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Zoox is aiming to create a driverless system, build a ride-hailing network and manufacture a bespoke autonomous vehicle at scale all at the same time © Jay Watson

Amazon in talks to buy driverless car start-up Zoox

Acquisition would be first by ecommerce group of an autonomous vehicle company

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Amazon is in advanced talks to acquire self-driving start-up Zoox, in what would mark the ecommerce group’s first purchase of a self-driving start-up, according to two people familiar with the matter.

Zoox was founded in 2014 and is unique in the self-driving sector in seeking to master the triple challenge of creating a driverless system, building a ride-hailing network and manufacturing a bespoke autonomous vehicle at scale. Pulling this off would require enormous capital and unlike Cruise, the self-driving company backed by General Motors, or Argo AI, which has support from Volkswagen and Ford, Zoox does not have a major automotive partner.

Zoox’s prospects soured last month when the coronavirus crisis grounded its fleet and forced the company to lay off about 100 employees, representing 10 per cent of its workforce.

Amazon was a lead investor in a $530m funding round for Aurora, a rival autonomy start-up led by Chris Urmson, former chief engineer of Waymo.

Before coronavirus hit, Zoox’s test fleet of modified Toyota Highlander sport utility vehicles were a common sight in San Francisco and Las Vegas. But the company has also developed a fully autonomous vehicle that lacks a steering wheel or pedals and features carriage-style seating. That vehicle has not been shown to the public but a service using it was scheduled to be launched in trial format this year before being deployed more widely in 2021.

Zoox was valued by investors at $3.2bn two years ago, when it raised $500m. The company’s backers include Breyer Capital, led by the billionaire venture capitalist Jim Breyer, and the Canada Pension Plan Investment Board.

The Information reported on May 7 that Zoox was contemplating a sale. Multiple people familiar with the matter confirmed that but said the start-up would prefer to remain independent.

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One person with knowledge of the situation said Toyota and Zoox held several discussions in late 2019 about the Japanese carmaker taking a stake in the company.

Amazon declined to comment.

Zoox said in a statement: “As a matter of policy, Zoox does not comment on rumours or speculation.”

Asad Hussain, a mobility tech analyst at PitchBook who had previously said Amazon was a potential acquirer of Zoox, said the purchase would allow the ecommerce company to build its logistics capability.

But he added that Zoox was likely to “face a significant decrease in valuation”.

“We believe $1.1 billion would be a fair price for the company, representing a 65.6% haircut from its previous post-money valuation of $3.2 billion,” he said in a note.

Zoox is led by Aicha Evans, a former Intel executive who joined as chief executive in early 2019 to help expand the company. Jesse Levinson, co-founder and chief technology officer, is the lead engineer.

The Wall Street Journal first reported on the talks.

Additional reporting by Miles Kruppa