Amazon is making an ambitious transportation bet by acquiring autonomous electric vehicle start-up Zoox for $1.2 billion in a deal that creates technology synergy potential with its fast-expanding delivery fleet.
With the headline-making move, the US e-commerce and technology giant is driving into direct competition with Google-linked Waymo, Uber, Lyft and car makers such as Tesla in the race to develop safe and reliable self-driving vehicles.
Amazon said on Friday that it has agreed to acquire Zoox, a six-year-old California-based company that designs purpose-built, zero-emission vehicles for ride-hailing customers. So far, self-driving Zoox vehicles have been road-tested in real-life conditions in San Francisco and Las Vegas.
"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."
The takeover is worth $1.2 billion, according to the Financial Times, which is far less than Zoox’s $3.2 billion valuation back in 2018. Zoox has been forced to delay a pilot programme planned for earlier this year due to the impact of the Covid-19 pandemic and lay off about 100 of its 1,000 staff, it reported.
Founded in 2014, Zoox had raised nearly $1 billion in funding before the Amazon deal, according to TechCrunch. The US technology portal speculated that although Zoox has been focused on passenger transportation so far, its in-house technology “could easily translate” to Amazon’s logistics operations for package delivery.
Amazon confirmed that Aicha Evans, Zoox CEO since early 2019, and Jesse Levinson, Zoox co-founder and CTO, will continue to lead the company as a standalone business.
"This acquisition solidifies Zoox's impact on the autonomous driving industry," said Evans. "We have made great strides with our purpose-built approach to safe, autonomous mobility, and our exceptionally talented team working every day to realize that vision. We now have an even greater opportunity to realize a fully autonomous future."
"Since Zoox's inception six years ago, we have been singularly focused on our ground-up approach to autonomous mobility," added Levinson. "Amazon's support will markedly accelerate our path to delivering safe, clean, and enjoyable transportation to the world."
Amazon has previously led a $700 million investment in electric vehicles maker Rivian and made a $440m order for 100,000 electric vehicles from the company by 2030. It has also invested in another autonomous vehicles firm Aurora.
Green light for Deliveroo investment
Meanwhile, Amazon has been given a green light from UK competition authorities to buy a 16% stake in bike courier firm Deliveroo, which specializes in restaurant deliveries in Britain and other large consumer markets.
Amazon planned to lead a $575 million funding round in the UK-based firm, gaining a minority stake. But the Competition and Markets Authority had blocked the investment since last year over fears that it would reduce competition in the British restaurant delivery service market.
But in April the CMA provisionally cleared the deal following concerns that Deliveroo might be forced out of business by the financial impact of the Covid-19 pandemic which closed restaurants in many of its markets. The CMA said it considered that “the imminent exit of Deliveroo would have been worse for competition than allowing the Amazon investment to proceed”.
In an updated provisional decision last week, the authority said Deliveroo’s finances have improved and it is no longer likely to exit the market without the Amazon investment. Moreover, it now had no competition concerns about the deal. However, the CMA warned another investigation might follow if Amazon were to take full control of Deliveroo.
Stuart McIntosh, head of the CMA inquiry, said: “We’ve carefully considered how this investment could affect competition between the two businesses in future. Looking closely at the size of the shareholding and how it will affect Amazon’s incentives, as well as the competition that the businesses will continue to face in food delivery and convenience groceries, we’ve found that the investment should not have a negative impact on customers.”
