Lion Electric (TSX: LEV) this morning disclosed its decision to downsize its workforce, marking the third electric vehicle maker to initiate such measures recently just this week.
The reduction, aimed at aligning operational costs with current market dynamics, encompasses approximately 120 employees, primarily affecting Canada-based personnel in overhead and product development roles. Notably, Lion ensures that its production capacity will remain unaffected by these changes.
Post-reduction, the company’s workforce will stand at around 1,150 employees, with over 600 employed in manufacturing capacities.
In tandem with the workforce reduction, Lion Electric is actively implementing internal measures to curtail expenses across various sectors, including third-party inventory logistics, lease expenditures, consulting, product development, and professional fees. Combined with previous initiatives announced in November 2023 and February 2024, these measures are anticipated to generate approximately $40 million in annualized cost savings.
Marc Bedard, CEO and founder of Lion Electric, addressed the rationale behind the decision, citing the adverse impact of market dynamics, particularly delays associated with Canada’s Zero-Emission Transit Fund, on school bus deliveries.
“We sincerely regret the impact of this decision on our valued employees. It is however crucial to rightsize our workforce to the current environment,” Bedard explained.
This development follows similar actions by other players in the EV industry. Rivian, in a recent announcement, disclosed a 1% reduction in its workforce, marking its second round of job cuts this year. The company previously laid off 10% of its employees in February, which came after the company fell short of its 2024 production forecast.
Similar to Lion Electric, Rivian has adopted strategies such as internal part production, renegotiating supply contracts, and temporarily halting production lines for upgrades to enhance efficiency.
Earlier this week, Tesla revealed plans to lay off approximately 14,000 employees. These measures come amidst pressure from declining sales and intensified price competition in the EV market. Tesla’s decision to reduce its workforce aligns with its ongoing efforts to navigate economic challenges and streamline operations.
This latest round of layoffs at Tesla follows a previous round announced in 2022, reflecting the company’s proactive stance in adjusting its workforce in response to changing market conditions. Despite the job cuts, Tesla’s headcount has seen an overall increase in recent years, indicating the company’s continued growth trajectory.
Information for this story was found via Reuters and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
