Amazon, the world’s largest online retailer, is increasingly focusing on start-ups that are active in the field of autonomous driving. The e-commerce giant is thus gradually penetrating Tesla’s area of expertise.
- Bezos takes over Zoox for 1.2 billion US dollars
- Online retailers increasingly focus on sustainability
- Amazon is pursuing a different goal than Tesla
After Alphabet and Apple, Amazon is now the third major US tech company to become involved in the field of autonomous driving. Jeff Bezos is thus gradually penetrating the lucrative territory of Elon Musk and discovering a new line of business for his company, which should ensure further growth in the future.
A new growth market for Amazon
At the beginning of 2019, Amazon caused a stir within the automotive scene with its investment in the US startup Aurora. The company, which was only founded in 2017 and focuses on the development of self-propelled cars, is a real insider tip in the sector. After all, the three Aurora founders Chris Urmson, Sterling Anderson and Drew Bagnell are regarded as true professionals in the field of autonomous driving. While Urmson and Bagnell have developed self-propelled vehicles for Google and Uber, Anderson has even been involved in the creation of the Tesla autopilot. As a result, the trio is already considered the ultimate in the entire scene.
With an estimated triple-digit million amount, Amazon has already bought into the very lucrative industry at the beginning of 2019 in the course of Aurora’s second financing round. The participation of the liquidity-rich e-commerce giant is also a real stroke of luck for the three Aurora founders. “We are trying to be strategic and have people around the table who share the vision of where we want to go as a company, who understand how difficult the problem is – this is not a short-term game – and who know that we will need more capital in the end,” says co-founder Urmson in an interview with the technology portal TechCrunch.
The great vision of Jeff Bezos
For Jeff Bezos, the investment in Aurora was only the beginning of a larger vision. The US billionaire is not only interested in self-propelled cars, but also in electric vans that enable climate-friendly delivery of customer orders. At the end of September 2019, the online retailer ordered a total of 100,000 electric delivery vans from the US startup Rivian.
Our fleet is Electrifying! Thrilled to announce the order of 100,000 electric delivery vehicles – the largest order of electric delivery vehicles ever. Look out for the new vans starting in 2021. pic.twitter.com/y5qYpuy2WP– Dave Clark (@davehclark) September 19, 2019
With the help of these vans, which are to be delivered for the first time in 2021, Bezos wants to make its company completely climate-neutral by 2040, according to its own statements. However, the mega order to the electrical newcomer from near Detroit was not entirely altruistic, even for Amazon. A good six months before the mega order, the e-commerce giant invested the equivalent of around 640 million euros in Rivian and is now profiting from the order itself.
Amazon thus wants to make its business more and more sustainable and make a positive contribution to environmental and climate protection, which is also expected and demanded by more and more of the group’s customers. “If we are successful with this and replace petrol engines with electric vehicles, we will take a huge step forward and make our parcel delivery service even more sustainable. And it will have a positive effect on the environment,” said Ross Rachey, Chairman of Amazon’s Global Fleet Department, at the presentation of the Rivian delivery van.
1.2 billion for Zoox – the third investment in the automotive sector
As reported in the US media at the end of June 2020, Amazon has now expanded its commitment to autonomous mobility even further. After the investments in Aurora and Rivian, the takeover of the American start-up Zoox, which is said to have cost around 1.2 billion US dollars, is now the third major investment by the e-commerce giant in the automotive sector.
With the purchase of Zoox, Amazon is thus not only securing a team of around 1,000 employees, but also further know-how in the field of autonomous mobility and various software and hardware solutions. The company, which was only founded in 2014 by the US American Jesse Levinson and the Australian Tim Kentley-Klay, has developed an autonomous driving technology that transforms classic cars into a kind of self-propelled robot by means of a conversion. The original goal of the two founders was to use this technology to build a nationwide fleet of robot taxis.
With a transaction volume of $1.2 billion, the purchase of Zoox is now the most expensive acquisition in Amazon’s history. However, when you consider that the startup has already been valued by investors at a total of 3.2 billion US dollars in 2018, it quickly becomes clear what possible bargain Bezos has made with the purchase.
Does Amazon now compete with Tesla?
Amazon’s massive involvement in the field of electromobility or autonomous mobility over the past two years is now worrying more and more Tesla shareholders, who see the supremacy of their company increasingly under threat. On closer analysis, however, it is obvious that Amazon will use the purchased technology and the expert knowledge of the three start-ups to build up its own logistics network more efficiently, sustainably and with a better future. After all, a combination of Zoox and Aurora applications and Rivian’s e-transporters would allow Amazon in the distant future to deliver parcels not only climate-neutrally and quickly, but also completely without human intervention.
In contrast, Elon Musk is currently focusing more on the development and production of futuristic e-cars, which are expected to replace all conventional combustion engines in the mass market and luxury segment. Accordingly, Amazon is not yet a major competitor to Tesla, but this could change quickly through further acquisitions and takeovers. If, for example, Jeff Bezos soon considers it lucrative to invest the high cash flows that Amazon generates month after month in the expansion of its own automotive division, which produces not only vans but also ordinary passenger cars, the e-commerce giant could also become a Tesla rival.
With a 52-week share price performance of over 400 percent for Tesla shares and just under 50 percent for Amazon shares, there are currently no signs of a tense competitive situation.
For more interesting investment ideas, check out the Capitalist Partners Newsletter