Enlarge /. People are examining a Zoox test vehicle in 2019. The company still needs to demonstrate the customized vehicle that it plans to use for its commercial service.
Andrei Stanescu / Getty
Zoox, one of the most cost-financed independent self-driving startups, was taken over by Amazon, the companies said on Friday.
Venture capitalists hungry for participation in the much-vaunted self-driving industry spent hundreds of millions of dollars in Zoox between 2016 and 2019. Since self-driving companies have not reached self-imposed milestones in recent years, investor enthusiasm has cooled.
Zoox’s own plans were breathtakingly ambitious. The company planned not only to develop self-driving software, but also to build its own vehicles and set up a hail service. In 2018 the company wanted to introduce a fully self-driving taxi service by 2020.
But like most other self-driving companies, Zoox was forced to postpone its schedule. Zoox fired CEO and co-founder Tim Kentley-Klay in 2018. It's never a good sign for a startup that's years away from launching its first product. Zoox hired former Intel manager Aicha Evans to replace him in 2019.
In April, amid the coronavirus pandemic, Zoox released more than 100 security drivers – although he hoped to bring them back after the pandemic ended. With dwindling money and little appetite from venture capitalists, Zoox started looking for a buyer.
The search was obviously not a good one. A round of donations in 2018 had valued the company at $ 3.2 billion. Amazon bought the company for $ 1.2 billion.
A "revolutionary passenger experience?"
In Friday's press release, Amazon released some details about its plans for Zoox. The company is currently managed as an independent company by its current management team – Evans and co-founder Jesse Levinson. Zoox will apparently continue to focus on the taxi market. According to Amazon, "Zoox's ground-up vehicle focuses on hail-ship customers with tightly integrated features designed to provide a revolutionary passenger experience."
However, it is easy to imagine that at some point Zoox will either offer delivery services – in competition with UPS and FedEx as well as start-ups like Nuro – or long-distance services. As the world's largest online retailer, Amazon is one of the largest customers for both types of services.
The Zoox acquisition continues the trend of self-driving projects becoming subsidiaries of larger companies. Market leader Waymo is part of Alphabet, while Cruise and Argo are owned by GM and Ford, respectively. All of these companies, like Zoox, were granted significant autonomy from their parent companies.
Independent self-driving companies are now having problems. Apple took over the self-driving startup Drive.ai last year – although apparently this was mainly a talent acquisition. Starsky Robotics, a startup with a focus on trucking, was closed in March.
The combination of general economic uncertainty and slow advances in self-driving technology could make it increasingly difficult for the remaining independent self-driving companies – including Nuro, Aurora and Voyage – to continue as independent companies. If they can't find a way to start a profitable commercial service, they may have to sell to follow Zoox’s example and sell to a larger company with adequate cash reserves.