Amazon is said to be in talks to acquire Zoox, a self-driving start-up and is expected to announce a deal as early as today for upwards of $1 billion, which would mark the group’s first purchase of a self-driving start-up.
Why it matters: While Apple, Google and others have invested in self-driving technology, Amazon is the one whose core business could benefit the most, given how much the company spends to deliver goods to consumers.
Founded in 2014, Zoox wants to create a driverless system, build a ride-hailing network and manufacture a bespoke autonomous vehicle at scale. Unlike Cruise, the self-driving company backed by General Motors, or Argo AI, which has support from Volkswagen and Ford, Zoox would require huge funding but does not have a major automotive partner.
Like many other companies this year, Zoox has suffered with the coronavirus crisis. It has grounded its fleet and the company has been forced to lay off about 100 employees, representing 10 per cent of its workforce.
Amazon was a lead investor in a $530m funding round for Aurora, a rival autonomy start-up led by Chris Urmson, former chief engineer of Waymo. Before coronavirus, Zoox’s test fleet of modified Toyota Highlander sport utility vehicles were a common sight in San Francisco and Las Vegas. But the company has also developed a fully autonomous vehicle that lacks a steering wheel or pedals and features carriage-style seating.
That vehicle has not been introduced to the public but a service using it was scheduled to be launched in trial format this year before being deployed more widely next year.
Two years ago, Zoox was valued by investors at $3.2bn, when it raised $500m. The company’s backers include Breyer Capital, led by the billionaire venture capitalist Jim Breyer, and the Canada Pension Plan Investment Board.
A person close to the matter said Toyota and Zoox held several discussions late last year about the Japanese carmaker taking a stake in the company and Amazon has not commented on the matter.
Earlier this year Zoox CEO Aicha Evans said that the company was in talks with strategic partners and corporate investors about raising more money. The Wall Street Journal reported last month that Zoox and Amazon were in advanced talks.
Between the lines: Zoox has been by far the most ambitious self-driving tech company as it’s been working on developing a fully integrated vehicle, not just the core autonomous technology.
- Zoox planned from the beginning to develop the technology, build a car and operate a robotaxi service. Not even Waymo is trying to bite off that much (although Cruise is).
- Developing a car costs billions of dollars, so Amazon will have to invest a lot more if it intends for Zoox to stay on that path.
- It’s unclear what exactly Amazon wants to do with Zoox’s technology — use parts of its technology to apply to warehouse robots, delivery vehicles and other needs, or keep its whole project going.
- Zoox has already raised about $1 billion in funding — and once was valued at $3.2 billion
