Nikola Corp. is laying off 270 employees, or about 23% of its workforce, and restricting its electric truck efforts to North America as it seeks to preserve cash.
The company said Friday it will lay off 150 workers who were supporting the company’s European programs. Another 120 employees based at the company’s Phoenix and Coolidge, Arizona sites will also lose their jobs. 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 its expected to decrease to under $400 million by 2024.
Shares fell 15% Friday, but rose about 1.7% in after-market trading following the announcement.
“Nikola has initiated a more focused business plan this quarter, concentrating on North America, zero-emission truck production, and our HYLA hydrogen business,” CEO Michael Lohscheller said in a statement. “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 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.
Nikola shares were as high as $65.90 in 2020 when the buzzy SPAC was being led by Milton. Shares have since fallen to $1.19.
The company 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.