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Amazon in Talks to Acquire Self-Driving Car Startup Zoox

By Danny Vena – May 27, 2020 at 11:11AM

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The company has long been an innovator in artificial intelligence. Now it wants to add additional autonomous vehicle technology to its portfolio.

Amazon.com (AMZN 3.15%) is reportedly in advanced discussions to acquire self-driving car start-up Zoox, though neither company has confirmed the talks. The autonomous driving system designer was valued at $3.2 billion in 2018, but the purchase price is likely lower due to fallout from the pandemic, according a report from The Wall Street Journal

Zoox "has been receiving interest in a strategic transaction from multiple parties and has been working with Qatalyst Partners to evaluate such interest," a Zoox spokesperson said in a statement.

A vehicle covered in computer code on a road laced with computer chips.

Image source: Getty Images.

The Silicon Valley start-up has been working to develop self-driving technology from the ground up since its founding in 2014, while also designing a system that can be retrofitted onto existing vehicles. Zoox is working to integrate the latest in automotive, robotics, and renewable energy systems into its designs  and has previously published videos of vehicles outfitted with its level 3 technology performing a series of complex driving maneuvers in downtown San Francisco in heavy, multi-lane traffic amid pedestrian crowds. 

Viable self-driving technology could be a game changer for Amazon, whose shipping and delivery costs are among the company's largest expenses. Amazon's logistics expense could soon reach as much as $90 billion annually, according to analysts at Morgan Stanley. A deal like this could save Amazon $20 billion each year, according to the report. 

Amazon has shown its willingness to spend heavily on automation. The company announced in 2012 that it acquired warehouse automation and robot-maker Kiva Systems for $775 million in a bid to make its fulfillment operations more efficient and the robotic systems have become a staple in Amazon's warehouses.

This isn't Amazon's first foray in autonomous driving technology. The company previously invested in self-driving start-up Aurora Innovation.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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