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Amazon set to buy self-driving start-up for over $1bn

According to The Information, Amazon has agreed to buy a self-driving start-up, Zoox Inc, in a further major investment in the automotive sector.

California-based Zoox, which has approximately 1,000 employees, has been designing a prototype vehicle which can autonomously travel forwards and backwards with ease – it has a mould-breaking symmetrical design without a distinct front and back end. The vehicle is intended for urban passenger transport.

Zoox has been testing its autonomous driving system in retrofitted Toyota Highlanders around San Francisco and Las Vegas.

Amazon has been experimenting in recent years harnessing emerging technologies for package delivery, including drones and autonomous robots. However, it is not known whether the company is interested in using Zoox technology to deliver packages, automate some warehouse processes, compete with Uber and Alphabet’s Waymo in urban passenger transport, or a combination of these.

The report said that Amazon is likely to announce the deal this week, but does not plan to disclose the exact purchase price.

According to The Information, sources familiar with the deal said that it was worth over $1bn. The Wall Street Journal recently reported that Amazon and Zoox were in discussions, and that the deal would be likely to value Zoox at less than the $3.2bn it raised in a July 2018 funding round. However, the report said that the majority of Zoox investors would get their money back and some would have a positive return.

The Financial Times reports that Amazon plans to let Zoox continue to run as an independent subsidiary following the acquisition.

The deal is among Amazon’s largest ever acquisitions; if reports are accurate, it is of the same magnitude as its acquisitions of Twitch in 2014 and Ring in 2018. It also looks likely to be Amazon’s largest-ever investment in autonomous vehicle technology, following a $530m investment in self-driving start-up Aurora Innovation in February 2019, and generous investments in EV start-up Rivian. Amazon is likely to need to invest multiple billions of dollars in order to bring its own autonomous vehicles to market.

Zoox has been led by former Intel executive Aicha Evans since January 2019. It has suffered some challenges recently, including a lawsuit brought by Tesla which alleged theft of trade secrets and proprietary technology. Zoox has also been impacted by the coronavirus pandemic; it was forced to lay off more than 100 people amid lockdown, including backup drivers for its test vehicles. It has indicated that it plans to rehire these workers when it is appropriate to do so.

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