Amazon eyeing acquisition of driverless vehicle startup Zoox

Zoox, which was valued at $3.2bn after a 2018 funding round could help Amazon with its rising shipping costs Inc. boxes sit at a United States Postal Service (USPS) facility in Fairfax, Virginia, U.S., on Tuesday, May 19, 2020. The Postal Service in recent weeks has sought bids from consulting firms to reassess what the agency charges companies such as Amazon, UPS and FedEx to deliver products on their behalf between a post office and a customer's home, the Washington Post reported last week. Photographer: Andrew Harrer/Bloomberg
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Amazon is in talks to buy driverless vehicle startup Zoox, according to people familiar with the matter, a deal that would accelerate the e-commerce giant’s automation efforts.

Other companies in the automotive and chip industries have also held talks with Zoox about a potential investment, the people said. At least one other business besides Amazon has offered to buy the company, they added.

Zoox is unlikely to sell for less than the $1 billion (Dh3.67bn) that it has already raised, according to the people, who asked not to be identified discussing private negotiations.

“Zoox has been receiving interest in a strategic transaction from multiple parties and has been working with Qatalyst Partners to evaluate such interest,” the startup said. It declined to comment on Amazon’s interest. A spokeswoman for Amazon declined to comment.

Zoox had outsized ambition and financial backing. The startup wanted to build a fully driverless car by this year. However, after a 2018 funding round that valued Zoox at $3.2bn, the startup’s board voted to oust chief executive Tim Kentley-Klay. The executive criticised the move, saying the directors were “optimizing for a little money in hand at the expense of profound progress.”

Dow Jones reported that Amazon is in advanced talks to buy Zoox for less than the $3.2bn valuation from 2018.

Amazon is willing to spend heavily to automate its e-commerce business. The online retail giant purchased warehouse robot-maker Kiva Systems in 2012 for $775 million and now has tens of thousands of robots in warehouses around the world.

Paying drivers to deliver packages is still one of the biggest costs in the company’s operation, though. Chief executive Jeff Bezos announced plans for drone delivery in 2013, though they have yet to materialise at scale.

Last year, Amazon revealed an experimental delivery robot called Scout in the Seattle area that rolls on sidewalks like a shopping cart.

Buying Zoox could help Amazon “manage rising shipping costs that we project will exceed $60bn by 2025,” Bloomberg Intelligence analysts Jitendra Waral and April Kim wrote in a research note on Tuesday.