Amazon rivals Tesla in AVs with the potential acquisition of Zoox

How will Amazon utilize self-driving technology to expand its empire?
2 June 2020 | 9 Shares

Zoox CEO Aicha Evans speaks onstage during TechCrunch Disrupt San Francisco 2019. Source: AFP

  • Amazon could save up to US$20 billion with the acquisition of Zoox
  • Shipping fees remain one of the highest costs at Amazon
  • The pandemic has ground the retail giant’s warehouses to a halt 

Amazon is reportedly in late-stage talks to buy Zoox, a budding startup developing autonomous vehicles (AVs).

Unlike other AV companies like Waymo, Argo, Aurora, and Cruise, Zoox is laser-focused on developing a new kind of electric-powered vehicle. The startup aims to develop a “native” AV, one that fundamentally is designed to be fully autonomous. It’s a different approach compared to their peers that aims to develop and consolidate self-driving technology before integrating it with vehicles.

Amazon’s interest in acquiring the AV startup will see an expansion and enhancement of their operations, especially in logistics.

Since Amazon’s shipping costs may reach US$90 billion in the coming years, the acquisition of Zoox will see the online retail giant save more than US$20 billion annually, an estimation provided by Morgan Stanley analysts.

In addition, self-driving technology solutions could be expanded, adapted and applied to Amazon’s warehousing and distribution processes.

Morgan Stanley’s analysts wrote: “Autonomous technology is a natural extension of Amazon’s efforts to build its own third-party logistics network,” as reported in Bloomberg.

Amazon’s ambition to turbocharge their shipping and delivery services will see the retail titan nipping at the heels of other traditional players in the logistics sector.

“From an e-commerce perspective, it could lead to a potentially even more efficient long-term delivery network (long-haul and last-mile) to compete harder against traditional retailers and other online players,” Morgan Stanley added.

In other words, Amazon is positioning itself as a clear rival against the likes of Tesla and General Motors who are presently dominating the race in AVs. Even so, the retail titan holds the potentials to compete in services like ride-sharing and food delivery services.

The online shipping firm will directly challenge the status of United Parcel Service (UPS) and FedEx as they offer autonomous middle-mile and last-mile delivery services.

In reference to the ongoing pandemic, a hard takeaway is that future-proofing your business for a crisis is no longer simply a nice-to-have contingency plan – it’s something critical for business continuity and sustainability.

Even the largest corporations are susceptible to a global crisis and enlisting the ‘appropriate’ technology can help cushion the dire impacts that come with one. 

For instance, imposed social distancing and lockdown measures have disrupted Amazon’s warehouses. Amazon’s early start in automation and the integration of robots in warehouses has seen the retail titan setting a road map to fully-autonomous warehouses, with the expected timeline to be of a decade.

In 2012, Amazon acquired warehouse robot-maker Kiva Systems for US$775 million and, since then, has deployed tens of thousands of robots in warehouses around the world.

Amazon’s lists of acquisitions continue and the current interest in autonomous vehicle startup Zoox follows a similar trajectory of their ever-expanding empire.

Besides saving millions of dollars in shipping costs, the acquisition of Zoox proves valuable for Amazon to prepare and endure another potential global crisis that could have similar far-reaching effects as the current coronavirus outbreak.

The company’s fulfillment centers suffered a hit as operations faced months of disruptions while shopping orders surge. As lockdown restrictions ease, the company is now showing signs of gradual recovery and are picking up their speed to fulfill backlog orders. 

Last year, CEO Jeff Bezos announced that Amazon had placed orders for 100,000 electric delivery vans from Rivian, an electric vehicle startup. The purchase of electric vans was made in a bid to tackle climate change and the online retail giant plans to deploy these green vehicles in 2021, with prototypes expected as early as this year.