What Amazon’s Acquisition of Zoox Means for Autonomy Players

As a close watcher of the autonomy space, I find Amazon’s most recent acquisition of Zoox both a bold and curious purchase. The autonomous vehicle company is building the technology stack from the ground up and designing the vehicle, but it’s still very early in its development cycle. 

So why is Amazon paying $1.3 billion for such a young company? 

Amazon wants to claim the first stake in adding leading-edge but practicable autonomous vehicles at scale to its logistics business. By doing so, the tech giant can drive greater efficiencies, build at scale, reduce friction, and increase safety. Once it has perfected that internally, it will likely market the solution more broadly. Looking at it within this construct, the Zoox acquisition becomes both relevant and obvious. 

Keep in mind that Zoox is not Amazon’s first acquisition in the autonomy/robotics market. Prior to this, market leaders in robotics Kiva (2012) and Canvas (2019) moved in under Bezos’ roof. Amazon is now considered the leader in both the development of warehouse robots and the use of those robots, deploying more than 200,000 robots across multiple warehouses. The Zoox acquisition, I believe, is the first in a select few acquisitions to build the same market leadership in autonomous electric vehicles and the autonomy technology stack. Zoox will become the bedrock of Amazon’s push into autonomy, much like Kiva was for warehouse robots. 

The acquisition of Zoox, alongside two other transactions, allows us to begin to see a possible autonomy strategy emerging that also closely intersects the drive for electrification. Notably, in February 2019 Amazon invested $700m in electric truck maker Rivian, alongside Ford and others. At the same, it placed an order for 100,000 trucks with Rivian. Rivian’s vehicles are not only electric, but designed and built to be autonomy-ready. Amazon also acquired Dispatch, to build Scout, a six-wheeled urban delivery robot that is both electric and autonomous. (If you like the Zoox autonomous electric vehicle, fits somewhere between a Rivian truck and a Dispatch delivery robot.)

One of Amazon’s key market strategies is to build technology stacks that first address its own needs, and gain scale internally. The outcome is a robust solution that has been tested in a very demanding environment. If that solution is not fundamental to Amazon’s competitive differentiation and also attacks a massive addressable market, Amazon will likely move forward to market that platform—in some cases, even to companies that may compete with it in certain segments. Examples include AWS for cloud computing and Amazon Go for a frictionless brick-and-mortar retail experience. The recent establishment of Amazon Robotics is a clear signal that Amazon intends to aggressively market its robots and autonomy technology to other companies. 

Amazon has three major, interdependent strategic thrusts that are important to understand:

• Inside facilities: Automation of warehouses with extensive robot deployment – often alongside people.
• Outside last-mile delivery: The clear preference is for electric, autonomous (where possible) vehicles.
• Reduction of emissions: Shipment Zero is Amazon's vision to make all Amazon shipments net zero carbon. Its first goal is to have 50% of all shipments net zero by 2030.

Corporate pundits and executives realize that the off-road and controlled environment markets offer more near-term commercial upside than open-road passenger vehicles – likely in one to three years. This move fits well with the other key piece of Amazon’s long term strategy: always pursue mega-markets. Personally, I have my eye on more acquisitions and am eager to see how Amazon braids these threads together into a leading autonomy platform, to challenge OEM efforts, big tech efforts like those from Alphabet’s Waymo, and emerging and well-funded autonomy companies like Aurora and TuSimple. 

For industry players within autonomy, there is a relentless pursuit to score breakthrough wins, especially in trucking, last mile delivery and the broader technology stack. As I stated in a previous paper, “Technologically, autonomy is still the ‘wild west,’ with really no operating systems or standards emerging as clear winners, and no dominant players.” Even in this open playing field, Amazon may begin to put the squeeze on the players. It is the first technology company to enter the space with its own vast logistics and road transport business acting as a test bed. Combine these elements with its deep pockets, warehouse robotics expertise and overall tech savviness, and Amazon may leap over the other multi-billion investors and grab the leading position in the autonomy race.