By on June 27, 2020

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]

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22 Comments on “Getting Into the Game: Amazon Purchases AV Startup Zoox for an Undisclosed Sum...”


  • avatar
    dwford

    Is it time to start a Deathwatch for autonomous driving? This article has been up for hours and still no comments..

    Personally, Amazon putting it’s hooks into yet another industry just elicits an “Ugh” from me.

    • 0 avatar
      mcs

      It’s autonomous. It can watch itself die.

      We’ll eventually get it once the technology that we need to do it properly is complete. There are a lot of deep flaws in the current generation of AI that most of the industry pretends don’t exist. They’re happy to take all of that investor money. Maybe ten years from now the technology we need to do it right will be there. When it’s done right, it can be better than any human driver in any situation. That is what the standard has to be.

      • 0 avatar
        jalop1991

        @mcs: “There are a lot of deep flaws in the current generation of AI that most of the industry pretends don’t exist.”

        Steve Lehto just talked about one of those: facial recognition. Turns out some cops in Michigan tossed a very grainy photo at their third party AI facial recognition app, which came back with a hit. The cops didn’t even look at the result or compare it to the security cam footage; no, they just took the output from the FR app and immediately went out and arrested that guy.

        Turned out that even a 2 year old could have looked at both pictures and immediately known that they didn’t match, but the lazy cops couldn’t be bothered. Their AI system told them they had a hit, so they just went and handcuffed the guy in his front yard and hauled him off.

        People so badly want to believe, even to the point of cops not even doing the basics of their jobs.

      • 0 avatar
        dwford

        It does really seem like anyone can put out a shingle with “autonomous” in the name and get a quick billion out of one of these auto or tech companies.

        • 0 avatar
          mcs

          ” anyone can put out a shingle with “autonomous” in the name and get a quick billion”

          Not if you’re honest with them and tell them how far away it really is from actually working properly. Then it’s thanks, have a good life and good luck.

          The downside of that money is the pressure to complete a product as soon as possible rather than engage in the vast amount of research that needs to be done.

  • avatar
    ect

    Matt, your right wing bias is showing. My Amazon orders get delivered by a mix of Amazon, UPS, FedEx and USPS – just as the BI article you link to points out.

    Amazon has undoubtedly been very aggressive about negotiating delivery charges, and I’m sure that UPS, FedEx, USPS and others have been equally aggressive about negotiating their fees. That’s what business is about. Including USPS.

    Tell me this – if USPS has been busy subsidizing Amazon, how is it that Amazon has found it profitable to build up its own delivery infrastructure to the point that (per the BI article) it now accounts for about 50% of Amazon deliveries? And most of this increase has been met by reducing the business that Amazon does with USPS, while UPS and FedEx business has been stable – again, according to the BI article you link to.

    Stick to cars, Matt.

    • 0 avatar
      jalop1991

      The Ruthless Reality of Amazon’s One-Day Shipping:

      https://gizmodo.com/the-ruthless-reality-of-amazons-one-day-shipping-1835513901

      Inside Documents Show How Amazon Chose Speed Over Safety in Building Its Delivery Network:

      https://www.msn.com/en-us/money/companies/inside-documents-show-how-amazon-chose-speed-over-safety-in-building-its-delivery-network/ar-BBYhKxz

      If that’s not enough to get you to dump Amazon:

      https://www.theverge.com/2018/12/19/18140799/amazon-marketplace-scams-seller-court-appeal-reinstatement

      https://www.webretailer.com/lean-commerce/amazon-to-ebay-arbitrage/#/

      https://www.mcall.com/business/mc-sg-amazon-warehouse-series-storygallery.html

      https://www.msn.com/en-us/money/companies/7-reasons-why-i-refuse-to-buy-anything-on-amazon/ss-AAIdUTf

      How to shop without Amazon:

      https://www.msn.com/en-us/money/personalfinance/how-to-shop-without-amazon/ar-BBYdxO3

      • 0 avatar
        ravenuer

        I’ve been pretty happy with Amazon, never had any problems.

        • 0 avatar
          jalop1991

          I understand you’ve “never had any problems” with Amazon.

          That simply means the only thing you pay attention to is what you bought and how you received it. You care nothing about what that costs society as a whole.

      • 0 avatar
        brn

        But Amazon let’s your average consumer sit on their ass and buy items as perceived good prices, that show up the next day. Who cares if it destroys the economy, as long as I get what I want? /s

        It’s walmart taken to the next level.

        • 0 avatar
          jalop1991

          I’ve gone BACK to WalMart, for that matter. And Sam’s Club. In the last 10 years, they’ve clearly expended quite a bit of effort to up their game. They’re not the crappy experience they used to be.

          And it’s that much more business Amazon isn’t getting.

          As far as Amazon and “good prices” goes, my guess is that all the Jabba slobs lying around ordering from Amazon have never, ever, not once bothered to shop anywhere else for their Chinesium fix. If so, they’d discover that Amazon’s prices for that crap are way higher than they thought.

          But hey, they’re too lazy.

          • 0 avatar
            FreedMike

            So…Amazon is awful and the people who buy from them are lazy and stupid.

            Geez…seriously?

            As far as “buying from Amazon hurts society” nonsense is concerned, buying from ANYONE has an impact on society. Want to buy from Mom ‘n Pop on the corner? OK. If that happens enough, it deprives people of jobs at whatever big box store Mom ‘n Pop competes with.

            If you want to make an impact on society, stop trashing (insert name of whatever company you dislike here) and start demanding our country invest in producing new technologies and all the education it’ll take to make those jobs a reality. Amazon (or whatever company you think is Responsible For Destroying America) is just another example of what happens when a company that executes an idea better than its’ competitors – the competitors suffer. That’s the way a market economy works.

    • 0 avatar
      FreedMike

      ECT is correct…EVERY e-commerce company is “subsidized by the USPS,” and it’s been going on for a LONG time.

      Heard of Sears, or JC Penney?

      • 0 avatar
        jalop1991

        “So…Amazon is awful and the people who buy from them are lazy and stupid. ”

        Yes.

        If you don’t see the scope of the negative impact Amazon has on society, you’re willing yourself to be blind.

        If you defend Amazon, you’re no better than Amazon. It’s too bad people feel they have no other choice than to work there under Amazon’s conditions.

  • avatar
    ect

    20 years ago, I was involved with a tech startup that was focused on a voice recognition application. At the time, I came to say of independent voice recognition that it was the technology of the the future – and always would be.

    That judgment was (as I knew at the time, but why stop that getting in the way of a good line?) premature. Technology being technology, it was only a matter of time before reliable independent voice recognition became a reality.

    I feel the same way about autonomous driving. Not ready for prime time at the moment, but inevitable. Never bet against technology, once it gets its teeth into an issue.

    • 0 avatar
      dwford

      I think that we have been told so many rosy stories from all the automakers and startups about how fast autonomous driving would roll out. Turns out it’s nowhere near ready. I see autonomous working best on highway drives, which are less complex driving situations. So we see Cadillac’s Super Cruise and Ford’s new system, but at the moment they require constant driver attention, making them basically useless for what people expect from autonomous driving systems.

  • avatar
    ravenuer

    They must stay up late at night dreaming up these names….Zoox?

    • 0 avatar
      jalop1991

      Some moron heard “Zoiks!” as he watched his regular TV show, but being the moron he is, couldn’t spell it to save his life come the business meeting the next day.

    • 0 avatar
      TimK

      A mashup of zoom and sex, zoom sex — subliminal marketing at its finest! The company itself looks to be typical SillyCon Valley, lots of young Asians and an assortment of “playahs” all hoping their stock options are worth something before the magic spell dissipates.

  • avatar
    APaGttH

    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.

  • avatar
    SoCalMikester

    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.

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