Alibaba Set to Merge Autonomous Driving Unit with Zelos in $2 Billion Deal

Summary

Alibaba’s logistics arm, Cainiao, is reportedly planning to merge its autonomous-driving operations with Chinese startup Zelos Technology in a deal that could create a combined entity valued at around $2 billion. The move marks a strategic shift away from heavy in-house R&D toward a partnership-driven model aimed at rapidly scaling last-mile delivery automation across China.

HANGZHOU — Alibaba’s logistics subsidiary Cainiao is preparing to combine its autonomous-driving unit with robovan maker Zelos Technology, according to people familiar with the matter, as reported by The Wall Street Journal.

The transaction would bring together Cainiao’s self-driving delivery assets with Zelos’ autonomous vehicle technology, forming a new business tentatively known as Cainiao Robovan, which is expected to oversee a fleet of more than 20,000 driverless delivery vehicles.

The merged entity is projected to carry a valuation of roughly $2 billion, reflecting growing investor interest in automation solutions designed to lower logistics costs and improve delivery efficiency in China’s massive e-commerce sector.

Neither Alibaba nor Zelos has publicly commented on the reported discussions.

Strategic Consolidation of Last-Mile Automation

Under the proposed structure, Alibaba would become a strategic shareholder in Zelos, while the startup would assume operational control of the combined autonomous driving business.

A senior Cainiao executive is expected to join Zelos’ board, ensuring Alibaba retains strategic influence as the technology is deployed more broadly across Cainiao’s logistics network and Zelos’ commercial clients.

The move represents a clear pivot by Alibaba away from running autonomous driving as a capital-intensive in-house research project toward a more scalable partnership model — one increasingly favored across China’s tech sector amid tighter margins and rising development costs.

Previously, the autonomous driving unit had been transferred from Alibaba’s Damo Academy research arm into Cainiao as part of broader restructuring efforts.

Zelos Gains Scale, Alibaba Gains Speed

Founded in 2021, Zelos Technology focuses on Level 4 autonomous delivery solutions for postal services, express logistics, and urban distribution networks.

By merging with Cainiao’s robovan operations, Zelos gains immediate access to one of China’s largest logistics infrastructures and real-world deployment environments — a major advantage in commercializing autonomous delivery at scale.

Industry analysts say the deal directly targets three of China’s most pressing logistics challenges:

• Rising labor costs across urban delivery networks
• Congestion in dense city corridors where short-haul automation offers efficiency gains
• Margin pressure in last-mile logistics as competition intensifies

Regulatory Oversight Still Ahead

The merger remains subject to regulatory scrutiny in China, including approvals related to autonomous driving operations and data handling.

China has been tightening oversight of smart mobility technologies while simultaneously encouraging automation that improves industrial productivity — creating a complex policy environment for large-scale driverless deployments.

Why This Matters

This deal highlights how China’s tech giants are reshaping innovation strategies in 2026:

• From in-house R&D to platform partnerships to cut costs and scale faster
• Autonomous delivery becoming commercially critical, not experimental
• Logistics automation emerging as a profit lever rather than a tech showcase

For Alibaba, the move accelerates deployment without absorbing massive development risk.
For Zelos, it instantly becomes one of the largest autonomous delivery operators in China.

Together, the merger could redefine last-mile logistics economics across Chinese cities.

FAQs

Q1. Is Alibaba buying Zelos outright?

No. This is an equity-based merger where Alibaba contributes its autonomous driving assets in exchange for a strategic stake in the combined business.

Q2. What will the new company be called?

Insiders have referred to it as Cainiao Robovan, though the final legal name has not yet been confirmed.

Q3. Why is Alibaba shifting away from in-house development?

The partnership model reduces R&D burn while accelerating commercial deployment and maintaining strategic influence.

Q4. What does Zelos specialize in?

Zelos develops Level 4 autonomous delivery vehicles used in postal services, express logistics, and urban distribution.

Q5. Is the deal finalized?

No. Discussions are ongoing and subject to regulatory approvals in China.