The race to replace the traditional car is already one of the most fascinating stories in global business.
Internet giants such as Google and China’s Baidu, upstarts such as Uber and Tesla (led by the increasingly volatile Elon Musk) and traditional automakers like General Motors, are all vying for control of a market that analysts believe will be worth trillions of dollars.
Yet, from an Australian perspective, this race is about to get much more interesting.
A secretive autonomous vehicle company, led by an Aussie, is in the process of restocking its war chest with hundreds of millions of dollars in fresh funding. And the nation’s most prominent tech entrepreneur is firmly behind it.
Zoox, a California based autonomous vehicle company co-founded by a Melbourne designer, Tim Kentley-Klay, is in advanced talks with investors about a massive “series B” funding round that would value it at around $US3 billion ($AU4 billion), sources have told Fairfax Media.
Mike Cannon-Brookes, the Atlassian co-CEO, is a significant investor in the round through his personal vehicle Grok Ventures. He is expected join the company’s board once it’s completed.
A representative for Zoox confirmed the funding talks. Cannon-Brookes declined to comment.
The funding from Grok and other investors will provide Zoox with hundreds of millions of dollars in ammunition for what looms as a financial war attrition against some very deep pocketed rivals.
Zoox wants to build and operate a fleet of driverless taxis that would endlessly roam the streets. It hopes to have a vehicle on the roads by 2020, but it will need significant funding to achieve its lofty aims.
Last week, boutique American investment bank Aegis estimated that on-demand ride hailing could be an industry worth $US1 trillion, or 15 per cent of the global transportation market, by 2030.
In an era of autonomous vehicles, its estimates double to $US2 trillion, and 30 per cent, respectively.
Kentley-Klay, a graduate of Camberwell Grammar and Swinburne University, has repeatedly said Zoox is not pursuing an incremental update to the automobile, but something completely different and transformational.
Zoox’ vehicles likely won’t have a steering wheel, for example, and would be ordered through an Uber-style ride hailing service.
“Zoox is not building a better car, we actually think we are building what comes after the car, which is a robot,” he said at a conference last year.
Little is known about Zoox’s vehicles, due to the company’s closely guarded secrecy.
The company has distanced itself from images of prototypes that have previously been distributed on social media.
Kentley-Klay last year said the company has “test mules in the wild” on the streets of California.
Zoox faces stiff competition from a host of cashed up rivals from both the tech and auto industries.
Waymo, a unit of Google’s parent company Alphabet, is considered the market leader in autonomous vehicles – its self-driving cars have already notched up 5 million miles.
Other prominent aspirants include Chinese tech company Baidu (which is building a self-driving bus), ride-hailing company Uber, China’s Didi Chuxing, Elon Musk’s Tesla and established automakers such as General Motors, which has invested $US500 million in Uber rival Lyft.
Last month Forbes reported on the company’s recent hiring activity, noting that 16 per cent of its employees had previously worked for Tesla. The report noted that Zoox has a funding round in the works that would see it raise significantly more money.
Sources said the company was initially raising upwards of $US600 million in the round.
In 2016, Zoox raised $US290 million from top-tier US venture funds Lux Capital and DFJ, and other investors including, Sydney-based Blackbird Ventures, and China’s Tencent. That financing round valued the business at $US1.5 billion.
Last year, it was reported that the company was in discussions with Japanese wireless behemoth Softbank, one of the world’s biggest investors in emerging tech firms, about a $1 billion funding round that would value Zoox between $3 billion and $4 billion.
The deal will represent a major personal financial bet from Cannon-Brookes, whose $US4 billion plus net worth is mostly tied up in Atlassian stock.
Cannon Brookes is a major investor in many Australian linked tech start-ups including Australian home energy lender Brighte and cyber-security firm Cog.
This would be a much bigger gamble. Yet the rewards could also be much more substantial.
Aegis described autonomous vehicles as the “endgame” for all ride-hailing companies. Ride-hailing services operating with autonomous vehicles would not have to pay drivers, and their vehicles would be constantly on the roads.
The “market share of transportation services [powered by autonomous vehicles] would explode higher, and so would their revenues and profits, and their valuations” Aegis’ analysts wrote.
“That is essentially the longer-term investment case for owning companies in this burgeoning space”
NOW WATCH: Tech Insider videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.