Waymo, the self-driving technology unit under Alphabet, quietly laid off workers on Monday, according to The Information and several posts on LinkedIn and Blind. The layoffs at the autonomous car company follow layoffs at Alphabet and Google late last week.
Waymo denied claims it was shutting down Via, saying it remains fully committed to scaling its trucking solution over time. The spokesperson said Waymo is pulling back slightly from its fully autonomous deployment for trucking. According to the spokesperson, Waymo will continue to develop Driver in ways that can be applied across lines of business, including highway capabilities that can be applied to both driving and trucking.
In 2023, it’s no surprise to read news about companies laying off their jobs. Most companies, including Alphabet, are course-correcting after hiring for a different economic reality than we see today. Last week, Alphabet laid off 6% of its global workforce, or about 12,000 people, including, we’re now learning, part of the Waymo team. Area 120, Google’s internal incubator, was also significantly affected by the cuts.
However, the layoffs at Waymo may go deeper than the surface-level economic woes that affect nearly every tech company. After Argo AI shut down last year, many investors and OEMs have become more bearish on the future of autonomous vehicles — at least in the near term. Solving the problem of self-control is always a difficult and expensive problem. 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 its shipping expansion, particularly as it covers harmful shipping lanes.
Waymo currently runs several robotaxi programs in California and Arizona, and recently reached the milestone of opening self-driving rides to the Phoenix airport for members of the public. If Waymo does indeed cut or scale back its ride-hailing program, it will be able to shift resources to its robotics efforts to better compete with Cruise, a General Motors subsidiary that is neck-and-neck with Waymo in terms of technological advancements.
With 2,500 employees, Waymo has the largest headcount of any of Alphabet’s spin-offs. The department isn’t generating nearly enough revenue to cover its huge losses, which include the cost of building specialized equipment like lidar, machine learning models to train “drivers” and cloud computing to analyze data captured by vehicles. Not to mention the costs of dealing with massive headaches like the crash of one of Waymo’s autonomous semi trucks last May.
Waymo doesn’t have a specific line on Alphabet’s balance sheet, but the parent company’s third-quarter earnings last year showed a 27% drop in profits compared to 2021. The biggest losers for the company are Google Cloud and Waymo under “other bets.” Other bets, including the Wing drone delivery project, lost $1.6 billion, up from $1.29 billion lost a year ago.
Activist investor TCI recently urged CEO Sundar Pichai to cut costs, pointing to Ford and Volkswagen’s decision to end their self-driving projects, which resulted in the shutdown of Argo AI.
Today, Waymo’s main revenue stream 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 several years. Waymo’s current and future pilots, with trucking partners like CH Robinson, JB Hunt and Uber Freight, likely won’t generate any revenue yet, but the company wouldn’t confirm or deny that assumption.