Alphabet's self-driving car unit, Waymo, has announced that Avis Budget Group would be managing its self-driving vehicles.
We still don't know the full details of the deal, but the announcement had an immediate impact on Avis's stocks. The partnership has seen Avis's shares rise sharply since the announcement was made.
Waymo Will Begin In Phoenix
Waymo plans to begin its self-driving service in Phoenix, Arizona, where Avis will manage Waymo's fleet of self-driving Chrysler Pacifica minivans. The vans are still owned by Waymo, and Avis will be paid for maintaining and storing the vehicles. The deal is not exclusive, but the exact expiration date has not been revealed, though we do know it will be in effect for several years.
What Does Alphabet Get Out Of This Deal?
The biggest win for Alphabet will be access to Avis's network of traditional rental customers. This gives Waymo access to large user base that could make the transition from traditional cars to self-driving ones. Uber, Lyft, and major car manufacturers already have the supply chains and customer networks in place to make the transition to self-driving cars. Waymo, on the other hand, had the technology to create self-driving cars but lacked a support network.
In addition to its standard car rental service, Avis also manages Zipcar, an online rental service with more than 1 million members. Most of these members live in urban areas, where not everyone relies on cars for day-to-day travel. The current iteration of the deal only includes Waymo's vehicles in Phoenix, but it could expand beyond that. Waymo CEO John Krafcik said that Zipcar was part of Avis's appeal, and he appreciates the openness of their current deal.
The Future Of Self-Driving Cars
This deal is the one of the first of its kind in the industry, but it likely won't be the last. Self-driving cars are far from commonplace, but one needs to look no further than Blockbuster to see the dangers of ignoring the disruptive potential of technology.
This isn't the only such deal announced today. It has been reported that Apple has partnered with Hertz to manage its own fleet of self-driving cars. Apple's self-driving car project is currently in the testing phase with its focus being placed on the Bay Area of San Francisco.
These deals make it clear that Avis and others in the industry are determined to avoid becoming a casualty of automation.