Amazon has agreed to pay more than $1 billion (Dh3.67bn) to buy Zoox, an early developer of self-driving cars, the company said on Friday.
The tech giant said on Friday that its acquisition of Zoox, a California company "working to design autonomous ride-hailing vehicles from the ground up" will help "bring their vision of autonomous ride-hailing to reality".
"Zoox is working to imagine, invent, and design a world-class autonomous ride-hailing experience," said Jeff Wilke, Amazon’s chief executive, Worldwide Consumer, in a statement on the company's website. "Like Amazon, Zoox is passionate about innovation and about its customers, and we're excited to help the talented Zoox team to bring their vision to reality in the years ahead."
Amazon said Aicha Evans, Zoox chief executive, and Jesse Levinson, Zoox co-founder and chief technology officer, will continue to lead the Zoox team "as they innovate and drive towards their mission".
Amazon will reportedly work with Zoox to create a ride-hailing fleet to compete with Waymo, the self-driving industry leader backed by Alphabet. However, analysts expect Amazon could also use automated cars to deliver goods to customers.
Advanced talks between Amazon and Zoox were first reported last month.
Founded in 2014, Zoox has raised $1bn and was valued at $3.2bn after a 2018 funding round.
Investors in the California-based start-up include Breyer Capital, the Canada Pension Plan Investment Board, Lux Capital, Draper Fisher Jurvetson and Australian billionaire Mike Cannon-Brookes.
The company had planned to launch a pilot programme for its ride-sharing service this year, but vehicle testing was halted by the coronavirus outbreak.
Zoox made about 100 employees redundant in April while rival Cruise, a division of General Motors, shed 150 staff.
Even before the pandemic, the industry faced challenges. Since Waymo, which is valued at more than $30bn, was unveiled in Arizona in late 2018, it has not expanded elsewhere.
Amazon has stepped up its investment in the car sector, participating in a $530 million funding round early last year in self-driving car start-up Aurora. It also purchased a stake in electric lorry maker Rivian over several funding rounds last year.
The potential for Amazon to develop a “more efficient long-term delivery network” with Zoox technology could save the company $20bn a year, Morgan Stanley analysts said last month.
The Zoox deal would be comparable to Amazon’s 2009 $1.2bn acquisition of retailer Zappos, its second-biggest deal after its $13.7bn purchase of Whole Foods in 2017.
"This acquisition solidifies Zoox's impact on the autonomous driving industry," said Aicha Evans, chief executive of Zoox. "We now have an even greater opportunity to realise a fully autonomous future."