Embark Trucks laid off 70% of its workers on Friday and may liquidate. The first autonomous trucking company to haul freight cross country under robot control is closing offices in Houston and Southern California.
It is the latest example of a transportation startup struggling to survive. A week ago, autonomous platooning startup Locomation denied published reports it was closing. But it acknowledged laying off an unspecified number of employees.
In a filing with the Securities and Exchange Commission on Friday, San Francisco-based Embark said it was laying off 230 employees by the end of the second quarter and is looking for a buyer. Liquidation is another option, the filing said.
Severance payments, employee benefits, equipment and related costs, and noncash expenses associated with vesting of share-based awards will cost $7 million to $11 million, according to the SEC 8-K filing. The noncash expense from other share-based awards cannot presently be estimated.
Board puts Embark sale and dissolution on the table
The Embark board of directors on Wednesday approved exploring, reviewing and evaluating a range of potential strategic alternatives available. That includes alternative uses of the company’s assets to commercialize its technology. Without additional sources of financing, potential dissolution … and liquidation is possible,” the SEC filing said.
Embark was founded by entrepreneurs Alex Rodrigues and Brandon Moak in 2016 when Rodrigues was just 20 years old. Embark completed a cross-country run of an autonomous truck with a safety driver on board in 2018 — the first among a growing field of autonomous trucking startups.
In the heady days of SPACs, the co-founders both stood at age 26 to reap hundreds of millions on paper.
Embark CEO’s emotional email to employees
In an emotional email to employees on Friday, Rodrigues said financial markets “have turned their backs on pre-revenue companies, just as slipping manufacturer timelines delayed the prospect of scaled commercial deployment.”
In December, Embark delivered a Kenworth T680 with its Embark Driver autonomous software to Knight-Swift. It is the first 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.
But the company’s financial prospects dimmed after a 1-for-20 reverse stock split in August. Embark’s share price had drifted below $1, putting it in jeopardy of being delisted from the NASDAQ. The initial bounce from the reverse split provided an immediate lift for the share price that quickly 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. “Although there are many external things that we wish had gone differently, ultimately this outcome is my responsibility.”
The email said the employees who remain would be expected to help colleagues affected by the layoff while winding down the business.
“I’m sorry that myself and Brandon weren’t able to find a way,” Rodrigues wrote. “You are an amazing team and it has been the highlight of my life to get to work with all of you.”
Embark SPAC merger hit by early redemptions
Embark went public in a merger with blank-check sponsor Northern Genesis Acquisition Corp. II in November 2021. But even a first-day valuation of $5 billion was tarnished when investors redeemed their SPAC shares early, depriving Embark of about $300 million in expected proceeds. Embark started its public life with $314 million in SPAC proceeds.
Unlike competitors Waymo Via, Torc Robotics and Aurora Innovation, which formed manufacturing partnerships with legacy truck makers, Embark chose to focus 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.
But whether Embark would be able to persuade OEMs to integrate its software onto their trucks was an unanswered question.
“You pretty much need to have one OEM partner to integrate your system,” Sam Abulesamid, principal analyst at Guidehouse Insights, told FreightWaves. “It’s one thing to build a few development trucks. “To scale up production, you really need to be working with a partner. You need to have access to vehicles from an OEM that is building an AV-ready truck.”
He said the apparent failure of Embark as an autonomous contender “won’t be the last, maybe even the last this year.”
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