American automaker Nikola Motor announced plans to reduce cash spending and reorganize its workforce as it aims to optimize the production of its zero-emissions trucks.
According to the press release, Nikola will lay off 270 employees, or approximately 23% of its total workforce. It will also now limit its electric truck endeavors in the North American market to preserve its current available cash.
Plan highlights
Nikola’s planned workforce reorganization will affect 150 employees working on its European projects and 120 employees at its Phoenix and Coolidge sites. Meanwhile, the automaker will keep approximately 900 employees to pursue its current and new strategies.
Nikola asserted that these layoffs would reduce the company’s personnel-related cash spending by over $50 million a year. In effect, its annual cash spend will drop to below $400 million by 2024.
“Nikola has initiated a more focused business plan this quarter, concentrating on North America, zero-emission truck production, and our HYLA hydrogen business.
Our battery-electric truck is in the marketplace and performing well for our customers, and the hydrogen fuel cell electric truck will go into production in a matter of weeks. We are proactively managing costs and reducing expenses. We are streamlining operations, including our organizational structure, to efficiently execute our objectives.”
CEO Michael Lohscheller
Challenges
Nikola’s management has been striving to push the firm back up since CEO and founder Trevor Milton was charged with federal securities fraud.
While it has made some progress—adding a new CEO and getting ready for commercial production, for example—it has also hit many roadblocks.
In addition, the public exchange informed Nikola in May that it would be delisted since its stock price had fallen below $1 for the previous 30 days.
Therefore, the company must meet Nasdaq’s minimum price regulation of over $1 share price for ten straight business days by November 20.
In hindsight, Nikola’s shares were $65.90 in 2020 when Milton was leading the SPAC. However, it has dropped to $1.19 since then.
Nikola has also been attempting to issue more shares but has difficulty encouraging investors to vote on the proposal. The company postponed its annual shareholder meeting until July 6 to obtain the necessary number of votes to release shares to the market.
Essentially, the automaker must obtain over 50% of all outstanding shares to vote in favor of the plan, a substantial threshold difference from other proposals. It is worth noting that Nikola warned in a statement that without approval of this proposal, production would be postponed or abandoned.
See Also:
- Nikola to be the first US truck maker to employ 9PlusDrive to Class 8 e-trucks
- Nikola and KeyState to collaborate on hydrogen supply
- Nikola plans to bring 60 hydrogen stations by 2026, aided by IRA and state-level incentives
- Nikola Agrees to buy Battery supplier Romeo Power for $144 Million
- How EV-related stocks changed in January 2023
Following the news, Nikola shares declined 15% but increased around 1.7% in after-market trading.
