Bezos: The Car Industry is too Charming
Amazon’s CEO Jeff Bezos said in March that he was fascinated by the recent developments in the automotive industry and said that this was the $700 million investment that Amazon led a start-up electric vehicle manufacturer Rivian in February. One of the reasons.
Bezos said, “Thinking about the current automotive industry, there are many things happening, Uber, electrification, networking, so this is a very fascinating industry. If you can join and observe, it will be very interesting. I am very excited about the entire industry.”
Bezos’s comments allowed him to peek into his interest in the automotive industry, and in February this year Amazon entered the industry through an investment in Rivian and another self-driving technology startup, Aurora. The investment in automation technology is finally expected to allow Amazon to provide faster and cheaper transportation, as well as automation technologies in other areas, such as unmanned grocery stores.
Rivian is known for its electric trucks and has raised $1.4 billion to date, including $500 million in Ford (F-US) in April. Aurora is an autonomous driving technology startup run by former Uber (Uber-US), Google and Tesla (TSLA-US) executives. After raising $530 million in February, it is reported to have a market capitalization of more than $2 billion. .
After these two investments, Amazon’s private equity held in the previous quarter increased to nearly $1.4 billion. It exceeded the $1 billion level for the first time since the company announced the project in 2015, and is almost the same as the shareholding level 2 years ago. Time
Amazon does not analyze the amount of personal investment, but will publish the total amount of equity and warrants held by public and private companies.
Amazon does not respond to requests for comment.
Wall Street view
Lo Mun Ventures analyst Gene Munster believes that investment automation companies allow Amazon to “learn more about cutting-edge technology,” which directly helps its core e-commerce business. For example, investing in electric and self-driving vehicles can provide insights into how to improve Amazon’s last-mile logistics strategy, potentially reducing overall transportation costs. In the last quarter, Amazon’s transportation costs increased by 21% to $7.3 billion.
“This is a form of R&D work outsourcing,” Munster said.
Automation technology is very helpful for Amazon. For example, in January this year, Amazon launched the new automatic transport robot Scout, and cooperated with self-driving truck startup Embark to handle part of the cargo transportation. When Amazon first launched Go Unmanned Stores in 2016, it said that the technology they used was discovered in self-driving cars.
More importantly, these investments mean that Amazon has a record profit and cash flow, but in the face of slowing growth, it has become more interested in investing in other companies (both public and private).
In the first quarter of this year, Amazon’s operating profit was US$4.4 billion and its cash surplus was US$47 billion, both of which set a record high, but its quarterly revenue growth was only 16.9%, the lowest level since 2015.
According to the documents, Amazon spent $1.2 billion on the “Acquisition and Other Investment Activities” project in the first quarter, excluding the third quarter of 2017 (because of the acquisition of the Whole Foods Supermarket), setting a high single-season acquisition record. Amazon acquired Eero (approximately $100 million), CloudEndure ($250 million) and the above-mentioned Rivian and Aurora investments in the first quarter.
Amazon is also very active this season, and last week led a $575 million Deliveroo fundraising initiative.
Amazon's CEO Jeff Bezos said in March that he was fascinated by the recent developments in the automotive industry and said - /10