Alphabet Inc.’s (NASDAQ:GOOGL) Waymo unit has tapped Avis Budget Group Inc. (NASDAQ:CAR) to provide support and maintenance services for its fleet of self-driving cars.
Avis Budget Group is one of the largest rental-car companies in the U.S. and owns the Avis, Budget and Zipcar brands. Its shares rose by more than 14% following the announcement.
The partnership will be launched in Phoenix, Arizona, where Waymo kicked off what it calls an early rider program, which is a public trial of its self-driving cars.
Waymo recently announced that it plans to expand its fleet of Chrysler Pacifica minivans to approximately 600 vehicles.
Under the terms of the multi-year deal, Avis Budget Group will improve certain rental facilities to offer services and secure parking for Waymo’s fleet. The services cover oil changes, tire rotations, exterior cleaning and the ordering and installation of parts, as well as other key fleet support and maintenance.
The companies did not disclose the financial terms of the deal.
“Not only does this partnership enable us to leverage our current capabilities and assets, but it also allows us to accelerate our knowledge and hands-on experience in an emerging area as Waymo-enabled self-driving cars become available in the marketplace,” said Larry De Shon, president and CEO of Avis Budget Group.
Ride services such Lyft and Uber Technologies Inc. have been a hit to travelers, which in turn have led to declines in the stock of Avis Budget Group, Hertz Global Holdings Inc. (NYSE:HTZ) and other traditional car companies.
This partnership, however, points to a potential future for the rental car industry as managers for autonomous and shared vehicle fleets require their services when the vehicles are not in operation.
Automotive analysts, meanwhile, believe Waymo’s selection of Avis Budget Group as a partner was no accident, given that the latter does not have an existing stake in self-driving cars, and working with the group could avoid giving other car companies a peak into its efforts.
“[It was] likely done in an effort to hedge against automakers’ race to develop their own autonomous technology,” Kelley Blue Book analyst Tony Lim said.
Apple Not Far Behind
Meanwhile, Bloomberg News reported that Apple Inc. (NASDAQ:AAPL) is leasing a small vehicle fleet of Lexus SUVs from Hertz Global’s Donlen unit to test self-driving technology.
Shares of Hertz rose jumped over 13% as a result.
Morgan Stanley analysts previously said that Waymo could be worth $70 billion if it were allowed to exist as a standalone startup.
The startup’s massive valuation was mainly because it has a partnership with Lyft, the analysts noted.