On Friday, electric truck maker Nikola said that it would lay off a total of 270 employees or 23 per cent of its workforce in order to snip costs and to regain its focus on the North American market place. Many other firms to have reframed their focus from core market after the US Federal reserve monetary policy restrictions created difficult economic conditions and prompted firms to reconsider their approach.
At present, the truck maker is also involved in a dispute with its own founder and primary shareholder Trevor Milton, who has demanded a change in leadership and provoked other investors to vote against the company’s proposal to raise the number of shares it is allowed to issue. Ever since the company has been pushing to issue more shares, but has not managed to get enough investors to vote on the proposal. In June, Nikola suspended its yearly meeting of shareholders until July 6 in a bit to secure the required number of votes that were needed to add shares to the marketplace. The Phoenix based truck maker needs to get more than 50 per cent of all outstanding shares to vote in favor of the proposal, which is a higher standard than other proposals would need to reach. Without the passing of this proposal, production could be delayed or terminated, the company said in a statement.
Out of the 270 employees who have been affected by the layoffs, 150 of them were supporting all the company’s operations in Europe while the other 120 were based at its sites in Coolidge and Phoenix.
The layoffs would work for Nicola to cut down personal related cash expenditure by $50 million in a year, according to sources familiar with the matter.
Cash usage for the company per year was expected to reduce and come under $400 million by 2024, the source added. Investors have been carefully monitoring the situation of cash reserves at Nicola and other electric vehicle makers and as the fears of slowing sales increase, and they could push the carmakers to pursue more share disposals in order to gather funds.
The company’s shares were up nearly by 1 per cent in trading post the bell. It closed to 15 per cent below in the regular trading session.
Source: Business insider
CEO Michael Lohscheller said in a statement, “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.”
Nikola’s leadership has been trying to cope up with the company’s struggles ever since its founder and CEO Trevor Milton was accused for federal securities fraud. While the firm has made some progress, which includes getting a new CEO and preparation for commercial production, it has also come across several speed bumps.
Last month, the company said it received a delisting notice from the public exchange as its share price has been below $1 for the past 30 days. Until November 20, the company has to abide with Nasdaq’s minimum price rule, which mandates the share price to be above $1 for 10 consecutive business days.
