Tesla Needs Democrats to Break Up Big Tech or Amazon Will Eat Its Lunch

  • Amazon is increasingly encroaching on space occupied by Tesla.
  • The online retailer has invested in electric and autonomous car startups.
  • For the newly minted conservative, Elon Musk’s solution may lie with Democrats.

More than two decades after launching as an online retailer, Amazon (NASDAQ:AMZN) is now in nearly every industry ranging from entertainment to manufacturing fast-moving consumer goods. It has not had enough, though, and recent developments suggest that transportation is the next frontier.

Last year, Amazon led investment rounds in electric car firm Rivian and self-driving technology startup Aurora Innovation. Last week, Amazon was reportedly in talks to acquire driverless car startup Zoox Inc.

Zoox is worth over $3 billion. | Source: Zoox website

While none of the startups mentioned above has unveiled a consumer-ready vehicle yet, some auto manufacturers should be more worried than others–I’m looking at you, Tesla (NASDAQ:TSLA).

Is Amazon putting its sights on Tesla?

Most carmakers are beginning to address the mobility needs of the future by investing in driverless car technologies and new energy systems. And nobody is doing this more than Tesla.

While Tesla is making cars for consumers, Amazon is backing companies in this space. Amazon not only invested in Rivian, but it has also signed a large order of 100,000 electric delivery vans. For comparison’s sake, it took Tesla over a decade to deliver 100,000 cars in a year.

Why Amazon is buying a driverless car startup

Amazon’s goal for acquiring Zoox is to cut shipping and delivery costs. But there is no limit to how Amazon may choose to profit from the driverless vehicle technology once it comes of age.

With Amazon’s relatively large footprint across the world and its fiercely competitive streak, Tesla should be worried. With such a deep-pocketed backer and a ready buyer, Rivian is positioned to give Tesla headaches in the coming months and years.

On its own, Amazon’s acquisition of technology startups isn’t much of a threat. But Amazon is investing to serve its future needs, making it Tesla’s most significant threat down the road. That’s how Amazon Web Services started, and there is no sign it will lose its market leadership anytime soon.

Tesla bulls, take a seat

In January, ARK Invest issued a stock price target of $22,000 for Tesla by 2024. The target was based on Tesla’s self-driving technology, which would allow the company to launch a robo-taxi network in four years.

ARK’s “Golden Goose” scenario for Tesla’s stock. | Source: ARK Invest website

While Amazon’s intended acquisition of Zoox does not prevent Tesla from going ahead with its plans, Amazon is in the position of presenting serious competition armed with such a technology. Fears of an Amazon takeover of transportation was present even before the company expressed an interest in Rivian, Zoox or Aurora.

Tesla investors were warned about Amazon in 2018. | Source: Twitter

Now the threat has been heightened. Luckily for Musk, the Democrats may be able to help out.

For self-preservation, Tesla needs Amazon broken up

On the presidential campaign trail last year, Senators Bernie Sanders and Elizabeth Warren stood out for their calls to break up large technology firms. Warren argued that tech behemoths such as Amazon possess too much power to buy out and destroy competition.

Senator Elizabeth Warren has been consistent in her quest to break up big tech companies. | Source: Twitter

Warren reignited those calls last month after Amazon was accused of using its marketplace to spy on competitors and develop its own private-label brands.

Though Elon Musk has increasingly taken conservative stances, it is the progressives who might save Tesla from the encroaching Amazon.

Disclaimer: This article represents the author’s opinion and should not be considered investment advice from CCN.com. The author holds no investment position in the above-mentioned companies.

This article was edited by Sam Bourgi.

Last modified: May 31, 2020 10:09 PM

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