5 key takeaways from Amazon’s $1 billion acquisition of self-driving startup Zoox (AMZN)

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Amazon CEO Jeff Bezos delivers remarks at grand opening of Washington Post newsroom in January 2016.

Amazon announced it’s buying self-driving startup Zoox on Friday.
Analysts say the deal can help Amazon in many ways by expanding its delivery capacity and cost efficiency.
Amazon declined to share the exact deal size, but reports indicate it’s over $1 billion.
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Amazon announced the acquisition of self-driving startup Zoox on Friday, signaling its first big foray into the autonomous vehicle space.

The deal is expected to be worth over $1 billion, according to The Information. Amazon declined to share the financial terms.

In a blog post announcing the deal, Amazon shared few details for how it plans to use Zoox’s technology. Zoox’s current leadership team, including CEO Aicha Evans and CTO Jesse Levinson, will continue to run the company as a standalone business, Amazon said.

“Zoox is working to imagine, invent, and design a world-class autonomous ride-hailing experience,” Jeff Wilke, Amazon’s CEO of Worldwide Consumer, said in a statement. “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.”

Analysts say the Zoox acquisition gives a good look into Amazon’s thinking over a number of different areas, including its delivery expansion and future M&A strategy.

Here are 5 main takeaways from Amazon’s Zoox acquisition:

It’s a ‘stepping stone’ toward expanding Amazon’s delivery network and capacity

Amazon’s delivery network is likely the biggest beneficiary of this deal, according to Loup Ventures managing partner Andrew Murphy. It’s no secret Amazon wants to automate more parts of its logistics operations, and Zoox’s self-driving technology can help by ultimately eliminating the need for human drivers.

“Amazon has made it clear that they don’t want to rely on third parties for delivery, and this is a logical progression of their efforts in the space,” Murphy said.

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Anthony Chukumba, an analyst at Loop Capital, told Business Insider that the Zoox acquisition is a “stepping stone” toward eventually offering free same-day delivery to all Prime members. While the technology and regulatory issues remain for a wider deployment of self-driving delivery cars, he said Zoox’s underlying technology will help Amazon significantly expand its delivery capacity and cost efficiency.

“Amazon needs more final mile delivery capacity,” he said.

It can save billions of dollars for Amazon

In a note published on Friday, RW Baird analyst Colin Sebastian wrote that the $1 billion price tag is a bargain for Amazon as Zoox’s team could help save “many years of R&D” and “many billions of dollars” in logistics costs.

Zoox’s experience in advanced hardware engineering, electric battery technology, and other automation software can help Amazon move 2 to 3 years ahead in the autonomous vehicle space, Sebastian wrote. He also said the Amazon-Zoox combination can help serve as a “counterbalance” to the growing market share of Uber and Alphabet’s Waymo.

Morgan Stanley’s Brian Nowak wrote in a note published late last month that a Zoox acquisition could potentially help save more than $20 billion per year shipping costs, saying it is be a …read more

Source:: Business Insider

      

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