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EV maker Lucid hires adviser to examine operations
Lucid denies bankruptcy rumors, says focus is on improving execution and operations
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A Lucid electric vehicle at the company's headquarters in Newark, Calif. (David Paul Morris/Bloomberg)
Key Takeaways:
- Lucid hired AlixPartners to review operations, cut costs and support a turnaround as the electric vehicle maker struggles.
- Shares plunged as much as 57%, a record intraday decline, after reports raised bankruptcy concerns amid layoffs and a suspended production outlook.
- Lucid said bankruptcy rumors were “completely false” and liquidity could fund operations well into next year as it prepares a new midsize vehicle.
Lucid Group Inc. is working with restructuring advisers to turn around its struggling business, according to people familiar with the matter, sending the electric vehicle maker’s shares to their biggest decline on record.
Consultant AlixPartners has been engaged to examine all aspects of Lucid’s operations, according to the people, who were not authorized to discuss the matter. The carmaker is aiming to optimize its business, cut costs and ensure that the rollout of a new midsize vehicle is successful, the people said.
Lucid confirmed in a statement to Bloomberg News that it is working with the adviser while saying that rumors circulating in industry publications about a possible bankruptcy filing are “completely false.”
“The company has sufficient liquidity to carry its operations well into next year,” Lucid said July 14, adding that its focus is on improving execution and operations. “AlixPartners is assisting us in that and nothing else and has not recommended bankruptcy to management or the board.”
Lucid’s shares plunged as much as 57%, their worst intraday drop ever, before paring the decline. The stock was halted multiple times due to volatility.
The situation extends a difficult stretch for the EV maker, which has suspended its production outlook, launched a review of operations and announced sweeping layoffs in recent weeks. CEO Silvio Napoli assumed the top post recently and has been overhauling management, including eliminating the company’s chief operating officer role and hiring a new finance chief.
It isn’t immediately clear if Lucid would consider more serious steps if the current turnaround effort fails to yield results. The company has relied on the backing of Saudi Arabia’s Public Investment Fund, its top shareholder, to fund operations as it launches new models.
Industry-focused publication EV on July 14 reported that strategic options under consideration include taking the company private or filing for Chapter 11 bankruptcy protection, according to an unidentified source familiar with the matter.
