It’s been a little over a month since we first heard Zoox needed cash and was up for sale, and that Amazon might be interested. Now just this evening, Amir Efrati at The Information broke the story that the deal is done, and could be announced as soon as Friday morning:

Amazon has agreed to pay more than $1 billion to buy Zoox, an early developer of autonomous vehicles, marking the entrance of one of the world’s most deep-pocketed companies in the long race to develop driverless cars, according to people with knowledge of the deal. 

The Information

People are starting to open their eyes to the impending autonomy revolution, and nobody wants to be left out. This is a technology that could potentially destroy Amazon if they don’t harness it before someone else does. Bezos can clearly see how Autopilot is progressing, and he doesn’t want to be left at Elon’s mercy, or be dependent on Alphabet. Instead, he’ll take a shot of his own.

You may remember Zoox as the self driving startup that earlier this year settled a lawsuit with Tesla over stolen documents. Zoox agreed to pay monetary damages to Tesla to end the proceedings.

The deal, which could be announced as early as Friday, would give Amazon control of a nearly 1,000-person startup that has designed a prototype vehicle to ferry passengers in urban areas. It couldn’t be learned whether Amazon also intends to use Zoox to automate vehicles that deliver goods to customers. Amazon has already begun experimenting with such technologies, from package-toting robots that travel on sidewalks to drones that bring orders to customers from the air.  

The Information

Very curious to know what Amazon’s plan for Zoox is. Presumably they’d use it for delivery vehicles? But there’s a million possibilities. Will they keep it a separate company? Fold it into Amazon? Repurpose the product?

For six years, Zoox has been building a self-driving, electric “bi-directional” vehicle that has no steering wheel. It also has no front or back—meaning it can drive comfortably in both directions, a design intended to allow it to change course quickly if it encounters obstacles in narrow streets, for instance. Amazon will likely still have to invest billions of dollars to make Zoox’s vehicles a reality.

The Information

That doesn’t really sound like Bezos’s kind of strategy. But when the stakes are high enough, maybe it makes sense to try something risky.

Zoox investors include Lux Capital, DFJ and Atlassian co-founder Michael Cannon-Brooks. Investors gave the company a post-money valuation as high as $3.2 billion during a round in 2018. That valuation was viewed skeptically by some observers because, as The Information previously reported, some investors in the round negotiated terms to receive their money back first before previous shareholders in the event of a sale, and receive extra shares to fully make up for any drop if Zoox went public at a share price lower than what they paid, also known as a “ratchet.” That arrangement can dilute the equity held by other shareholders. 

The Information

Some of these Zoox investors are also Tesla short sellers.

Amazon has also made a bet on the automation of long-haul trucking through an investment in self-driving vehicle developer Aurora Innovation. It has also let some of Aurora’s rivals transport some Amazon cargo as an experiment as part of those companies’ on-road tests. As with robotaxi development, automated truck or delivery vehicles are far from being perfected. Amazon separately invested in electric vehicle developer Rivian and has ordered delivery vans from the company to be manufactured in several years. 

The Information

So… you’re investing in Aurora, but buying Zoox? How exactly does Amazon’s strategy fit together again? It seems to make about as much sense as legacy auto’s.

Waymo operates some driverless vans for taxi customers in suburban Phoenix but internally has acknowledged that doing so in a denser area like San Francisco is an “order of magnitude more difficult.” Cruise, whose minority investors include SoftBank, hasn’t met its earlier plans to launch a commercial robotaxi service in San Francisco. Notably, Cruise is working with Honda to develop a Zoox-like vehicle for shared taxi rides.

The Information

That’s okay, just keep trying to get Chandler, Arizona working. Autopilot will handle the rest of world, where lives need to be saved today.

In the first few years of Zoox’s life, under its founder and former CEO Tim Kentley-Klay, a former advertising designer, the company steered clear of partnering with existing automakers because he and CTO Jesse Levinson, a former Stanford University researcher, believed that it would be better to build a brand new type of vehicle made especially for automated driving, rather than to retrofit existing vehicles the way Waymo, Cruise and others have done. 

Zoox’s board fired Kentley-Klay in 2018 and installed former Intel executive Aicha Evans as CEO. The company has been trying to raise more money ever since, taking on convertible debt last fall. The company laid off about 100 employees and at least dozens of contractors earlier this year as it tried to conserve cash.

The Information

Sounds like Bezos found a real winner here. It wasn’t love at first sight, but they’re the last two people at the dance without a partner and Tesla’s progress is making them feel desperate. Zoox needs Amazon’s piles of cash, and Amazon needs to protect against existential threats to their retail business. Let’s see how this goes.

The Amazon-Zoox deal would be one of the most high-profile acquisitions in the field of vehicle automation, alongside GM buying Cruise, Uber buying Otto, Ford and Volkswagen together acquiring a majority of Argo AI and Intel buying Mobileye, a commercially successful developer of driver-assistance features such as automatic emergency braking.

The Information

The autonomy race is heating up. Jeff Bezos has entered the ring.

Read the full story at The Information