Nuro Cuts Staff as Driverless Funding Dries Up
Nuro, a company that designs and engineers electric autonomous vehicles (AVs) for last-mile delivery, is laying off 30 percent of its staff, or approximately 340 employees.
On Wednesday, founders Jiajun Zhu and Dave Ferguson posted a note on Medium explaining the decision, confirming that Nuro would begin terminating workers that same week. They said Nuro offered voluntary separation packages to some employees back in April.
More from Sourcing Journal
This would be the second time in six months that Nuro slashed headcount after it previously cut 20 percent of staff, or 300 employees. Then, the founders admitted that the startup grew too quickly during the pandemic—doubling staff in the two years prior to that point.
The Silicon Valley-based startup, whose investors include Tiger Global Management, Google and Softbank Group, had raised $600 million in 2021 at a valuation of $8.6 billion. In total, Nuro has raised $2.13 billion.
Nuro is pausing plans to ramp up commercial operations and delay production of its third-generation “R3” delivery vehicle.
While the R3 is the centerpiece of Nuro’s commercial strategy, Zhu and Ferguson said the company plans to reduce the scale of its commercial pilots in the near term and explore more efficient deployment models with current partners.
With a leaner model for AV development, Nuro can more than double its runway from approximately 1.5 years to 3.5 years, according to the founders. This would buy Nuro more time to operate without needing to raise more capital.
“There is a fundamental tension in the development of self-driving between capital efficiency and speed to building an initial service. We have historically invested heavily in deploying commercial services and have learned a great deal from our customers,” said Zhu and Ferguson in the note. “But commercial deployments come at a significant cost, both in terms of resources and autonomy focus. And until the unit economics of these services make sense, we think it is prudent to focus on what we can do efficiently as a startup.”
It appears the company will shift more of its time to developing the back-end technology that powers its autonomous vehicles, particularly by making its “autonomy stack even more data driven,” which would help Nuro “scale to larger operating areas even more rapidly.”
The founders discussed how the changing macroeconomic environment from 2021 into 2022 altered how Nuro is approaching its finances.
“For most of Nuro’s existence, we have operated in a favorable fundraising environment and have been fortunate to attract significant funding from top investors. But over the past year and a half, capital markets in general, and deep tech funding in particular, have significantly retracted,” said the founders. “Recent bank failures and talk about an impending U.S. recession signal that this shift isn’t going to revert soon. We’ve entered a new capital environment that will shape the next few years or more. In this new reality, we need to be more efficient with our balance sheet.”
Nuro has had a leg up on competitors in its space as it gained government approval and even worked with Walmart. It was the first company to receive a special exemption from the National Highway Traffic Safety Administration and the U.S. Department of Transportation (DOT) and was also the first to charge money for driverless deliveries in California. The firm conducts its tests in select markets including the San Francisco Bay Area, Los Angeles and Houston.
Autonomous delivery has faced many regulatory hurdles and requires extensive trials. Many trucking companies in the autonomous delivery sector are burning through cash and that’s just one of their problems.
Like Nuro, many autonomous trucking companies benefited from an influx of capital. In the first half of 2021, investors poured $5.6 billion into autonomous trucking companies such as TuSimple, Waymo, Aurora, Plus and Embark, eclipsing the $4.2 billion invested in 2020 and marking a record for the autonomous trucking space, according to Pitchbook.
But after all that investment, some companies are hanging by a thread. Embark, for one, said in November that it hadn’t generated revenue yet. In March it cut 70 percent of its workforce, or 230 employees.
TuSimple gets delisting warning
TuSimple is in danger of getting delisted from the Nasdaq because it didn’t filed its third quarter and annual reports on time. The company still hasn’t filed its annual report.
The stock exchange said that unless the TuSimple appeals the delisting determination, which it intends to do, it will suspend the company’s stock from on May 15.
TuSimple had to file another notice with the Securities and Exchange Commission (SEC) on Thursday saying that it wouldn’t be able to file its first quarter report by the prescribed due date. It said that it recently tapped a new independent registered public accounting firm, UHY, to handle the 2022 reporting requirements.
TuSimple, which raised $1.35 billion when it went public in April 2021, recently ending a deal with truck manufacturer partner Navistar to co-develop self-driving trucks by 2024. CEO Xiaodi Hou was removed from the company after investigations by the FBI, SEC and the Committee on Foreign Investment in the U.S. (CFIUS) probed improper ties to a company with Chinese connections.
TuSimple reported third quarter revenue of $2.7 million. In December, it restructured and laid off 350 employees, or 25 percent of staff.
The company also was the subject of a federal investigation after a heavily publicized crash involving one of its autonomous trucks last year. The investigation was closed in March.
Shares in TuSimple have fallen more than 98 percent from a peak of $62.58 per share in July.
