Amazon continues its move into automotive technology with the acquisition of autonomous vehicle tech company Zoox.

Amazon has made no secret of its interest in switching to a fleet of self-driving delivery vehicles, and after announcing the order of 100,000 battery trucks last year, it is taken a critical step towards filling in the next piece of the puzzle with today’s acquisition of Zoox.

Talks between the online retail giant and San Francisco Bay autonomous tech firm reportedly have been underway for month. Zoox was considered one of the leaders in the emerging field and valued at more than $3 billion in 2018, but it has faced a series of problems since then and, according to the Financial Times, was sold to Amazon for around $1.2 billion.

“Like Amazon, Zoox is passionate about innovation and about its customers, and we’re excited to help the talented Zoox team to bring their vision to reality in the years ahead,” Jeff Wilke, Amazon’s CEO, Global Consumer, said in a statement.

(Rivian, Amazon provide peek at new electric delivery truck.)

The move is one of the largest acquisitions made by Amazon, which spent $13.7 billion for Whole Foods in 2017. Last year, the tech and retail giant made a series of moves into transportation, among other things leading a consortium investing $700 million into suburban Detroit-based Rivian, a start-up focusing on electric vehicles.

Zoox CEO Aicha Evans said the acquisition by Amazon cements Zoox’s impact on the autonomous driving industry.

That deal was followed by news that Rivian will begin supplying battery-powered delivery vans to Amazon, with 100,000 of them expected to be in operation by 2024.

How the new deal will play out is uncertain. There has been speculation that Amazon might seek to use Zoox technology in a variety of ways, such as powering its logistics network to smooth and speed up delivery operations, as well as in cashierless grocery stores. But the biggest opportunity, according to numerous observers, would be to help Zoox achieve its original goal.

“This acquisition solidifies Zoox’s impact on the autonomous driving industry,” said the start-up’s CEO Aicha Evans. “We have made great strides with our purpose-built approach to safe, autonomous mobility, and our exceptionally talented team working every day to realize that vision. We now have an even greater opportunity to realize a fully autonomous future.”

(Amazon orders 100K Rivian vans as part of broad environmental campaign.)

What that future will look like, however, is far from certain. As recently as three years ago, many self-driving proponents expected to see the first hands-free vehicles on the road by 2020. While there are vehicles offering systems with limited capabilities – such as Tesla’s Autopilot and General Motors Super Cruise – the timetable for true, go-anywhere, anytime autonomy, especially with no backup driver onboard, has been pushed back.

Zoox began testing its autonomous technology in Las Vegas.

In the near-term, automakers will largely emphasized limited systems, like Autopilot and Super Cruise, said John Murphy, senior automotive analyst with Bank of America, during a media webinar this week. When the technical challenges of full, driverless autonomy will be resolved is far from certain, he and other analysts now caution.

The pandemic-led recession has forced many automakers – among the heaviest investors in autonomy – to pull back on spending.

Complicating matters, the COVID-19 crisis has led consumers around the world to pull back on their use of mass transit, including taxis and ride-sharing services. While companies like Waymo, Uber and Lyft continue to focus on getting drivers out of their vehicles in order to reduce costs, it is unclear if and when demand for ride-hailing will recover.

(Amazon becoming lead investor in Rivian.)

In the meantime, that has led proponents of autonomous driving, as well as many of the companies developing the technology to shift focus to delivery services where health concerns are less relevant, said analyst Murphy.

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