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Lucid (LCID) Recalls 640 Air EVs Due to Electric Motor Issues

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After a potential power loss issue surfaced, Lucid (LCID - Free Report) recalled some of its 2022-2023 Air EVs in the United States. According to the company, out of the 640 Lucid Air EVs, 6% are estimated to have the defect.

The cause of the problem is the unanticipated action of contact switches or contractors. Usually, when the vehicle starts, contact switches close to transfer power to drive the motor and when the vehicle shuts down, contact switches open to stop the energy transfer. Due to the existing defect, the electrically activated switches may suddenly open, interrupting the power transfer to the electric motor, which increases the possibility of a crash.

To address the issue Lucid Service Centers will replace the contact switches free of charge, if necessary and will also update the software. The automaker will notify customers via mail on Apr 21, 2023.

Lucid Group’s regulatory filing suggests that the automaker is set to trim its workforce by 18% as a part of the restructuring plan. The layoffs will be completed by the end of the second quarter and will affect 1,300 employees, including executives. The company will incur about $24-$30 million in charges concerning the restructuring plan.

CTO and CEO Peter Rawlinson cited “evolving business needs and productivity improvements” as a reason for the layoff. The affected employees will receive a severance package with access to Lucid-paid healthcare coverage, career resources and equity acceleration.

Rawlinson affirmed that the decision would make the company “more resilient and agile.” Last month, the automaker lowered its production target for 2023 to 10,000-14,000 from 20,000-22,000, as previously estimated by analysts. In a year, Lucid has slashed its production target three times. The automaker plans to launch the Gravity SUV in 2024.

Zacks Rank & Key Picks

LCID currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few top-ranked players in the auto space are Geely Automobile (GELYY - Free Report) , Modine Manufacturing (MOD - Free Report) and Wabash National (WNC - Free Report) , all of which sport a Zacks Rank #1.

Geely is engaged in automobile manufacturing and related areas. The Zacks Consensus Estimates for GELYY’s 2023 sales and earnings imply year-over-year growth of 57.54% and 7.38%, respectively.

Modine operates primarily in a single industry of manufacturing and selling heat transfer equipment. The Zacks Consensus Estimates for MOD’s 2023 sales and earnings imply year-over-year growth of 11.43% and 43.09%, respectively.

Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimate for WNC’s 2023 sales and earnings implies year-over-year growth of 13.06% and 28.89%, respectively.

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