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Amazon Close to Finalizing its Purchase of Autonomous Vehicle Startup Zoox

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【Summary】According to a Wall Street Journal report, Amazon is close to finalizing a deal with self-driving car company Zoox that would give the enormous tech company a foothold in the autonomous race.

Original Vineeth Joel Patel    Jun 06, 2020 7:00 AM PT
Amazon Close to Finalizing its Purchase of Autonomous Vehicle Startup Zoox

Amazon has its foot in so many areas that it's almost too much to comprehend. Whole Foods, IMDb, Twitch, Audible, Zappos, Goodreads, and LivingSocial are just a few companies that fall under Amazon's wide reach. One area where Amazon hasn't really ventured into yet is the automotive realm. The company may have a deal with Rivian for electric delivery vans, but autonomous vehicles aren't on the docket yet. That, if recent reports are to be believed, will change in the very near future.

Saving Money On Drivers

According to the Wall Street Journal, unnamed sources with knowledge of the situation claim that Amazon is reportedly holding talks with Silicon Valley-based startup Zoox. The outlet claims that a deal could be "weeks away."

If you're wondering why Amazon would ever consider buying a startup looking into developing self-driving car technology, it all boils down to saving money. Bloomberg claims that shipping costs are one of Amazon's largest expenses. 

Research by Morgan Stanley's internet, auto, and transport analysts indicates that the company could spend upwards of $90 billion on just shipping items in the near future. They also believe that Amazon could save roughly $20 billion annually by incorporating autonomous technology into its delivery vehicles.

"Autonomous technology is a natural extension of Amazon's efforts to build its own third party logistics network," said Morgan Stanley's analysts. Purchasing a startup with autonomous technology could put Amazon up against companies like General Motors and Tesla. It would also open doors for Amazon to enter ride-sharing and food delivery segments. Beyond that, it could even send a ripple through traditional shipping companies like USPS and FedEx.

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Zoox Is A Hot Startup

Bloomberg claims that Amazon isn't the only company that's interested in purchasing Zoox. The outlet states that automotive and chip companies have held conversations with Zoox in regard to a purchase deal. Unnamed sources believe the deal would go for at least $1 billion.

Zoox came out six years ago with a focus on developing driverless technology for electric taxis. The startup recently posted a video on a Toyota Highlander that was modified with its technology driving around autonomously around San Francisco. In the video, the SUV also managed a few maneuvers. The company originally had plans to unveil an autonomous vehicle this year.

The acquisition of Zoox would be another step toward automating the majority of Amazon's businesses. In 2012, Amazon purchased warehouse robot-maker Kiva Systems Inc. for $775 million. The purchase led to the introduction of tens of thousands of robots in its warehouses. 

Drone deliveries started to become a thing in 2013, but still haven't become mainstream yet, though the company recently introduced Scout driverless delivery machines. Amazon also took part in a $530 million round of funding in 2019 for Aurora Innovation – a Silicon Valley-based startup focusing on autonomous technology.

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