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May 29, 2020

Happy Friday! June is just around the corner, in case you've lost track of time.

Today we look at Amazon's growing transportation empire and try to envision how mobility will be reshaped by the pandemic.

If you've got tips or feedback, send me an email at [email protected].

Today's Smart Brevity count: 1,334 words, a 5-minute read.

1 big thing: The Amazon of transportation

Illustration of Amazon shipping box freight truck
Illustration: Eniola Odetunde/Axios

Amazon is emerging as a transportation juggernaut that could threaten carmakers, package delivery firms and even ride-hailing companies.

Why it matters: By building its own logistics ecosystem and investing in promising electric and autonomous vehicle startups, Amazon could lower its shipping costs to the point that partners like UPS become competitors instead.

What's new: Amazon is in advanced talks to buy self-driving tech startup Zoox, the Wall Street Journal reported this week.

  • A deal, if it happens, would follow big investments in another automated driving startup, Aurora Innovation, and Rivian, a maker of electric trucks.

The news set off a wave of speculation among investors and AV experts.

  • Self-driving technology is "a natural extension" of Amazon’s efforts to build its own logistics network, and could save the behemoth more than $20 billion a year on shipping costs, Morgan Stanley analysts wrote on May 27.
  • Amazon is becoming a "clear competitor" to companies like Tesla and GM, they said, while UPS and FedEx "will need to respond to keep up."
“We often hear from investors that Tesla could potentially be the Amazon of transportation. But what if Amazon is the Amazon of transportation?”
— Morgan Stanley auto industry analyst Adam Jonas, in a May 17 report

The intrigue: Buying Zoox could potentially even open the door for Amazon to compete in the ride-sharing and food delivery industries.

  • Discounted ride-sharing for Prime members, for example, could help Amazon attract and keep more customers, Morgan Stanley suggested.

Amazon has more than 210 transportation-related patents on everything from drones to automated ground vehicles, according to a Reuters analysis.

  • Among them is a 2017 patent to provide an on-demand transportation service through a network of self-driving vehicles, Reuters reported.

A more likely scenario, according to Guidehouse Insights analyst Sam Abuelsamid:

  • Amazon could convert Zoox's planned robo-taxi into an automated delivery van that would serve as a mobile version of its Amazon lockers.
  • Rivian, which already has a contract to build 100,000 electric delivery vans for Amazon, could build these smaller vehicles, too, he said.

What to watch: Now could be the best time for Amazon to dramatically increase the size of its air fleet, says Bank of America analyst Justin Post.

  • Aircraft prices are depressed because battered airlines have cancelled orders during the pandemic.
  • Researchers at DePaul University say Amazon could have as many as 200 aircraft in its fleet within seven to eight years, nearly matching UPS' 275 planes.

2. How mobility could play out after COVID-19

Photo illustration of train, plane, and a car. Caution sign behind the vehicles.
Illustration: Eniola Odetunde/Axios

Transportation came to a virtual standstill in the past few months, but how it will look in three to five years is difficult to predict, even for the mobility experts at Deloitte Consulting, who are supposed to know these things.

The big picture: A lot will depend on how long the pandemic lasts, and the degree to which governments — and even private industry — collaborate to manage the economic fallout, says Deloitte's Scott Corwin, who leads the firm's future of mobility practice.

Here are four possible outcomes, from a group of "renowned scenario thinkers" assembled by Deloitte and Salesforce. The details are worth reading, but here's a quick summary:

1. The public health and economic crises are acute but end fairly quickly.

  • After a brief pause, most transportation returns to normal, but with an increased reliance on e-commerce and home delivery and a greater emphasis on sanitation and safety.

2. Mobility companies step in to fill the transportation void left by the struggling public sector.

  • Privately owned, on-demand mobility supplants public transit in some neighborhoods, potentially leaving others without access to transportation.

3. China, Singapore and Japan become the leaders in mobility innovation, including battery technology.

  • Cities adopt China's hands-on government policies to manage the rollout of new technologies and consumers share their data with government in exchange for better service.

4. Economic woes drag on and globalization fades, while cities and states regulate the movement of people and goods more closely.

  • Mobility services turn into quasi-public transit.

My thought bubble: It's impossible to predict which of these increasingly dark scenarios, if any, might come to pass, but two things seem like safe bets.

  • Consumers will demand better hygiene on cars, buses and trains.
  • E-commerce delivery is here to stay.

3. Ford's self-cleaning cop cars

Image of Ford's self-cleaning police car with lights flashing to monitor progress.
Ford's Police Intercept Utility undergoing cleaning process. Photo: Courtesy of Ford

Ford has developed software that literally bakes the interior of police cars to kill traces of the coronavirus that other cleaning methods might have missed.

Why it matters: The self-cleaning heat treatment is an example of how vehicle manufacturers and transit providers are experimenting with sanitization methods in the COVID-19 era.

The big picture: Police officers are at risk of contracting the virus because they are often dispatched to transport COVID-19 patients when ambulances are not available. They're also in danger of transporting individuals who have the virus but are asymptomatic.

  • Ford, the largest supplier of police vehicles, hopes its sanitization method helps reduce the spread of the virus.

How it works: The software, available on 176,000 hybrid-electric Ford Explorers sold as Police Interceptor Utility vehicles, uses the car's own engine and climate control systems to temporarily raise the cabin temperature to 133 degrees — hotter than Death Valley on its hottest day, Ford says.

  • The temperature is maintained for 15 minutes — long enough to disinfect nooks and crannies that manual cleaning can miss — while flashing lights let officers know the process is underway.
  • Ford partnered with researchers at Ohio State University to verify its effectiveness and tested it on police vehicles in New York, California, Michigan, Massachusetts, Ohio and Florida.

The big question: Can similar methods be used to create self-cleaning transit buses, subway cars and taxis?

  • Ford says it has no plans to use the technology beyond police vehicles.

4. Elon Musk's highs and lows

Image of Elon Musk
Photo: Saul Martinez/Getty Images

Bad weather scrubbed the scheduled launch of Elon Musk's historic first crewed SpaceX mission on Wednesday, but the sting of disappointment was likely offset by the $775 million stock bonus he earned the next day from his other company, Tesla.

Why it matters: Musk does not take a salary from Tesla, but negotiated an unusually rich, 10-year contract that pays him in stock options if the company meets certain performance milestones.

Driving the news: Musk earned the first performance-based payment: 1.7 million Tesla shares worth about $775 million based on the company's stock price at market close Thursday, according to an SEC filing reported by CNBC.

  • The tranche was a reward for keeping the company's market capitalization at $100 billion along with other revenue milestones.

The big picture: Musk owns about 18.5% of the company — worth about $24 billion — as of May 1, per CNBC. The options are set to vest over 12 tranches that use different milestone requirements.

What to watch: The next SpaceX launch opportunity will be Saturday.

5. Driving the conversation

Germs: Boeing and Airbus study how coronavirus behaves during air travel (Andrew Tangel and Alison Sider — The Wall Street Journal)

  • Why it matters: Social distancing isn't working on planes, and the airline industry needs to be able to reassure passengers they won't get sick when they decide to fly again.

Look up: The drones were ready for this moment (Alex Williams — The New York Times)

  • Why it matters: Drones are suddenly everywhere during the coronavirus crisis, taking over as cops, street cleaners, medical workers and delivery workers. The images alone are worth it.

Big raise: SoftBank leads $500 million fundraising for Didi's self-driving unit (Yingzhi Yang and Brenda Goh — Reuters)

  • Why it matters: It's the first external funding for Didi’s autonomous driving business since it became a standalone unit last year, and the largest fundraising round to date in China’s self-driving sector.

6. What I'm driving

Image of yellow 2021 Kia Seltos compact SUV
2021 Kia Seltos turns heads, especially in Starbright Yellow. Photo: Courtesy of Kia

Last week I drove a 2021 Kia Seltos, a fun and sporty subcompact SUV that turned heads everywhere I went.

The big picture: The Seltos is new to the Kia lineup, slotting between the entry-level Soul and the compact Sportage. It shares a platform with the Hyundai Kona and competes with cars like the Toyota C-HR, Nissan Kicks, Honda HR-V, Mazda CX-3 and Jeep Renegade.

First impression: It's a stylish little SUV, even better-looking in Kia's special Starbright Yellow paint with a black contrasting roof. (I love the daring color choices automakers are choosing lately.)

Details: Two four-cylinder engines are offered: an efficient 2.0-liter or a 175-hp, 1.6-liter Turbo, good for 27 mpg in combined city/highway driving. All-wheel-drive is available on every model.

  • The interior is spacious and well-planned, though you won't mistake the materials for a premium car.
  • Still, the Seltos offers abundant technology options, including a wireless smartphone-charging pad, a head-up display, and a 10.3-inch infotainment screen.
  • Available driver-assistance features include adaptive cruise control, lane-centering assistance and automated emergency braking with pedestrian detection, but unfortunately these are not standard equipment.

The bottom line: Starting at $23,110, the Seltos is still a good value, though. My SX Turbo AWD was $29,485.