Alphabet's self-driving car project Waymo is shuttering its Austin operations

John Krafcik, CEO of Waymo speaks at a press conference at the 2017 North American International Auto Show in Detroit, Michigan, January 8, 2017.

Geoff Robins | AFP | Getty Images

Waymo, Alphabet's self-driving car project, is shuttering its operations in Austin, Texas.

The Alphabet subsidiary is removing employees at the facility and says it will offer them relocation to the company's production center in Detroit, or to Phoenix, Arizona, where Waymo has a fleet of hundreds of self-driving cars. Those who do not wish to relocate will be offered a transition pay package. The move will affect fewer than 10 employees, but an undisclosed number of contractors also worked in the office. The relocations will not affect other Waymo employees around the country.

Waymo has been facing challenges to commercialize self-driving cars. Morgan Stanley cut its valuation on Waymo by 40% last month from $175 billion to $105 billion, concluding that the industry is moving toward commercialization more slowly than expected, and noted that Waymo still relies on human safety drivers, which CNBC reported in August.

"Waymo is growing our investment and teams in both the Detroit and Phoenix areas, and we want to bring our operations teams together in these locations to best support our riders and our ride-hailing service," a Waymo spokesperson said in a statement sent Friday to CNBC. "As a result we've decided to relocate all Austin positions to Detroit and Phoenix. We are working closely with employees, offering them the opportunity to transfer, as well as with our staffing partners to ensure everyone receives transition pay and relocation assistance."

Austin is where the company says it conducted its first full-self driving route on public roads back in 2015. Most of the employees in Waymo's Austin office provided rider support and fleet assistance.

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