Embark Lays Off Workers, Explores Liquidation or Sale
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Autonomous trucking company Embark Trucks announced March 3 it is winding down operations and is exploring a liquidation or sale.
Embark said it is laying off 70% of its workforce — 230 employees — and is closing offices in Houston and San Francisco. It also indicated to the remaining 30% of the staff that they are being kept on to facilitate the company’s shutdown. The layoffs are expected to take place in the coming weeks.
According to a regulatory filing with the Securities and Exchange Commission, the next step for the San Francisco-based company may be a liquidation, and it is actively looking for a buyer.
Embark Trucks was founded in 2016 by its then 20-year-old founders CEO Alex Rodrigues and Chief Technology Officer Brandon Moak. During the latter part of the 2010s it captured the attention of investors interested in the growing autonomous truck and technology sector.
In 2018, the startup raised nearly $50 million, and as research into the self-driving technology increased, the company agreed to merge via a special purpose acquisition with Northern Genesis Acquisition Corp. II in a deal valued at the time at nearly $5 billion.
But the acquisition got off to a rocky start. Investors redeemed their SPAC shares early, lowering Embark by about $300 million in expected proceeds. Embark began as a public company with $314 million in SPAC proceeds.
Its financial prospects diminished further in August of 2022 after a one-for-20 stock split. The company was in danger of being delisted on Nasdaq when its stock price fell below $1 a share. Then, the bounce from the reverse stock split boosted the stock price and the crisis temporarily dissipated.
“Unfortunately, after thoroughly evaluating all alternatives, we have been unable to identify a path forward for the business in its current form,” Rodrigues wrote in an email to employees. “Although there are many external things that we wish had gone differently, ultimately this outcome is my responsibility.”
His email said the remaining employees would be expected to help colleagues affected by the layoff while winding down the business with various job placement and transition services.
“I’m sorry that myself and Brandon weren’t able to find a way,” Rodrigues said. “You are an amazing team and it has been the highlight of my life to get to work with all of you.”
The company’s board of directors said in its filing that even as it explores its options, its future is unclear, at best. The board on March 1 approved a process “to explore, review and evaluate a range of potential strategic alternatives available to the company,” including alternative uses of its assets to commercialize its technology, additional sources of financing, as well as potential dissolution or liquidation of its assets. The board’s decision comes following an extended evaluation by the company of alternative markets in which to commercialize its technology as well as an exploration, performed with the assistance of a financial advisor, of a potential sale of the company, the filling said.
In his email, Rodrigues said financial markets “have turned their backs on pre-revenue companies, just as slipping manufacturer timelines delayed the prospect of scaled commercial deployment.”
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Just recently, in December 2022, Embark delivered a Kenworth T680 with its Embark Driver autonomous software to Knight-Swift. The company said it is the first autonomous vehicle carrier to use its own employees as safety monitors of computer-driven autonomy. Embark targeted commercialization of its manufacturer-agnostic Embark User Interface for 2024.
While other companies in the autonomous trucking sector, including Aurora Innovation and Waymo Via, formed alliances with legacy OEMs, Embark took a different path, focusing on software that could operate on any legacy truck maker’s products. It worked closely with Knight-Swift to integrate the EUI into a Kenworth truck the carrier ordered.
Embark is just the latest transportation startup to struggle as concerns about the economy grow. In late February Pittsburgh-based autonomous platooning startup Locomation denied published reports it was closing, but it acknowledged laying off an unspecified number of employees.
And preceeding Locomation, another Pittsburgh-based autonomous transportation company, Argo AI, closed suddenly in October when two of its biggest investors, Ford and Volkswagen, pulled out.