Lucid Plans More Job Cuts, but Is Demand to Blame?

• Lucid plans to reduce its workforce by 400 employees, representing some 6% of its current workforce, following a string of price cuts and job cuts in recent months.

• Softening demand is still seen as the main culprit in the EV industry, which has already seen some drastic production cuts in the past year and a half.

• In 2022 Lucid announced a deal with the government of Saudi Arabia to build 50,000 vehicles, with an option for an additional 50,000.

Along with Tesla, Lucid Motors has responded to softening demand for EVs with price cuts and job cuts. The latest round of the latter will see Lucid Motors reduce its workforce by 400 employees, representing some 6% of its total by the end of the third quarter of 2024, the EV maker revealed in SEC filings thing month.

"The Company estimates that it will incur a total of approximately $21 million to $25 million in charges in connection with the Plan, which consist primarily of charges related to severance payments, employee benefits, employee transition, and stock-based compensation," Lucid Motors said in a filing.

The good news is that Lucid has recently secured a $1 billion investment from its majority stakeholder, which is a unit of Saudi Arabia's Public Investment Fund (PIF). So the EV maker is not going to run out of cash anytime soon.

However, the automaker's Q1 production figures are still just a small fraction of the Tesla Model S, which is a vehicle that has been updated several times since its launch in 2012 but remains a first-gen model in product cycle terms.

In the first three months of 2024 Lucid produced 1728 units and delivered 1967 of the Air sedan, which has been its sole model since the start of production, but its deliveries actually grew compared to the same period last year.

The Lucid Air will be joined by the Gravity SUV later this year, giving Lucid a much needed boost to its lineup.

Yet another model, a midsize crossover expected to challenge the Tesla Model Y, is on the way in 2026.

Despite the boutique-sized quarterly production numbers, Lucid still has a purchase commitment for up to 100,000 cars from the government of Saudi Arabia over a ten-year period, composed of an initial batch of 50,000 cars and an option for 50,000 more. These cars are expected to produced not only at its Arizona plant, but also its future facility in the kingdom.

The deal itself was announced in April 2022.

"The order quantity is expected to range from 1,000 to 2,000 vehicles annually and increase to between 4,000 and 7,000 vehicles annually starting in 2025, with the delivery of the vehicles required to commence no later than the second quarter of 2023," the automaker said at the time.

However, the automaker hasn't indicated whether this large order, which would certainly boost its output numbers, has begun being fulfilled. So there is no shortage of "demand" for Lucid vehicles per se that the EV maker could be building, at least according to the deal announced in 2022.

Will Lucid be able to secure a larger slice of the full-size luxury EV sedan segment in the coming years, or has it reached its peak? Let us know what you think in the comments.