10:47 AM EDT, 05/24/2024 (MT Newswires) -- Lucid Group ( LCID ) announced plans on Friday to terminate 400 employees, or 6% of its workforce, as part of a restructuring plan aimed at cutting costs in a soft electric vehicle market.

The move, which Chief Executive Peter Rawlinson said in a staff memo will impact US employee and contract workers at all levels, comes as the company readies to begin production on its new Gravity sport utility vehicle later this year.

"I'm confident Lucid will deliver the world's best SUV and dramatically expand our total addressable market, but we aren't generating revenue from the program yet," Rawlinson said. "As always we must remain vigilant about costs."

Layoffs at the EV manufacturer will also impact leadership and mid-level management. The hourly manufacturing and logistics workforce will not be affected. Lucid's share slid 3.7% in Friday trade.

The company expects to have the restructuring plan mostly completed by the end of the third quarter and estimates between $21 million and $25 million in related charges, including severance payments. A majority of those charges will be recognized in the second quarter and paid by the end of the third quarter.

Despite slowing sales in the broader EV market, Lucid achieved an all-time delivery record for its Lucid Air sedan in the first quarter and has seen that momentum continue in the current quarter, according to Rawlinson. "We must continue accelerating new customer acquisition and expanding awareness for our flagship vehicle," he said in the memo.

Earlier this month, Lucid reported a wider-than-expected first-quarter loss as overall revenue that fell short of market estimates. The company aims to begin midsize vehicle production in late 2026, Rawlinson said Friday.

"While our funding will get us to the next phase of our business, we must continue to exercise strong cost discipline, a message reiterated in our recent earnings call," Rawlinson said.

Price: 2.63, Change: -0.09, Percent Change: -3.31