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Amazon is buying self-driving vehicle startup Zoox

June 26, 2020, 2:27 PM UTC Inc. is buying autonomous vehicle startup Zoox Inc., a move that could potentially help the e-commerce giant slash delivery costs and create a formidable opponent to ride-hailing and food-delivery companies.

Terms of the deal were not announced in a statement Friday. Aicha Evans, Zoox’s chief executive officer, and Jesse Levinson, co-founder and chief technology officer, will continue to lead the company as a standalone business.

“Zoox is working to imagine, invent, and design a world-class autonomous ride-hailing experience,” said Jeff Wilke, the head of Amazon’s worldwide retail business.

Shipping costs are one of Amazon’s largest expenses, and Zoox could help the company shave off more than $20 billion annually, Morgan Stanley analysts have estimated.

Still, autonomous vehicles have been a target of Silicon Valley giants and venture capital investors for years, but technical and regulatory hurdles have made getting safe AVs on the road a longer slog than the boosters had hoped.

Bulking up in driverless technology extends Amazon’s efforts to build its own third-party logistics network. Last year, Amazon invested along with Silicon Valley venture firm Sequoia Capital in Aurora Innovation Inc., a self-driving startup led by the former heads of Google’s driverless car project and Tesla Inc.’s Autopilot team. Amazon has also backed Rivian Automotive Inc., the electric pickup and SUV maker.

Zoox, a 1,000-person startup based in Foster City, California, has been developing a prototype for driverless cars to ferry passengers around in urban areas via an app, but Amazon could potentially also use the vehicles to deliver packages. Seattle-based Amazon has also tested sidewalk crawling robots and drones as alternative delivery methods.

In the statement, Amazon highlighted Zoox’s “ground-up vehicle” that “focuses on the ride-hailing customer.”

Founded in 2014, Zoox had outsize 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 $3.2 billion, the startup’s board voted to oust Chief Executive Officer Tim Kentley-Klay. The executive criticized the move, saying the directors were “optimizing for a little money in hand at the expense of profound progress.”