Read the memo: Tesla rival Lucid cuts 12% of its US workforce as EV winter takes hold
Business Insider
February 20, 2026
AI-Generated Deep Dive Summary
Lucid Motors, a Tesla rival, has announced a 12% reduction in its US workforce, affecting approximately 300 employees, as part of efforts to achieve profitability amid an EV market downturn. In a memo to staff, interim CEO Marc Winterhoff explained that the cuts were necessary to improve operational efficiency and optimize resources. Notably, hourly production workers in manufacturing, logistics, and quality control were exempt from these reductions. The company is focusing on streamlining its organization to enhance long-term growth and margin improvements while maintaining its core strategic priorities, including the launch of its Midsize platform and expansion into new markets.
The decision comes as the US EV market faces a significant slowdown, often referred to as the "EV winter," following the expiration of the $7,500 federal tax credit in September. Despite this challenging environment, Lucid managed to double its sales last year, driven by increased production of its Gravity SUV. However, the company continues to grapple with financial challenges, reporting a net loss of nearly $1 billion in its latest earnings. These cuts reflect the broader industry shift as manufacturers adjust to reduced demand and shifting consumer priorities.
Lucid's move highlights the pressures faced by EV startups striving for profitability while navigating an uncertain market landscape. While the company emphasizes that these layoffs are part of a strategic effort to improve efficiency, they also underscore the financial strain many EV manufacturers are experiencing. The cuts are designed to "streamline" operations without impacting hourly workers, ensuring production continuity in key areas like manufacturing and logistics.
This restructuring may help Lucid address its cash-burn issues and align its resources more effectively with long-term growth goals. As the EV industry undergoes a period of adjustment, such strategic moves could set the stage for future profitability and innovation, though challenges remain. The broader implications of this decision highlight the evolving nature of the EV market and the difficult choices companies must make to survive and thrive in this
Verticals
businessfinance
Originally published on Business Insider on 2/20/2026