Nikola Corp said on Friday, 16 June 2023, it would lay off a total of 270 employees, as the electric truck maker looks to cut costs and define its focus on the North American marketplace. This is about 23% of its workforce, and restricting its electric truck efforts to North America as it seeks to preserve cash.

Nikola employee reduction, 2023

Nikola job cut would affect about 150 workers who were supporting the company’s European programs. Nikola job cuts or employee reduction in Phoenix and Coolidge will affect about 120 employees. About 900 employees will remain.

Nikola said the cuts are expected to decrease personnel related cash spend by more than $50 million annually. As a result of the cuts, the company’s annual cash spend is expected to decrease to under $400 million by 2024.

“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 said in a statement.

Also, US based online food ordering company Grubhub has announced laying off about 15 per cent of its workforce, or nearly 400 employees, to maintain “competitiveness” in the market. Explaining the decision to lay off, the company said it’s operating and employee costs grew at a higher rate.

After the U.S. Federal Reserve’s monetary policy tightening created tough economic conditions, it has prompted a rethink where many of the firms have narrowed their focus on core markets.

Investors have been closely scrutinizing cash reserves at Nikola and other electric vehicle makers amid fears slowing sales could push the companies to pursue more share disposals to raise funds.

Nikola is involved in a dispute with its founder and top shareholder Trevor Milton, who has called for a change in leadership and urged other investors to vote against the company’s proposal to increase the number of shares it is allowed to issue.

Expectations after layoff

Nikola has also been pushing to issue more shares, but has struggled to get enough investors to vote on the proposal. In June, Nikola adjourned its annual meeting of shareholders until July 6 in an attempt to secure the requisite number of votes needed to add shares to the marketplace. Nikola needs to secure more than 50% of all outstanding shares to vote in favor of the proposal, which is a higher bar than other proposals would need to reach. Without the approval of this proposal, production could be delayed or scrapped, the company said in a statement.

Nikola’s leadership has been trying to turn the company around since its founder and CEO Trevor Milton was indicted for federal securities fraud. While it has made some progress, including installing a new CEO and preparing for commercial production, it has also encountered numerous speed bumps.

In May, Nikola said it received a delisting notice from the public exchange because its share price has been below $1 for the past 30 days. The company has until November 20 to comply with NASDAQ’s minimum price rule, which requires the share price to be above $1 for 10 consecutive business days.

The shares of Nikola fell 15% on Friday, but rose about 1.7% in after-market trading following the announcement.

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