Getting Into the Game: Amazon Purchases AV Startup Zoox for an Undisclosed Sum

Matt Posky
by Matt Posky

Always eager to slash delivery costs — especially if the government opts to stop subsidizing the company via the U.S. Postal Service — Amazon has been getting chummy with EV startups. It’s also begun exploring new business opportunities in regard to food delivery and ride hailing, resulting in sizable investments into both sectors.

On Friday, Amazon announced it will acquire California-based Zoox to help it further those goals. Coming off a staffing reduction of about 10 percent to contend with the pandemic, the company is currently focused on delivering an symmetrical, self-driving, zero-emissions vehicle that can compete on the currently nonexistent robo-taxi market. While the world’s 13th largest company (by revenue) seems like it would make good use of the property to advance its autonomous delivery program, corporate messaging seems to indicate Amazon is more interested in Zoox’s expertise in people moving.

From Amazon:

Amazon and Zoox are pleased to announce that we’ve signed an agreement for Amazon to acquire Zoox. Zoox is a forward-thinking team that is pioneering the future of ride-hailing by designing autonomous technology from the ground up with passengers front-of-mind. Aicha Evans, Zoox CEO, and Jesse Levinson, Zoox co-founder and CTO, will continue to lead Zoox as a standalone business as they innovate and drive towards their mission.

“Zoox is working to imagine, invent, and design a world-class autonomous ride-hailing experience,” said Jeff Wilke, Amazon’s CEO, Worldwide Consumer. “Like Amazon, Zoox is passionate about innovation and about its customers, and we’re excited to help the talented Zoox team to bring their vision to reality in the years ahead.”

However, analysts who are perhaps more enthusiastic about the prospect of autonomy than we are have suggested Zoox could likewise be a boon to Amazon’s delivery business. Back in May, Morgan Stanley (via Bloomberg) suggested the e-commerce giant buying up Zoox could save it $20 billion in annual delivery costs.

“Autonomous technology is a natural extension of Amazon’s efforts to build its own third party logistics network,” Morgan Stanley’s analysts wrote, estimating that the firm’s yearly delivery expenses could soon exceed $90 billion. It also suggested that acquiring Zoox would allow it to better compete with Tesla and General Motors.

Despite being theoretically possible on a long enough timeline, we’d argue Amazon supplanting the world’s most famous automakers is pretty raw speculation. That said, Amazon is sticking its fingers in quite a few pies these days. It’s already devoted a subset of its core business exclusively to automotive products and has snuck Alexa/Echo into a number of center consoles. Anything is possible with enough cash — something Amazon has in abundance.

The linchpin will be regulation and how the technology continues to develop. Thus far, it’s been slower than hoped, with governments just now starting to confront the very real problem of how liability works when no one is technically behind the wheel. Nobody seems sure of how to regulate these types of vehicles as development targets are missed by all — including Zoox. The 900-person startup (post coronavirus layoffs) was supposed to deliver its first vehicle this year, but needed additional support to maintain its development program.

The only question remaining is how much Zoox went for. Axios claimed it went for a cool $1.2 billion, meaning Amazon got a pretty sweet deal vs its $3.2-billion valuation from a few years ago, but that sum has yet to be confirmed by either company.

[Images: Zoox]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • APaGttH APaGttH on Jun 29, 2020

    Full disclosure: Former AMZN employee, AMZN shareholder TL;DR: AMZN didn't buy this because they're going to build self-driving cars The idea that vehicle autonomy is coming anytime soon is basically dead at this point. Certainly on roadways. Almost everyone working on the technology is either looking for someone to buy them out, cutting staff, and reducing expectations. Tesla has been saying give us six more months or just you wait and see for 4 years now. My speculation: 1) They bought this company for technology that can be used for other systems in needs (autonomy in warehouses, DCs, or on private property), or... 2) They bought the company for IP and patents that they need for something else, or... 3) They bought the company because of the development and leadership brains there-in, to work on other projects or... 4) They bought the company because someone else was interested in them they perceived was a bigger business threat to take them off the market 5) With Alexa working its way into more vehicles, maybe there is some kind of integration of some sort with the technology that can extend to Alexa and provide other services, not related to autonomous driving, but driving itself (no idea what that could be) Freely admit I've been a vehicle autonomy curmudgeon saying 4 or 5 years ago that we were still decades away (my guess is still 15 to 20 years away now) for the required processing power to catch up via Moore's Law and the required improvements and cost reductions in cameras, sensors, etc.). Even when technology catches up, there are massive ethical and legal questions that need to be answered.

  • SoCalMikester SoCalMikester on Jun 29, 2020

    boats and planes still need pilots and captains, and those are 2 things that should EASILY be autonomous. vehicles driving through crowded cities with no driver is a pipe dream.

  • Calrson Fan Jeff - Agree with what you said. I think currently an EV pick-up could work in a commercial/fleet application. As someone on this site stated, w/current tech. battery vehicles just do not scale well. EBFlex - No one wanted to hate the Cyber Truck more than me but I can't ignore all the new technology and innovative thinking that went into it. There is a lot I like about it. GM, Ford & Ram should incorporate some it's design cues into their ICE trucks.
  • Michael S6 Very confusing if the move is permanent or temporary.
  • Jrhurren Worked in Detroit 18 years, live 20 minutes away. Ren Cen is a gem, but a very terrible design inside. I’m surprised GM stuck it out as long as they did there.
  • Carson D I thought that this was going to be a comparison of BFGoodrich's different truck tires.
  • Tassos Jong-iL North Korea is saving pokemon cards and amibos to buy GM in 10 years, we hope.