Waymo, the self-driving technology unit under Alphabet, quietly laid off employees on Monday The information and various posts on LinkedIn and Blind. The cutbacks at the autonomous vehicle company follow a spate of layoffs at Alphabet and Google late last week.
Waymo denied claims it would close Via, but a spokesperson did say Waymo was backing off its fully autonomous commitment to freight transportation. Waymo will continue to develop its “Driver” in a way that applies to all business areas, including highway capabilities that can be applied to both ride-hailing and trucking, the spokesperson said.
Reading news of corporate layoffs is not at all surprising in 2023 after the year we just had. Most companies, including Alphabet, find themselves having to adjust course after hiring a different economic reality than where we are today. Last week, Alphabet cut 6% of its global workforce, or about 12,000 people, including, we are now learning, part of Waymo’s team. Area 120, Google’s in-house incubator, was also significantly affected by the layoffs.
Waymo’s cutbacks, however, may go deeper than the surface economic problems that virtually every technology company faces. After the closing of Argo AI last year, many investors and OEMs have become more optimistic about the future of autonomous vehicles – at least in the short term. The problem of self-driving is always difficult and expensive to solve. Autonomous truck competitor TuSimple also recently laid off 25% of its workforce to streamline operations and keep the company afloat. As part of the restructuring, TuSimple decided to scale back its freight expansion, particularly due to unprofitable truck lanes.
Waymo currently runs several robotaxi programs in California and Arizona, and recently passed the milestone of opening driverless rides to the Phoenix airport to members of the public. If Waymo is indeed scaling down or downsizing its truck program, it could direct resources to robotaxi efforts so it can better compete with Cruise, the General Motors subsidiary that is neck-and-neck with Waymo in terms of technological advancements.
Waymo, with its 2,500 employees, has the largest headcount of Alphabet’s side projects. The unit is not generating nearly enough revenue to cover the massive losses, which include the cost of developing proprietary hardware such as lidar, machine learning models to train the “drivers,” and cloud computing to analyze data captured by vehicles. Not to mention the cost of dealing with massive headaches like the crash of one of Waymo’s autonomous semi trucks last May.
Waymo does not have a separate line on Alphabet’s balance sheet, but that of its parent company third quarter results last year shows a 27% drop in profits compared to 2021. The biggest losers for the company were Google Cloud and “other bets”, which includes Waymo. Other bets, including the Wing drone delivery project, lost $1.6 billion, up from $1.29 billion lost the previous year.
Activist investor TCI recently called on CEO Sundar Pichai to curb spending, pointing to Ford and Volkswagen’s decision to halt their own self-driving projects, which resulted in the shutdown of Argo AI.
Waymo’s main revenue stream today comes from its robotaxi services in California and Arizona. In November, Waymo began charging for fully self-driving rides in San Francisco and downtown Phoenix, but the company has been working with paying customers in Chandler, Arizona, for a few years now. Waymo’s current and future pilots with transportation partners such as CH Robinson, JB Hunt and Uber Freight are unlikely to generate revenue yet, but the company would neither confirm nor deny this speculation.