By Laura Stevens and Tim Higgins. Source: WSJ.
Amazon.com Inc. AMZN +0.11% has created a team focused on driverless-vehicle technology to help navigate the retail giant’s role in the shake-up of transportation, according to people briefed on the matter.
Amazon quietly formed the team, which has comprised about a dozen employees, more than a year ago as part of its broader ambition to transport more of its goods itself. For now, Amazon doesn’t intend to build a fleet of vehicles, according to these people. Instead, the team serves as an in-house think tank to figure out how to leverage autonomous vehicles.
The initiative, still in its early phases, could help the Seattle-based company overcome one of its biggest logistical complications and costs: delivering packages quickly. Amazon could use autonomous vehicles including trucks, forklifts and drones to move goods. In addition, driverless cars could play a broader role in the future of last-mile delivery, enabling easier package drop-offs, experts say.
Many details of the team’s work, such as the extent of its progress, couldn’t be determined. An Amazon spokeswoman declined to comment.
Amazon hosted an event last week titled “Radical Transportation Salon” to discuss the future of transportation with other companies, the people said. The event, spearheaded by H.B. Siegel, whose responsibilities at Amazon include new ideas, in part targeted experts in autonomous vehicles. It wasn’t clear which companies attended.
“Amazon has a plan in place to shake up the entire supply chain as we know it today,” said Dave Sullivan, an automotive analyst for consultancy AutoPacific Inc.
Tech giants and auto makers are in a race to develop autonomous-vehicle technology that, while unproven, has the potential to shake up what Deloitte Consulting estimates to be the $2 trillion in annual revenue tied to the automotive industry. Waymo LLC, the self-driving tech unit of Google parent Alphabet Inc.; General Motors Co., Tesla Inc. and Uber Technologies Inc. are among the many global companies aiming to put self-driving vehicles on the road in the near future. They are joined by Silicon Valley startups eager to beat these bigger companies to market and players such as Apple Inc., whose intentions haven’t become clear.
Over the past few years, Amazon has been building out its supply chain and logistics network, aiming to deliver more of its own packages. It also envisions transporting goods on a large scale for other companies, one day competing with delivery giants United Parcel Service Inc. and FedEx Corp. , according to people familiar with the matter.
The company is leasing 40 planes and has bought thousands of branded truck trailers. Tractor trailers have long been considered a likely first target for implementing widespread driverless technology, in part due to how regularly they drive the same stretches of highway. Amazon is interested in autonomous trucking, according to the people.
Humans have a 10-hour limit when driving, but a self-driving truck could drive through the night, said Alex Rodrigues, co-founder of Embark, a startup that aims to develop technology to enable long-haul trucks to operate on the highway. “So instead of taking four days to drive coast to coast, it takes a day and a half.”
The biggest portion of Amazon’s spending and energy has gone toward another type of autonomous means of transport: drones. That initiative, announced in 2013, is further along and has a bigger team dedicated to the effort. It is expected to continue to be the major focus of the company, according to the people. Drones could communicate or pair up with driverless vehicles, for example, to coordinate deliveries.
In December, Amazon tested a commercial drone delivery in the U.K., but regulations in the U.S. make it unlikely it would become a major delivery option domestically soon.
Amazon could see potential in linking self-driving technology with its payments and services as cars become a way to place and receive deliveries. Its voice-command software, Alexa, which has been successful in its Echo speakers, is being used in cars. Ford Motor Co. , Daimler AG’s Mercedes-Benz and others have announced ways to integrate Alexa into their vehicles, enabling drivers to tap into some functions from home, such as starting the engine and unlocking doors.
In January, when German auto maker BMW AG demonstrated a semiautonomous 5 Series sedan in Las Vegas that enabled the driver to go hands free in certain scenarios, it partnered with Amazon to demonstrate how a customer could order chocolate while driving and stop to pick it up from an Amazon delivery person.
Amazon has also partnered with Deutsche Post AG’s DHL and Audi in Germany to test making package deliveries to car trunks.