Waymo, the self-driving technology unit under Alphabet, quietly laid off workers on Monday, according to The Information and several publications on LinkedIn and Blind. The cuts at the self-driving vehicle company follow a wave of layoffs at Alphabet and Google late last week.
Waymo denied claims it was closing Via, saying it remains fully committed to evolving its freight trucking solution over time. A spokesperson said Waymo is backtracking slightly on its fully autonomous rollout for freight trucking. Waymo will continue to develop its “Driver” in a manner applicable to all business sectors, which includes freeway capabilities that can be applied to both transit and trucking, the spokesperson said.
Reading news about corporate layoffs is not at all surprising in 2023 after the year we just had. Most companies, including Alphabet, find themselves course-correcting after hiring for a different economic reality than the one we find ourselves in today. Last week, Alphabet cut 6% of its global workforce, or about 12,000 people, including, we now learn, part of the Waymo team. Area 120, Google’s internal incubator, has also been significantly affected by the layoffs.
The cuts at Waymo, however, could go deeper than the surface economic issues that plague virtually every tech company. After the shutdown of Argo AI last year, many investors and OEMs have become more bearish about the future of autonomous vehicles, at least in the short term. The problem of autonomous driving is always difficult and expensive to solve. Autonomous trucking competitor TuSimple also recently laid off 25% of its staff to streamline operations and keep the company running. As part of its restructuring, TuSimple has decided to scale back freight expansion, especially as it involves unprofitable trucking lanes.
Waymo currently operates several robotaxi programs in California and Arizona, and recently reached the milestone of opening driverless rides to the Phoenix airport to the public. If Waymo does reduce or reduce its trucking program, it could redirect resources to robotaxi efforts to better compete with Cruise, the General Motors subsidiary that is neck and neck with Waymo in terms of technological advancement.
Waymo, with its 2,500 employees, has the most side projects in Alphabet. The unit isn’t generating enough revenue to cover its massive losses, which include the costs of developing proprietary hardware like lidar, machine learning models to train “drivers,” and cloud computing to analyze data captured by the vehicles. Not to mention the costs of massive headaches like the crash of one of Waymo’s self-driving tractor-trailers last May.
Waymo doesn’t have a dedicated row on Alphabet’s balance sheet, but the parent company’s third-quarter earnings from last year show a 27% drop in profits from 2021. The company’s biggest loss-makers were Google Cloud and “other bets,” under which Waymo falls. The other bets, which also include drone delivery project Wing, lost $1.6 billion, compared to $1.29 billion lost last last year.
Activist investor TCI recently called on CEO Sundar Pichai to cut spending, pointing to Ford and Volkswagen’s decision to end their own self-driving projects, which resulted in the shutdown of Argo AI.
Waymo’s main source of revenue today comes from its robotaxi services in California and Arizona. In November, Waymo began charging for fully driverless rides in San Francisco and downtown Phoenix, but the company has been working with charging customers in Chandler, Arizona for a few years. Waymo’s current and future riders with trucking partners, like CH Robinson, JB Hunt and Uber Freight, likely aren’t generating revenue yet, but the company won’t confirm or deny that speculation.
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