Lucid is cutting 18% of workforce amid slow sales

Lucid Motors is slashing its workforce by about 18 percent as the EV startup seeks to cut costs amid steep losses and softening demand for its Air sedan after a year and a half of production.

In a regulatory filing Tuesday, Lucid Group CEO Peter Rawlinson said the staff reduction was needed to reduce noncritical spending.

"Given evolving business needs and productivity improvements, we are reducing the size of our organization by approximately 18 percent, which will affect Lucid employees and contractors," Rawlinson said. "This action is aligned with the cost discipline announcement we made in late February when we reported earnings."

Lucid said on its fourth-quarter earnings call that preorders for the Air sedan had fallen to 28,000 in February from 34,000 late last year. Lucid also reported a fourth-quarter net loss of $473 million.

"Our U.S. workforce will see reductions in nearly every organization and level, including executives," Rawlinson said in the regulatory filing. He noted the automaker intends to launch its second vehicle, the Gravity crossover, next year.

"I am confident that we have the most advanced technology, we have the right operational infrastructure and know-how to deliver, and we have a track record of tenacity that will make us stronger," Rawlinson said.

Lucid is based in Newark, Calif., and its factory is located near Phoenix. The Air sedan starts at $89,050 with shipping. Lucid is forecasting production of about 14,000 cars this year, about double last year's production.

The publication Insider first reported the layoffs Tuesday.

Lucid shares fell 7.2 percent to close Tuesday at $7.55.

Lucid said about 1,300 employees would be effected by the job cuts. The automaker is expected to incur charges of $24 million to $30 million related to severance payments, employee benefits and stock-based compensation.

Industry experts say price cuts by EV leader Tesla and the availability of cheaper EV models from traditional automakers hurt demand for new vehicles from startups such as Rivian Automotive and Lucid.

Last month, Rivian said it would let go of 6 percent of its workforce in an effort to cut costs.

Reuters contributed to this report.