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Why Amazon Is Investing in Aurora

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Feb. 15 2019, Published 8:03 a.m. ET

Amazon helped raise $530 million for Aurora

Amazon (AMZN) recently invested in self-driving startup Aurora. It participated in a funding round that drew other investors such as Sequoia Capital and raised $530 million for the startup. Aurora has developed technology that can be used to make autonomous vehicles. It works with automakers to install its technology in their vehicles and counts Volkswagen and Hyundai among its partners.

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Amazon seeking to speed up deliveries and cut costs

What did Amazon see in Aurora that led it to put its money in the autonomous driving startup? Amazon views autonomous driving technology as having the potential to make its workers and partners more productive, a company spokesperson said, according to a report from the Wall Street Journal. So the investment in Aurora shows Amazon backing innovation that it likes.

The investment in Aurora comes at a time when Amazon has been showing interest in autonomous driving systems. In January, the company unveiled an autonomous robot on wheels called Amazon Scout that it said it would use to deliver packages to customers. Amazon has also shown interest in using drones to ship packages to customers. Amazon’s interest in autonomous driving technology is driven by the company’s desire to speed up package deliveries and cut shipping costs, which soared 27% to $27.7 billion in 2018. Together with warehouse operations, Amazon’s fulfillment expenses jumped to $34 billion in 2018 from $25.2 billion in 2017.

Retailers turning to autonomous vehicles

But Amazon is not the only retailer interested in autonomous driving technology. China’s JD.com (JD) has been using autonomous rolling robots for last-mile deliveries since some time last year. JD and its domestic rival Alibaba (BABA) have also experimented with drone deliveries. In the United States, Walmart (WMT) has teamed up with Ford Motor (F) on a program that involves using self-driving vehicles to ship grocery packages to customers.

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