Nikola Corp., the electric vehicle manufacturer, is implementing significant changes in an effort to conserve cash. The company announced that it will be laying off 270 employees, which amounts to approximately 23% of its workforce. As part of the restructuring, Nikola will restrict its electric truck efforts to North America.
The company plans to eliminate 150 positions that were supporting its European programs, while an additional 120 employees based in Phoenix and Coolidge, Arizona, will also lose their jobs. This downsizing will result in around 900 employees remaining at Nikola.
The layoffs are expected to reduce personnel-related cash expenditures by over $50 million annually. By 2024, the company anticipates its annual cash spend to decrease to under $400 million as a result of these cuts.
Following the announcement, Nikola’s shares dropped by 15% during regular trading hours. However, there was a slight rebound of approximately 1.7% in after-market trading.
CEO Michael Lohscheller highlighted the company’s shift in strategy, stating, “Nikola has initiated a more focused business plan this quarter, concentrating on North America, zero-emission truck production, and our HYLA hydrogen business.” He further emphasized the company’s commitment to managing costs, streamlining operations, and executing their objectives efficiently.
Nikola has been working towards a turnaround since its founder and former CEO, Trevor Milton, faced federal securities fraud charges. Despite making progress, such as appointing a new CEO and preparing for commercial production, the company has encountered several obstacles along the way.
In May, Nikola received a delisting notice from the public exchange due to its share price remaining below $1 for 30 consecutive days. To comply with Nasdaq’s minimum price rule, which requires the share price to be above $1 for 10 consecutive business days, Nikola has until November 20. The company’s shares, which reached as high as $65.90 in 2020, have since plummeted to $1.19.
Furthermore, Nikola has faced challenges in securing investor votes for its proposal to issue more shares. The company adjourned its annual meeting of shareholders until July 6 in an attempt to gather the necessary votes. Failure to obtain approval for this proposal could result in production delays or even cancellation, according to a statement from the company.
