Lucid Motors to cut 18% of EV startup's workforce

March 28 (UPI) -- Electric vehicle startup Lucid Motors is planning to lay off about 18% of its workforce as the company restructures to cut costs amid weaker-than-expected demand for its EVs.

According to a regulatory filing Tuesday, the Silicon Valley luxury EV carmaker will cut about 1,300 employees.

Employees were told about the layoffs in an internal memo and a meeting Tuesday, Lucid's chief executive officer Peter Rawlinson confirmed in a statement.

The job cuts will hit "nearly every organization and level, including executives, Rawlinson said, calling it a "painful, but necessary decision."

"These decisions are designed to position us to be more resilient and agile, thereby strengthening the company for the long-term," Rawlinson added.

Workers will be notified by the end of the week and will receive severance packages with paid healthcare coverage and accelerated equity vesting, according to Rawlinson.

As Lucid downsizes its workforce, the startup plans to ramp up production of its Air luxury sedan, which currently has more than 28,000 reservations. Demand for the higher-priced Air is lower than Lucid had predicted, while the company struggles to fulfill orders for the vehicle.

Lucid's factory is set up to build about 34,000 vehicles a year, but the company only plans to put 10,000 to 14,000 vehicles on the road in 2023.

"As we produce vehicles at low volumes on production lines designed for higher volumes, we have and we will continue to experience negative gross profit related to labor and overhead costs," chief financial officer Sherry House told CNBC last month.

As of the end of 2022, Lucid had about $4.4 billion cash to last through the first quarter of 2024, House said.

Lucid is among a number of tech companies, including Amazon, Microsoft and Meta, that have announced layoffs amid economic concerns.

Last month, EV truck and SUV manufacturer Rivian laid off 6% of its workers for a second time in less than a year.

During Lucid's fourth-quarter earnings call, Rawlinson said the priorities for 2023 include marketing and brand recognition to boost sales.

"Our mission remains unchanged. We are committed to a more innovative and environmentally sustainable future -- designing, building and delivering the best EVs on the market," Rawlinson told employees Tuesday.

"We would not have the best EV on the market without the collective efforts of all of our teams, which is a direct result of your tremendous perseverance, resourcefulness and teamwork."