Amazon.com, Inc. (NASDAQ:AMZN) is in late-stage talks to acquire Zoox, a budding robo-taxi service. Zoox’s hardware and software assets could be a boon for Amazon, but a bane for automotive players fighting to retain market share.

Morgan Stanley analysts led by Adam Jonas maintained an Overweight rating on Amazon with a $2,600 price target.

How Amazon Could Become A Threat

Zoox positions Amazon to expand its total addressable market with food-delivery and ride-sharing services.

“AMZN’s innovation focus, capital to invest, and leading shipping volumes (and the miles driven along with them) make it one of the few companies that could build a product to compete with Waymo, Uber, Lyft and others,” Jonas wrote in a note.

Zoox’s capabilities would also position Amazon to rival automotive companies.

“In a post-COVID world, we believe fewer and more powerful players will be in position to deploy capital and talent to solving autonomy with a ‘play to win’ mindset,” the analysts wrote. “We see Amazon (and other tech players) as clear competitors, not partners, vs the likes of” Tesla Inc (NASDAQ:TSLA), Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM).

Retailers, Shippers Could Also Be Hurt

Amazon’s expansion could also hurt retailers and shippers. By Morgan Stanley’s estimate, Zoox could hasten the development of Amazon's third-party logistics network and generate shipping efficiencies that save more than $20 billion a year.

“From an e-commerce perspective, it could lead to a potentially even more efficient long-term delivery network (long-haul and last mile) to compete harder against traditional retailers and other online players,” the analysts wrote. “In our view, the value of cost effective shipping is likely to only rise given the inflection we are seeing in e-commerce in 2020.”

Autonomous middle-mile and last-mile delivery services would challenge United Parcel Service, Inc. (NYSE:UPS) and FedEx Corporation (NYSE:FDX).

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