Weekly Brief: Amazon Ready to Disrupt the Driverless Industry

Commentary By Andrew Tolve

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29th June 2020

Amazon’s purchase of self-driving car specialist Zoox for $1.2Bn last week will ripple across the autonomous car industry.

Zoox is a six-year-old start-up based out of Silicon Valley. It has autonomous vehicles on the road in Arizona and Nevada and is focused on delivering complete autonomy in complex environments, from fast-moving highways to busy city streets packed with cabbies, bikers and pedestrians. It plans to remain independent in the same way that Cruise remained independent when it entered General Motors’ orbit back in 2016. The company will maintain its own operations but everything that it does from now on will be directed toward Amazon’s short- and long-term benefit.

Talk about a marriage of our times. The self-driving car industry was already on its heels before coronavirus came along. Now, tack on the uncertainty and financial hardship of a global pandemic, and the industry is reeling. Zoox recently laid off 100 workers. Last year it was valued at $3.2Bn. It has just sold for about a third of that.

Amazon, meanwhile, has never been more valuable. Quarantine has been a boon for business as people scramble for basic necessities, indulgences and entertainment all from the safety and comfort of their homes. Amazon is now comfortably the most valuable company on the planet, worth almost a quarter of a trillion dollars, about $60Bn more valuable than Google. Jeff Bezos has long talked about his desire to usher in a world powered by drone deliveries and contactless drop-offs. In the midst of a pandemic, the need for novel ways to deliver goods to people without being dependent on other companies or human beings is more clear than ever before.

Put the two together and this is a no-brainer of an acquisition. Amazon gets a turbo boost toward achieving autonomous deliveries and Zoox gets much-needed stability and a thick wallet to keep its operations afloat. Neither company has said exactly what comes next but it’s easy to see how this will unfold. Zoox will be able to ramp up its existing pilots faster and start delivery trials similar to what Walmart has done with the likes of Nuro, Gatik AI and Waymo. Given Bezos’s temperament, expect driverless deliveries to go mainstream far sooner than robo-taxis.

Indeed, this changes everything. For years now the self-driving car industry has been a scattered free-for-all operating without much regulation. Dozens of start-ups vie for funding. Some fall off. New ones rise in their place. Amazon’s entrance into the market shows that things are starting to consolidate around a few central power brokers: Alphabet with Waymo, Tesla, Baidu, Uber and now Amazon. Don’t be surprised to see Apple join that list shortly. Also don’t be surprised if more start-ups like Zoox, struggling to stay afloat, get swallowed up into larger companies, either to eliminate the competition or tack on new specialties.

Consolidation and partnership are the new keys to survival and success in the self-driving car sector. No surprise then that as Amazon was acquiring Zoox last week, Waymo was busy partnering up with Volvo. The collaboration will see Volvo’s electric brand Polestar build a new EV platform for ride-hailing vehicles that integrates Waymo’s autonomous technology. Our Paul Myles has the full low-down.