(Bloomberg) -- Quanergy Systems Inc.. said Chief Executive Officer and co-founder Louay Eldada stepped down after the driverless car technology startup failed to fulfill technical promises and questions mounted about its finances.
Kevin Kennedy, who joined Quanergy’s board last April, will take over as interim CEO, it said in a statement released publicly after Bloomberg News inquired about the leadership change. Eldada also left the board, effective Jan. 13, the company said.
Quanergy makes lidar, sensors that use lasers to create real-time imagery of the physical world. It’s a critical component for many autonomous cars, and Quanergy seemed uniquely positioned to capitalize on the emergence of a huge new industry. But its fortunes waned in recent years.
Eldada was a central figure both in the company’s early success and its more recent troubles. He co-founded Quanergy in 2012, based on early progress on solid-state lidar, a version of the technology that promised smaller, more efficient and cheaper sensors. The company scored several partnerships with car companies and began talking to banks about an initial public offering in late 2017.
But Quanergy consistently failed to hit an ambitious timeline for the development of its sensors. Industry partners and former employees said the company shipped devices that didn’t work as advertised, and employees found Eldada’s management style alternately intimidating and alienating, Bloomberg News reported in 2018. The company contested various aspects of Bloomberg’s reporting. “Quanergy has never knowingly shipped product with defects,” a spokeswoman for the company said at the time.
In recent years, Quanergy has focused increasingly on mapping, security and other non-automotive applications, a shift that former employees said reflected the deteriorating prospects of the company landing large deals with autonomous vehicle makers.
This wasn’t entirely due to Quanergy’s own performance. Some of the frontrunners in the autonomous driving industry, such as Alphabet Inc.’s Waymo, developed their own lidar and have been slower-than-expected to deliver fully driverless vehicles. Enthusiasm for lidar companies among investors has been cooling for several years.
But there were also mounting complaints about Eldada’s management. Former employees have said Quanergy’s leadership misled them about equity options they received as part of their compensation. Akram Benmbarek, a former Quanergy executive, sued the company last May over the way it handled his stock options. Chief Financial Officer Patrick Archambault said last year that Quanergy had reviewed pending litigation with a former employee and determined that it was “completely without merit.“
In interviews in 2018, Eldada dismissed concerns around the company’s finances. In a statement in October 2018, the company said it had secured new funding in a round led by a “global top-tier fund” at a valuation exceeding $2 billion. He said the “level of happiness is high” among employees.
Much of the new financing came from Eldada and Tianyue Yu, another Quanergy founder, according to people familiar with the company who asked not to be named discussing private business dealings. Quanergy initiated a $75 million financing round in March 2018, and managed to raise $25 million, according to a regulatory filing later that year. Another filing said Quanergy began a $150 million offering that October and raised just over $20 million.
Quanergy didn’t respond to requests for comment beyond its statement, which touted its sensors designed for the security and transportation sectors. Eldada, it said, “will continue his support of the company as a consultant and evangelist.”
(Updates with more details after third paragraph.)
--With assistance from Liana Baker.
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