Embark Technologies is laying off 230 employees as executives explore an exit strategy for the autonomous trucking startup, CEO and Co-founder Alex Rodrigues announced Friday.
The news, which Rodrigues shared with employees via email, comes after the startup explored a potential sale and the option of entering new markets, but found both options unviable.
“Today, having exhausted all alternatives, we are taking the incredibly difficult step of laying off ~70% of the company, and shutting down our SoCal and Houston offices,” Rodrigues said the email, which the executive shared on Medium.
The autonomous trucking company is now focused on winding down operations while executives seek another solution for what’s left of the business and its assets.
Market pressures led to Embark’s downturn
In the email to staff, Rodrigues cited multiple reasons behind the layoffs, including market pressures, equipment limitations and leadership failures.
“Unfortunately, after thoroughly evaluating all alternatives, we have been unable to identify a path forward for the business in its current form,” Rodrigues said in the email. “Although there are many external things that we wish had gone differently, ultimately this outcome is my responsibility.”
A spokesperson for Embark Technologies declined to answer further questions on the reasons behind the layoffs, their timeline and effects on existing deals with shippers and trucking companies.
Founded in 2016, Embark Technologies raised more than $400 million dollars in funding and proceeds to deploy software enabling autonomous trucks, according to a company spokesperson. Since 2021, the company has announced partnerships with companies like Knight-Swift Transportation Holdings and Mesilla Valley Transportation.
Embark had more than 14,000 reservations for its autonomous driving system according to a securities filing last year, but no actual purchase agreements. As of its most recent quarterly filing, the company had not logged any revenue.
The lack of revenue increased the market's pressure on Embark over the past few months, according to the CEO.
“The last 9 months have been tough for the autonomous trucking industry, and for Embark,” Rodrigues said. “The capital markets have turned their backs on pre-revenue companies, just as slipping manufacturer timelines have delayed the prospect of scaled commercial deployment.”
Layoffs will stretch through Q2
The autonomous truck developer said the layoffs are part of an operating cost-reduction strategy and would be “substantially complete” by the end of Q2 2023, according to a Friday securities filing.
The move will cost the company between $7 million and $11 million due to severance payments, equipment, benefits and equity-related expenses.
According to Rodrigues’ email, laid off employees will also:
- Receive their base salary through June 2, 2023 or an equivalent lump-sum payment
- Have access to up to two paid consultation sessions with immigration attorneys, provided the laid off employee was working on a visa
- Have access to support from a newly created “Placement Team,” in which remaining employees will be tasked with helping laid-off workers find new opportunities
The remaining employees will help wind down day-to-day operations and help laid off colleagues land on their feet as executives weigh the company’s future, according to the email.
What’s next for the business
Embark Technologies is now considering several options, according to its securities filing, including:
- Alternative uses of the company’s assets to commercialize its technology
- Additional sources of financing
- A potential dissolution or winding up of the company and liquidation of its assets
The company’s board of directors approved the layoffs and a process to explore those options on March 1 — two days prior to the layoff announcement — after the company had already evaluated a sale or new markets.
“No assurance can be given that the Company’s exploration of strategic alternatives will result in any change in strategy,” according to the filing.
