Shares of Nikola Corporation (NASDAQ: NKLA) fell -3.36% in the after-hours trading Friday. The drop comes after the electric-truck manufacturer made an announcement regarding its decision to lay off a total of 270 employees. This strategic move aims to reduce costs and enhance the company’s focus on the North American marketplace.
The decision to narrow their focus on core markets is not exclusive to Nikola, as several other firms have taken similar measures in response to challenging economic conditions. The tightening of the U.S. Federal Reserve’s monetary policy prompted companies to reassess their strategies.
The layoff impact will be felt across Nikola’s operations, with 150 employees supporting European operations and 120 based at sites in Phoenix and Coolidge.
Nikola expects this decision to reduce personnel-related cash expenditure by $50 million per year. Furthermore, the company projects that its annual cash usage will decrease to under $400 million by 2024.
Meanwhile, Nikola is facing internal disputes involving its founder and top shareholder, Trevor Milton. Milton has been advocating for a change in leadership and has urged fellow investors to vote against the company’s proposal to increase the number of shares it can issue.