American electric vehicle manufacturer Lucid Motors has unveiled significant spending cuts, including workforce reductions, in response to escalating financial losses.
The California-based firm, predominantly owned by Saudi Arabia’s Public Investment Fund, has pinpointed initial cuts amounting to $1.4B as part of a comprehensive business review.
This announcement coincided with the release of its earnings results for the first half of the year, which indicated a 50% YoY increase in losses, rising from $1.6B to $2.4B.
Shares Drop 9% After Hours
Following this announcement, shares of Nasdaq-listed Lucid dropped by 9% in after-hours trading. The company has experienced a challenging period, struggling to attain profitability since commencing electric vehicle production in 2021.
Demand for electric vehicles in the United States has diminished this year, with Lucid’s first-half production of 10,274 vehicles falling significantly short of its full-year target of 25,000 to 27,000 vehicles.
The company’s share price has plummeted from nearly $600 in 2021 to just above $7 after yesterday’s announcement.
C-suite Change
Lucid recently underwent a leadership overhaul, appointing Silvio Napoli as the new CEO.
The company dismissed speculation about an impending bankruptcy following a blog post that arose from its collaboration with AlixPartners, a consultancy renowned for corporate restructuring.
PIF Investments in Lucid
On July 29, it was disclosed that HRH Prince Alwaleed bin Talal Al Saud acquired a 5% stake in Lucid, valued at $154M.
In April, the Public Investment Fund invested an additional $550M in the firm.
Lucid has announced intentions to relocate substantial portions of its operations to Saudi Arabia, with plans for full-scale manufacturing in the kingdom commencing this year.
The spending cuts include an estimated $600M to $800M in inventory reductions, alongside $500M in capital expenditure and $200M in operating expenses, including $158M earmarked for workforce reductions in the United States.
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