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Amazon’s Latest Acquisition Increases Industry Profile

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July 10, 2020—Amazon that it will acquire Zoox, a self-driving startup founded in 2014 that has raised nearly $1 billion in funding with the goal of developing autonomous driving technology, including vehicles for the purposes of ride hailing.

Zoox will continue to exist as a standalone business, according to Amazon’s announcement. The Financial Time reported that the deal is worth $1.2 billion.

The Wall Street Journal reported at the end of May that Amazon was looking at Zoox as a potential acquisition target, and that the deal had reached the advanced stages.

Zoox has chosen one of the most expensive possible paths in the autonomous driving industry, seeking to build a fit-for-purpose self-driving passenger vehicle from the ground up, along with the software and AI end to provide its autonomous driving capabilities.

With a parent company like Amazon, it is thought that Zoox could now keep up with its primary rival Waymo, Google’s self-driving car project.

Amazon has been working on its own autonomous vehicle technology projects, including its last-mile delivery robots, which are six-wheeled sidewalk-treading bots designed to carry small packages to customer homes. The company has also invested in autonomous driving startup Aurora, and it has tested self-driving trucks powered by self-driving freight startup Embark. 

The Zoox acquisition is specifically aimed at helping the startup “bring their vision of autonomous ride-hailing to reality,” according to Amazon, so this doesn’t look to be immediately focused on Amazon’s logistics operations for package delivery. 

Meanwhile, if Zoox really does remain on course for passenger ride-hailing, that could open up a whole new market for Amazon—one which would put it head-to-head with Uber and Lyft once the autonomous driving technology matures.

Both Uber and Lyft spend millions annually recruiting drivers, and face regulatory pressure to classify them as employees in New York and California. An autonomous ride-hailing service from Amazon could have a big advantage in terms of overhead costs.

And Amazon could easily offer discounted fares to its more than 100 million Prime members, giving plenty of passengers an incentive to switch services. 

Why should shops in the aftermarket pay attention or care? For one, it’s another indication of the large player that Amazon plans to become in the space. For another, these moves could disrupt the supply chain, customer preferences, and the future of car ownership.

In a recent Reuters article, it noted that, “As consumers pay less attention to horsepower and more to streaming content and services, he expects more consumers ‘won’t really care whether you’re in a Ford or a Chrysler or a Chevrolet or a BMW.’”

Alexa, Amazon’s digital assistant, is taking a leading role in the company’s drive to get inside cars.

Amazon is collaborating with a number of automakers to embed Alexa in vehicles, and has made deals with GM, Ford, Volvo and Honda Motor Co Ltd to allow online orders to be delivered to owners’ cars.

Image: Zoox

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