Recently, Amazon officially issued a statement stating that it has signed an acquisition agreement with Zoox, and this long-rumored acquisition has been settled. Although Amazon has not disclosed the specific amount and details of the acquisition, the Financial Times stated that the acquisition amount exceeded US$1.2 billion.
For Amazon, this is undoubtedly its most important move in the field of autonomous driving. For the leading company Zoox, the price tag is actually less than half of the valuation of the previous round of financing ($3.2 billion). Zoox was founded in 2014 and is headquartered in California, USA. It is committed to developing self-driving car technology.
Zoox, the leading autonomous driving company, has become a "sellout"
Zoox was once known as the "five major families" of autonomous driving in Silicon Valley along with Waymo, Cruise, Argo AI, and Aurora. So, compared with a number of self-driving companies in the United States, what is the difference between Zoox, which was acquired by Amazon?
First of all, Zoox is the first driverless service provider approved by California to carry passengers. Regulatory agency data shows that although 62 companies had obtained permits to test self-driving vehicles in California at that time, Zoox was the first company allowed to carry ordinary passengers.
Secondly, Zoox’s development goals and products are different from other companies. Not only does it develop its own self-driving system, Zoox also wants to build self-driving cars and a ride-hailing platform. No matter which project it is, it is a huge money-burning pit. Although they have raised a total of about 1 billion US dollars before, it is not enough. Coupled with the huge impact of this year's epidemic, Zoox's plight has become increasingly obvious. In April, it began to lay off employees. In May, foreign media revealed that it was looking for potential buyers.
Previously, company founder Tim Kentley-Klay publicly admitted that Zoox was in a double downturn. On the one hand, traditional automotive equipment manufacturers have withdrawn investment, which has broken the capital chain in the field of autonomous driving. On the other hand, making money has become more difficult due to Covid-19.
In fact, as early as the end of 2019, Zoox had many discussions with Japanese automakers taking stock of the company. However, both parties refused to disclose specific information, and the final result obviously did not reach an agreement.
Obviously, as Waymo opens a financing model for external investors, it may exacerbate the financing difficulties of other autonomous driving companies. On the one hand, when given the freedom to choose, investors are more willing to invest in “leaders” with better profit expectations; on the other hand, as time goes by, the field of autonomous driving will require more and more funds and investors. It’s just that there will be fewer and fewer investors who can afford it.
In the past few years, traditional manufacturers and technology companies have been looking for suitable autonomous driving companies to invest. But now, it is completely in a buyer's market, and the head effect has already appeared. Then, other financing in the market will become more difficult. Coupled with the impact of the epidemic, financing difficulties will become the main theme in the future. The field of autonomous driving is inherently a capital-intensive battlefield. Without strong capital support, it is difficult to continue.
What kind of card did Amazon play to make Musk "start a fight"?
As soon as the news of Amazon’s acquisition came out, Tesla CEO Elon Musk called Bezos a “plagiarism dog” on Twitter.
Musk publicly "teared" Bezos, which can be traced back to the past between Tesla and Zoox.
In March 2019, Tesla filed two lawsuits against multiple former employees and Zoox, accusing them of misappropriating Tesla’s trade secrets. Tesla said in the lawsuit that four former employees of the company stole Tesla's "proprietary information and trade secrets, which helped Zoox save a lot of time to develop and operate its own warehousing, logistics and inventory control systems." The lawsuit ended with Zoox paying a large amount of compensation, but the amount of the compensation was not disclosed.
In fact, the two men also competed against each other in other fields in the early years. As far as the aerospace field is concerned, Bezos founded Blue Origin in 2000, and Musk founded SpaceX in 2002. In the moon landing project announced by NASA, Blue Origin and SpaceX are among the winning bidders.
It is not difficult to understand that in a certain competitive relationship, Musk likes to publicly ridicule Blue Origin for "plagiarism". In the field of electric vehicles, Rivian, an electric truck start-up backed by Amazon, is Tesla’s number one competitor in the field of electric pickup trucks.
Although in the field of autonomous driving, Tesla and Amazon each have their own highlights. The former focuses on autonomous driving in the manned field, while the latter focuses autonomous driving in the field of cargo. However, Amazon’s hidden strength cannot be underestimated. According to Reuters, between December 2016 and May 2019, Amazon held more than 210 patents in logistics-related fields such as drones and self-driving cars. This number is significantly higher than Apple and Google.
Amazon’s interest in the self-driving industry comes from logistics. After all, human logistics delivery is one of the largest costs in operations. According to Amazon's 2020 Q1 financial report, its revenue was US$75.5 billion, net income was US$2.5 billion, and earnings per share were US$5.01. In Q1 2019, Amazon had revenue of $59.7 billion, net income of $3.6 billion, and earnings per share of $7.09. Combined with other public information, it can be seen that Amazon's revenue has increased but its profits have decreased, mainly because its transportation costs have remained high.
Last month, Bloomberg Intelligence analysts Jitendra Waral and April Kim wrote in a research report that the acquisition of Zoox may help Amazon control rising transportation costs, and it is expected that by 2025 Amazon will Transportation costs will exceed $60 billion. It is obvious that with this acquisition of Zoox, Amazon hopes to generate synergies based on its existing business.
On the other hand, and also a very important point, the future of autonomous driving is promising. According to a UBS report, the global self-driving taxi market could be worth more than $2 trillion by 2030, and the mass adoption of autonomous vehicles could provide a major boost to many existing industries. Therefore, Amazon’s “buying the dip” in Zoox at this time is also an investment in future prospects.
As far as the autonomous driving field is concerned, 2020 will be a year filled with endless acquisition rumors. From the troubled situation of the leading autonomous driving company to its eventual acquisition by Amazon, this means that whether it is carrying people or cargo, there is still a long way to go for autonomous driving technology to mature. The epidemic is bound to accelerate the arrival of the industry knockout. On the other hand, in the implementation process, in addition to cooperating with traditional car companies or technology companies to solve product-side problems, autonomous driving companies also need to find matching demand parties in terms of application scenarios.
Text/Sun Lili
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This article comes from the author of Autohome Chejiahao and does not represent the views and positions of Autohome.