Amazon will reportedly pay more than $1.2 billion to acquire Zoox, the Foster City, California self-driving technology company, the Financial Times (FT) reported.
While the purchase could fuel Amazon’s delivery fleet, a source familiar with the deal told the newspaper it could signal the eCommerce giant’s entry into ride-hailing.
The source said Amazon would collaborate with Zoox to create a ride-hailing fleet, taking on Waymo Co, the California-based self-driving industry leader backed by Alphabet, Google’s parent company.
Still, some analysts say the deal is more about Amazon’s mission to fold autonomous technology into its delivery network. Last year, Amazon participated in a $530 million funding round for autonomous technology firm Aurora Innovation.
Last month, PYMNTS reported Amazon was in talks to buy Zoox. Founded in 2014, it was valued at $3.2 billion four years later. Today, it’s market value is more than $30 billion, FT reported.
“We believe $1.1 billion would be a fair price for the company, representing a 65.6 percent haircut from its previous post-money valuation of $3.2 billion,” said Asad Hussain, a mobility tech analyst at PitchBook, in a note in May.
Before COVID-19 put the kibosh on it, Zoox planned to launch a ride-sharing service pilot program this year,the paper reported.
But the industry faced challenges even before the pandemic and Waymo is the only company to launch a true driverless service, FT reported.
In May, Morgan Stanley analysts said the potential for Amazon to develop a more efficient long-term delivery network with Zoox technology could save the company $20 billion a year.
If it closes, the deal would represent Amazon’s second-biggest acquisition since the 2009 purchase of online shoe retailer Zappos for $1.2 billion. Amazon’s biggest deal came three years ago with the acquisition of Whole Foods, the upmarket grocer, for $13.7 billion, according to Dealogic.
Zoox has 1,000 employees and has been working on a self-driving so-called “bi-directional” vehicle with no steering wheel. It can drive in any direction and quickly reverse course if stuck on a narrow street, the company has said.