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FutureStarrLucid to Cut 1300 Workers amid Signs of Flagging Demand For Its EVs
Lucid has made a lot of headlines this year: it unveiled its flagship luxury sedan, the Air, and achieved an EPA range mark that rivals Tesla's Model S. But the Newark, California-based startup is facing production issues which could put it at a competitive disadvantage in the long run.
Peter Rawlinson, CEO of the company, announced today that they are eliminating approximately 1300 workers as part of a cost-cutting initiative. He explained that these cuts are necessary in order to address an "immaturity" in their logistics systems.
Tuesday, Lucid's (NASDAQ:LCID) stock price plummeted after it announced it would be cutting 1300 jobs due to weakening demand for its electric vehicles (EVs). The California-based firm has struggled to increase production of its Air electric luxury sedan - one of the priciest on the market and competing against Tesla (TSLA), Nissan, Jaguar and Polestar.
Peter Rawlinson has faced supply-chain shortages and other difficulties, yet he has also worked hard to build a reliable team, streamline production processes, and guarantee quality control. All of this effort has been instrumental in the startup's success.
Lucid is now facing a major obstacle - an ongoing shortage of commodities like window glass and interior carpeting. This issue must be solved before Lucid can fully ramp up production for its Gravity SUV, which it plans to begin delivering in the first half of 2024.
Despite these difficulties, Rawlinson remains optimistic about Lucid's long-term prospects. He believes that a shift to zero-emission transportation will be beneficial for both consumers and the environment, with Lucid's vehicles perfectly suited to take advantage of this trend.
Investors were thrilled this week when Lucid's Air won the coveted Car of the Year award from MotorTrend, surpassing sedans from Porsche and Honda. At $169,000, its Dream Edition model offers a 520-mile range and serves as the automaker's flagship model.
Lucid also plans to release a cheaper version of its vehicle and an SUV, while Saudi Arabia, the world's largest oil exporter, is purchasing up to 100,000 electric vehicles from them.
Lucid's expansion plans could be hindered by a shortage of cash to cover rising production expenses. To attract buyers, Lucid is offering discounts on cars already ordered and on its top-of-the-line Air Grand Touring model (with an original list price of $154,000) by 10%.
Lucid, a luxury electric vehicle maker, is cutting back on staff by 18 percent due to signs of declining demand for its models. According to its filing with the Securities and Exchange Commission, this means they will reduce their workforce by 1300 people.
Lucid has faced an unenviable situation, particularly as an EV startup. After promising 20,000 vehicles by 2022, the company now projects only 6,000 to 7,000 units to be produced this year.
Lucid has more pressing problems than just its supply chain. It must contend with a lack of investor confidence as well. It's been an especially trying year for Lucid's stock, which has fallen to around $19 per share, down nearly 67% since its November highs.
The electric vehicle market has been hit hard by chip, parts, and metal shortages as well as cost inflation. As a result, many investors are turning away from EVs - leading Lucid to lose ground to rivals Rivian and NIO which are both valued at around $30 billion each.
Peter Rawlinson, Lucid's CEO, acknowledges the company is still far from being an industry leader but believes it will eventually achieve this status. Additionally, Lucid recently announced it would open a production plant in Saudi Arabia.
In the future, this new plant should enable Tesla to produce more than 100,000 electric vehicles (EVs). It will be in addition to their current factory in Arizona.
Lucid also plans to add more electric models to its lineup in the future, including an SUV in 2020 and a sports car by 2021.
According to Redburn analyst Charles Coldicott, the company's production issues will persist. He anticipates that even when Saudi Arabian's production plant opens this summer, it must ramp up quickly in order to meet demand.
Lucid has a difficult road ahead, as its electric vehicles have been struggling to sell due to price cuts from Tesla and an abundance of affordable EVs from traditional automakers.
Lucid Motors (LCID) is an ambitious startup seeking to revolutionize the electric vehicle (EV) industry, but it must first overcome industry-wide hurdles. Their success depends on maintaining affordable EV prices while also dealing with supply chain disruptions and material shortages.
Lucid has created a range of electric vehicles (EVs) designed to rival their high-end ICE counterparts, starting with the $169,000 Air Dream Edition. This 5-door luxury sedan has an estimated EPA range of 517 miles on a single charge and is one of the fastest charging EVs on the market, according to Lucid's website.
Lucid's battery technology is an integral component of its overall strategy, as they design batteries that are 59 percent more powerful and 45% lighter than their closest competitors. This feat is especially remarkable considering many electric vehicles utilize large, heavy batteries.
The company is developing efficient cars that can operate longer on smaller, lighter battery packs. These batteries are designed to fit into smaller spaces and reduce weight - an ideal strategy for meeting stringent emissions regulations.
However, the electric vehicle space is becoming oversaturated with each passing quarter as automakers and startups rapidly expand in this field. This trend will likely continue until EVs are as affordable as ICE vehicles - at which point they'll start competing more directly with gas-powered cars for customers' attention.
Therefore, more electric vehicles are expected to hit the market soon - which presents Lucid with a challenge. Unlike Tesla (TSLA), their production capacity cannot keep up with demand, making it more challenging for them to catch up to their rivals.
Another challenge faced by Lucid is its lack of manufacturing experience, making it harder to produce more cars than its rivals. This could result in slower initial production and decreased sales over time as Lucid attempts to expand operations. Ideally, Lucid should be able to boost its output by 10% annually; however, that won't happen until it establishes a stronger track record.
Lucid has announced plans to cut 1300 employees in order to address supply-chain difficulties facing its business. It remains uncertain if these reductions will have an impact on production levels.
One of the major obstacles facing electric vehicle companies is a global shortage of semiconductor chips required for vehicle electronics. This could cause them to delay or reduce production.
Another problem facing the industry is a shortage of metals and other essential materials needed for car assembly. This could result in price inflation and lower profit margins for many EV makers.
However, these manufacturing issues are only temporary and won't stop the growth of electric vehicles. As more EVs hit the road, drivers will become more familiar with them and demand for them will continue to increase.
Lucid has a long way to go before it can replicate Tesla's success. Lucid's primary competitors are well-established luxury brands such as Mercedes, Audi and BMW.
Lucid has had difficulty building its first electric vehicle, the Air, due to improvements made to the battery, motors and power electronics. As a result, Lucid had to delay production for an extended period of time.
Lucid faced a major challenge in getting these details correct with such a small team. That is why CEO Peter Rawlinson, an ex-employee of Tesla, decided to engineer the car's components in-house.
He stressed the significance of having an experienced team working on critical components for an electric car. Furthermore, developing suitable software and electronics for a vehicle is essential, according to He.
With this in mind, he says the Lucid Air has plenty to offer drivers. For instance, it's the longest-range electric vehicle on the market and its battery boasts excellent efficiency levels.
In addition, the Air has bi-directional charging capabilities that enable it to be used both for driving and home storage. Furthermore, it has a home energy management system which enables control and monitoring of your home's power usage.
With this in mind, Lucid could be an attractive buy-the-dip stock. It boasts impressive analyst ratings, encouraging results and a promising production outlook.