Amazon's Zoox jumps into U.S. robotaxi race with Las Vegas launch

Five years after its splashy $1.3 billion acquisition of Zoox, Amazon has officially entered the U.S. robotaxi race, which to date has been dominated by Alphabet's Waymo.

Zoox's first public launch kicks off Wednesday on the Las Vegas strip. The company is offering free rides from a few select locations, with plans to expand more broadly across the city in the coming months. Riders will eventually have to pay, but Zoox said it's waiting on regulatory approval to take that step.

Amazon is jumping into a market that's all about the future, but one where Waymo has a major head start, having offered commercial driverless rides since 2020. Earlier this year, Waymo said it surpassed 10 million paid rides, and the company now operates in five cities, with Dallas, Denver, Miami, Seattle and Washington, D.C., coming next year.

Tesla, meanwhile, began testing a limited robotaxi service in Austin, Texas, in June, though with human supervisors on board.

But unlike Waymo and Tesla, Zoox's electric robotaxi doesn't resemble a car. There's no steering wheel or pedals, and the rectangular shape has led many in the industry to describe it as a toaster on wheels. Zoox co-founder and technology chief Jesse Levinson says, "We use robotaxi or vehicle or Zoox."

"You can shoehorn a robotaxi into something that used to be a car. It's just not an ideal solution," Levinson told CNBC in an interview in Las Vegas. "We wanted to do that hard work and take the time and invest in that, and then bring something to market that's just much better than a car."

Zoox was founded in 2014, five years after Google formed the project that became Waymo. Following Las Vegas, the company said it plans to debut an early rider program in San Francisco before the end of the year. The company has been testing a fleet of 50 robotaxis in San Francisco and Las Vegas.

Austin and Miami will be Zoox's next locations, the company said. Zoox will soon begin testing robotaxis in those markets, and said it's already driving retrofitted test vehicles in Los Angeles, Atlanta and Seattle.

"We think it's very, very early days, and the future is not written yet," said Levinson, during a demo ride with CNBC.

Zoox's Las Vegas depot spans 190,000 square feet, which is about the size of three football fields. At the facility, the company houses the dozens of vehicles set to start operating around the city. Smartphone users will be able to order them from Top Golf, Area15, Resorts World Las Vegas, New York-New York Hotel & Casino and Luxor Hotel & Casino.

The robotaxi features two rows of seats that face each other. The front and rear are identical, with bidirectional wheels that allow it to move forward or backward without turning around. The vehicle can run for 16 hours on a single charge.

Floor-to-ceiling windows provide a sightseeing experience for passengers who want a clear view of the endless rows of casinos. But the interior design is meant to enable easy conversation with fellow riders.

"It's not a retrofitted car," said Zoox CEO Aicha Evans. "It's built from the ground up around the rider."

CNBC interviewed Evans at Zoox's headquarters in Foster City, California, a short drive north of Google's sprawling Silicon Valley campus.

In addition to offering a unique kind of vehicle, Zoox is taking a very different approach getting to market than Waymo, which has teamed up with carmakers such as Chrysler, Jaguar and Hyundai.

Zoox is going it alone, reflecting the vision of co-founder Tim Kentley-Klay, an Australian entrepreneur, who subsequently started an artificial intelligence robotics company. Kentley-Klay, whose background was in marketing, initially learned about autonomous vehicles by going around Silicon Valley and interviewing experts in the nascent field under the premise that he was a filmmaker working on a related project, according to people familiar with the matter, who asked not to be named in order to speak freely about the co-founder.

For technical expertise, Kentley-Klay teamed up with Levinson, who had worked on self-driving technology at Stanford University. Levinson's father is Apple board chair and former Genentech CEO Arthur Levinson.

Kentley-Klay and Levinson decided to build the automobile of the future instead of just retrofitting cars so they could drive on their own. Neel Mehta, a former autos analyst at Morgan Stanley, signed up to join them in 2016, when Zoox was still in stealth mode.

"If you have a fully autonomous vehicle, then why do you need a steering wheel?" said Mehta, who ran multiple teams, including corporate strategy, during his five years at Zoox.

It was a laborious process.

While rivals were taking existing models and adding sensors and software, Zoox was using 3D printers to create entirely new car parts, people familiar with the matter said. When challenges arose and employees suggested a different approach, Kentley-Klay and Levinson refused to waver, the people said.

But Kentley-Klay was ousted in 2018. Early the following year, Zoox brought in Evans, who had been a longtime executive at Intel, starting at the chipmaker as a test manager in 2006.

"I had a job. Life was good, and I had lots of other opportunities," Evans said. "This was a choice, a very deliberate choice, and Jesse was part of that choice."

Evans was much more corporate, more polished and a little less approachable than her predecessor, said a person with knowledge of the matter. But with added bureaucracy came organizational skills that helped the company mature, two people said. The sources asked not to be named because they weren't authorized to speak about the company.

Evans said her goal was to bring together Zoox's experts on compute, cloud and robotics.

"It's a big vision – you're not going to get there overnight," she said. "So it was, how do we break it down? What things do we have to prove? In what order?"

Within Amazon, Zoox falls under the sprawling devices and services business, led by former Microsoft executive Panos Panay. The category includes everything from Alexa and Kindle to Project Kuiper, the internet satellite business.

Zoox has continued to function largely as an independent subsidiary, two people familiar with the matter said. The leadership team has remained intact, unlike at several of Amazon's acquired businesses, such as Whole Foods, One Medical and PillPack, which saw a shuffling at the top after joining.

"It's been 5½ years, so we're way past the dating period," Evans said. "Their expectations are quite reasonable. Do what you say you're going to do, and when you do it, great."

Leadership is still paying close attention.

In honor of Zoox's anniversary in July, Amazon CEO Andy Jassy and other executives paid a visit to headquarters, said a person who was in attendance. The mood was celebratory, and Jassy congratulated employees on Zoox's success to date, the person said.

Ahead of its launch, Zoox had been testing its technology in Las Vegas since 2019. Robotaxi tests began there in 2023, and the company started offering demo rides to curios spectators at Resorts World in late July.

Zoox chose Las Vegas due to its hefty concentration of tourists near the strip and the fact that a drive to the airport doesn't require getting on the highway.

Russell James, 68, was an early tester.

James, who lives in San Francisco, is no stranger to robotaxis. He said he often rides in Waymos when he's home, preferring the privacy of a driverless car.

"It does what you want it to do," he said. "It picks you up and gets you where you want to go."

In June, during one of his frequent trips to Las Vegas, James said he took a friend up on an offer to take an early Zoox ride.

There were some hiccups.

The first vehicle that staff summoned for him at Resorts World wasn't fully charged, he said. After another three pulled up, James was instructed to hop into the car that still had sufficient battery power remaining. (During CNBC's visit to Las Vegas last week, all of the cars that pulled up to get passengers were charged.)

James said that, as a tall man, he appreciated the spaciousness of the vehicle.

"I usually have to scrunch my head down," he said. "There was none of that."

James compared the experience to the "trams that take you between terminals at an airport." He described his short loop around the resort as uneventful, "which is kind of exactly what you want."

But not all of Zoox's rides have been without incident.

In April, an unoccupied Zoox in Las Vegas collided with a car that Levinson said was "driving a bit erratically."

It was a minor crash and no one was injured. But after reviewing the log file, Zoox determined its vehicle could've handled the situation better, Levinson said. The company paused rides in Las Vegas for a short period. In May, Zoox recalled 270 vehicles to address a software defect concerning its ability to predict the movements of other road users.

A few weeks later, Zoox ordered another software recall after one of its robotaxis was struck by an e-scooter rider in San Francisco. The robotaxi was stopped at the time of the collision, but then began to move to complete a turn.

"We're happy to admit that we're not perfect, and so anytime we find opportunities to improve our software, we take those opportunities," Levinson said.

Safety has been a big challenge in the robotaxi industry's short history.

Prior to Uber selling off its AV division in 2020, one of the company's test cars collided with and killed a pedestrian in Tempe, Arizona, in 2018. General Motors said it would no longer fund its Cruise division in December. Cruise's robotaxi business became engulfed in scandal in 2023 after one of its cars dragged a woman, who was knocked into its path, for 20 feet in San Francisco.

"Our bar is not being perfect. It's being significantly safer than a human," Levinson said. "Our safety record so far is very much consistent with being significantly safer than humans."

Levinson said Zoox is starting out with free rides to get the word out, before turning its attention to making a business out of it.

"Obviously we have a path to do that or else it wouldn't make sense for Zoox to exist," said Levinson. In terms of timing for profitability, Levinson said, it's "not weeks from now, it's not decades from now. So somewhere in between."

A more pressing priority is scale. Earlier this year, Zoox opened a sprawling manufacturing facility in Hayward, California, across the San Francisco Bay from its headquarters.

The site is currently producing one vehicle per day, but the company says it will eventually get to roughly three robotaxis per hour, or 10,000 a year, when it's at full scale. Waymo says it currently has more than 2,000 vehicles in its commercial fleet.

Sam Abuelsamid, vice president of market research at Telemetry, said that given the hefty costs of building and operating a full robotaxi service, "It's probably going to be at least 2030, or maybe later, before any of these businesses are actually profitable."

Amazon insists that it's willing to be patient. The company has poured billions of dollars into Zoox since the acquisition in 2020, and finally gets to show the public what's in store.

"One of the things that I feel Amazon doesn't get enough credit for is that it's very good at picking some long-term big bets and actually making them happen," Evans said. "We're setting out to show that, yes, this is real, and it's coming to you."