BEIJING, May 15 (TMTPost)— Alibaba Group is scaling back its scientific research on autonomous driving after the Chinese tech giant kicked off its largest reorganization since inception.

Source: Visual China

The autonomous driving lab of Alibaba Academy for Discovery, Adventure, Momentum and Outlook, also known as DAMO Academy, will be merged into Cainiao, a logistic arm of Alibaba, and the global research institute will not retain any business or team involved in self driving. The reshuffle suggests all the work on driverless delivery, either on the basis of the robovan called Little Donkey, or the unmanned self-driving truck dubbed Big Donkey, will focus on the practical demand for Cainiao, since the autonomous driving becomes a technology team under Cainiao, instead of a program of DAMO Acadey dedicated to cutting-edge technologies.

Following the merger, the self driving lab would report to Li Qiang, the Chief Technology Officer (CTO) of Cainiao. Li has initially worked at Alibaba’s e-commerce business and doesn’t have professional background about autonomous driving. Prior to the shakeup, Chen Junbo, head of the lab was confirmed to resign in March. Chen, graduated from the College of Computer Science and Technology, Zhejiang University, was said to be recognized as the first person who wanted to work on autonomous driving inside Alibaba. The autonomous driving lab has been running without a real leader since Chen left the company to build a cleaning robot venture with Gu Zulin, former CEO at Alibaba Robotics.

Not all the members of the lab will be transferred to the Cainiao’s tech team, and about 200 people, accounting for 70% of workforce, will be laid off, Chinese digital news media outlet Jiemian learned on Monday. Alibaba was said to offer two severance packages: N+1+1 and N+1. The former package provides employees who are set to leave on Friday an average salary of the past 12 months and the monthly salary base as well as a vacation pay for compensation. The latter package is designed for staff to get laid off next month, when they will not receive the vacation pay, but obtain more buffer time to find an internal transfer or new jobs. In addition, DAMO Academy was said to provide internal transfer opportunities for fresh graduates in the lab.

The news about cutting 70% of staff at the lab is untrue, Alibaba Cloud later Monday responded. Some of employees working for the autonomous driving lab under Aliababa DAMO Academy will be transferred to Cainiao, and a considerable number of other lab members will be moved to different businesses of Alibaba, according to the cloud unit.

A key reason that Cainiao could not accept the whole team of the lab is that what the logistic unit showed willingness to invest in the self-driving is limited, an insider at the Alibaba told Jiemian. “Cainiao would like to spend some money on Little Donkey, which was involved with the company’s certain business, while it is unwilling to invest in Big Donkey, which requires too many inputs, and neither are other (Alibaba’s) businesses,” the insider said. The restructure is part of aftershock for Alibaba’s biggest overhaul in its 24-year history, as the company became more sensitive and cautious for resource allocation and business efficiency, especially for those high asset-intensive businesses like the self driving, the people noted.

Alibaba announced in late March that it would split into six business groups, including Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics, Global Digital Commerce Group, Digital Media and Entertainment Group. With financial independence, each business group is fully responsible for its performance and could seek separate IPOs. Cainiao was reported in the end of March to have started preparation for its Hong Kong IPO, which seems to be the first in Alibaba’s six units to be a listed company. With the current valuation at more than US$20 billion, Cainiao could go public as early as end of the year, according to the report. Cainiao didn’t have any clear plan or timetable about IPO, the company later responded.