on whether the company can not only launch a budget crossover but also convince the mass buyer to choose Lucid over more established players. Time for this is now critically limited, as each new round of layoffs undermines the trust of both investors and potential customers.
