Amazon is reportedly devising a major venture into the autonomous vehicle industry. The e-commerce-to-cloud giant is said to be in “advanced” talks, to acquire self driving start-up Zoox, the Wall Street Journal reports.
While Amazon did lead a major funding round for autonomous vehicle start-up Aurora last year, the deal which is currently in talks would mark the logistics giant’s first full- blown acquisition in the Industry, and perhaps its first direct entry into the highly lucrative yet limited sector.
Amazon’s purchase however, would value Zoox below its estimated market value of $3.2 billion, a number that it had achieved during its last funding round in 2018. According to people familiar with the matter, the company will not sell for less than $1 billion that it has already raised, but would still go seriously undervalued. While the discussion is in progress, a final deal is still weeks away and may not even come through for all we know.
Zoox was cofounded in 2014 by artist and designer Tim Ketley-Klay and Stanford computer scientist Jesse Levinson. In essence, the company seeks to build robotaxis and delivery vehicles that amalgamate aspects of autonomous driving technology and electric powertrains. The service aims to capture its customer base from dense urban settings.
While the company has had a heavy capital infusion since it began, its cost-intensive plans would require much more capital to be poured in. The potential sale is a result of its inability to acquire those several billion dollars, specially in a climate such as the one we are living in right now. Additionally, unlike other autonomous vehicle companies such as Cruise which is backed by general Motors, Zoox does not have a major automotive partner. Last month, the company also had to lay of 10% of its workforce owing to the coronavirus pandemic.
Meanwhile for Amazon, the acquisition has a set of distinct implications. As a logistics giant, one of Amazon’s biggest expense include paying drivers to deliver packages. There have been plans to employ drone deliveries and even a delivery robot, but none of these have materialised. According to Bloomberg analysts, the purchase of Zoox could help Amazon manage its shipping costs, which are expected to cross $60 billion in the next five years alone.
The autonomous vehicle industry is expected to grow positively in the coming years. Owing to this, Amazon is not the only entity looking to acquire Zoox. Reportedly, other chip and automotive industries have also held talks with start-up, seeking to make investments in it.
