Waymo, the self-driving auto unit of Alphabet Inc, said on Monday it signed a multi-year agreement with Avis Budget Group Inc for the auto rental firm to manage its growing fleet of autonomous vehicles, sparking a surge in Avis Budget's stock.
The agreement will see the rental vehicle company manage a fleet of minivans in Phoenix, where Waymo is now operating a ride-hailing service with volunteer members of the public.
Working with Avis allows Alphabet to put more self-driving cars on the road for its autonomous ride-hailing program, according to a company spokesperson. Instead of selling autonomous vehicles directly to the public-which will happen eventually-operating the fleets themselves means they can be commercially insured, solving (for the time being) one of the big unanswered questions about the evolving technology.
Avis gives Waymo a potential asset that rivals like the major automakers and Uber Technologies Inc. already have: a sprawling network of traditional cars and customers that could be transformed into an autonomous transport service over time. Avis will retrofit certain facilities in Phoenix with tents to shelter the cars from the elements, but the rental company will not purchase any new land. Waymo plans to deploy a bulk of its 600 vehicles from Fiat Chrysler Automobiles in Phoenix.
Waymo and Avis did not say whether their partnership will expand to other cities, but John Krafcik, the head of Waymo, said in a statement that "with thousands of locations around the world, Avis Budget Group can help us bring our technology to more people, in more places".
Avis locations will be reworked to accommodate Waymo's vehicles without acquiring additional space. Keeping up with maintenance will be a full-time job in itself, thus Waymo is smart to outsource that part of its fleet support. Shares in Hertz were up 7.7% to 10.28, as Wall Street apparently expects the car-rental leader to score its own self-driving deal with one of several entities involved in the effort. Within the past few years, the field has seen heavy investment for software and cars by companies ranging from Apple to Nvidia.