Amazon has acquired self-driving start-up Zoox for more than $1.2bn, marking the ecommerce group’s biggest investment into the autonomous vehicle sector.
The deal is set to be announced on Friday, according to two people familiar with the matter.
One of the people said Amazon would work with Zoox to create a ride-hailing fleet, pitting the ecommerce group against Waymo, the self-driving industry leader backed by Alphabet.
However, some analysts expect Amazon to focus on integrating autonomous technology into its delivery network.
Advanced talks between Amazon and Zoox were first reported in May. Neither company has confirmed the talks and both declined to comment.
Zoox was founded in 2014 and valued at $3.2bn in July 2018. Before coronavirus halted vehicle testing, the company had planned to launch a pilot programme for its ride-sharing service this year.
The health crisis has hit companies specialising in developing robotaxi services particularly hard. Zoox made about 100 employees redundant in April while rival Cruise, a division of GM, shed 150 staff.
The industry faced challenges even before the pandemic. Only Waymo has launched a true driverless service. But since it was unveiled in Arizona in late 2018, the company has not expanded elsewhere. Valued at more than $30bn, Waymo is developing self-driving lorries in addition to passenger vehicles.
Analysts at Morgan Stanley said last month the potential for Amazon to develop a “more efficient long-term delivery network” with Zoox technology could save the company $20bn a year.
Amazon has invested heavily in same-day delivery and demand for its services has been boosted by coronavirus lockdowns in the US, pushing its stock up 45 per cent this year to a valuation of $1.37tn.
The deal would be Amazon’s second-biggest acquisition since the 2009 purchase of online shoe retailer Zappos for $1.2bn. Amazon’s biggest deal was the 2017 acquisition of Whole Foods, the upmarket grocer, for $13.7bn, according to Dealogic.
The only Big Tech deal this year that is comparable in size is Intel’s $900m purchase of Moovit, a mobility-as-a-service company, in May.
News of the deal was first reported by The Information.
One person said Zoox management will report to Jeff Wilke, Amazon’s head of worldwide consumer and a key deputy to chief executive Jeff Bezos.
Aicha Evans, chief executive of Zoox and a former Intel executive, and Jesse Levinson, co-founder and chief technology officer, will both stay at the company, according to the people familiar with the deal.
Zoox is expected to operate as an independent company along the lines of Twitch, the video streaming service Amazon acquired in 2014.
The company’s place within the Amazon empire, including what sort of cash infusion it would receive to keep developing its technology, was an important part of the talks.
Zoox has raised close to $1bn since its founding. Backers include Breyer Capital, the Canada Pension Plan Investment Board, Lux Capital and the Australian billionaire Mike Cannon-Brookes, co-chief executive of software company Atlassian.