clock menu more-arrow no yes

Filed under:

Zoox, citing COVID-19 shutdown, lays off its autonomous vehicle backup drivers

But the buzzy startup insisted this should not be considered ‘a standard layoff’

Test drive robot car of the Forma Zoox Photo by Andrej Sokolow/picture alliance via Getty Images

Zoox, the ambitious self-driving startup said to be worth over $3 billion, laid off almost all of its contract workers last week, including its backup drivers who ride around in the company’s autonomous vehicles. Around 120 people are said to be out of work.

Zoox workers were informed in an email sent on Friday that their jobs were being terminated effective immediately. They were told that they were being locked out of the company’s email, Zoom, and Slack, and would be required to turn in their company-issued laptops and badges. But Zoox also insisted that this should not be “considered a standard layoff.” The company said that it will hire everyone back “once the shelter in place is lifted, unless stated otherwise.”

“Zoox has every intention to resume testing and normal business practices, and will need your efforts in getting back on track,” the email said.

Several former workers interviewed by The Verge said they didn’t expect Zoox to follow through on its promise. One former Zoox worker who left the company last December said the company had a high turnover rate, noting that of the seven people who joined Zoox when this worker was initially hired, five were laid off or fired three weeks later.

“It would be amazing if Zoox brought everyone back, but I’m doubtful,” the worker said. “That just sounds like they are all fired to me.”

Zoox appears to be the first AV operator to eliminate jobs during the viral outbreak. Most of the industry has temporarily halted operations in response to the pandemic.

In a statement, Zoox said its adherence to California’s order to shelter-in-place until May 3rd comes with “logistical and financial challenges to our operations, including a stop to payment of Zoox contractors beyond April 7th if they are unable to work remotely.

“This decision was not made lightly, and is an unfortunate reflection of the difficult situation faced by many organizations in an uncertain economic climate,” the company said, adding that contractors who are able to work remotely were not laid off.

Based in Foster City, California, Zoox was founded in 2014, with the ambitious mission of developing and building self-driving cars from the ground up, rather than retrofitting traditional vehicles like many of its competitors. The company gained some notoriety for its plans to build a vehicle that can travel in both forward and reverse directions without needing to turn around, which it planned to unveil by the end of 2020. The following year, Zoox said it expected to begin testing its own robot-taxi service.

Building your own vehicle, though, is incredibly expensive. Zoox raised $500 million in venture capital at a $3.2 billion post-money valuation in 2018. A few months later, the company’s board unexpectedly ousted co-founder and CEO Tim Kentley-Klay, and replaced him with Intel’s former chief of strategy, Aicha Evans. Its more recent cash infusion, in October 2019, was in the form of a $200 million convertible note — an initial step in closing Zoox’s series C funding round. But that has yet to happen.

The company has hundreds of full-time software engineers, AI researchers, and coding experts on staff. Like the vast majority of AV companies, it relies on third-party staffing agencies to fill a variety of other roles, such as safety drivers, mechanics, vehicle cleaners, and others involved in the daily operation of its fleet. Zoox has multiyear contracts with two such agencies, Aerotek and Experis. This keeps Zoox’s costs down, as well as puts some legal space between it and many of its workers.

Zoox has 50 test vehicles registered in California, as well as a smaller fleet based in Las Vegas. In early March, as cities were beginning to respond to the COVID-19 pandemic by issuing shelter-in-place orders, Zoox said it would stop testing its vehicles on public roads in San Francisco and Las Vegas.

Initially, some of the company’s contract workers were under the impression they were being laid off, according to online chats viewed by The Verge. One safety driver said they reached out to their Experis representative about the shutdown and received a link to information about unemployment insurance in response.

But Zoox dismissed those claims as the result of miscommunication, and promised to continue to pay workers until April 7th — assuming they would be going back to work after that. The pandemic-imposed shutdown has continued unabated, so the company instead opted to lay off those workers.

California’s statewide shelter-in-place rule has been extended to May 3rd, which means many AV companies are or will be in a similar position as Zoox. Some are exploring how to get designated as an “essential business” so they can continue to test during the shutdown. But backup drivers have told The Verge they would be extremely reticent to go back to work without rigid social distancing guidelines in place.

“Personally I don’t think it’d work,” said one backup driver who has worked at three self-driving car companies over the years, including Zoox. “But I also don’t wanna go back to work if I’m gonna be in a space with hella people and no indication of the virus slowing down.”

Update April 6th, 3:28PM ET: This story was updated to include Zoox’s statement, and to correct the number of vehicles in the company’s fleet.