How Avis-Waymo Partnership Will Impact the Future of AVs

Earlier this week two national car rental agencies partnered up with two of the biggest tech companies in the United States, potentially marking a definitive change in the autonomous vehicle market.

On Monday, Avis Budget Group and Waymo said they would be non-exclusive partners in Phoenix, Ariz., where Waymo is currently testing self-driving vehicles through its early rider program. The tech company plans to grow its autonomous fleet to 600 minivans, dictating the need to partner with an experienced fleet manager, the company said in an announcement.

“As we build out our own fleet, we’ll tap into [Avis’] expertise in providing efficient and high-quality maintenance at scale,” the Waymo statement said.

Avis and Waymo did not respond to a request for comment.

Later that day, Hertz Global Holding Inc. reportedly inked a partnership with Apple for its own fleet of six self-driving cars. The iPhone maker is leasing Lexus RX450h sport-utility vehicles from Hertz’s Donlen fleet-management unit, according to documents released by the California Department of Motor Vehicles. When Apple received its license to test three autonomous vehicles from the state’s DMV in April, the documents listed Donlen as the lessor and Apple as the lessee.

“What Waymo and Apple are doing is exactly what they need to do because neither are auto manufacturers,” Sam Abuelsamid, senior research analyst at Navigant Research, told Mobility Finance.

This pivot toward fleet management is poised to have a significant impact on the future of autonomous vehicles, since the idea of personal ownership becomes unlikely as more OEMs, rideshares — and now tech companies — position themselves to maintain ownership and thus control over self-driving vehicles.

In order for tech companies to provide OEMs with autonomous vehicle operating systems and adjacent services — whether those be ridehailing or subscription-based services — those companies need to have their own fleets of vehicles to use for testing and developing a “back-end infrastructure,” Abuelsamid said. Car rental companies are perfectly positioned to provide that kind of support, because of the experience they have in tracking vehicles, fueling them, servicing them, and having places to store the vehicles when not in use, he said.

“For car rental companies like Hertz and Avis it’s a perfect opportunity to get a new revenue stream,” Abuelsamid added. “For the car manufacturers, they are likely to follow a similar path in deploying AVs,” Abuelsamid said, adding that there are two primary reasons why automakers may want to retain ownership: they won’t have to split the revenue, if they have their own mobility services; and manufacturers are interested in investing in vehicle services because they can have repeat customers with a continuous revenue stream.

Avis, in particular, has an advantage, as the company owns Zipcar, one of the first on-demand rental services with more than one million members and vehicles spread across urban centers. This gives Avis a better understanding of how to service vehicles that are not concentrated on one lot, but are sprawled across many areas.

Zipcar was part of Avis’ appeal, John Krafcik, Waymo chief executive, said in a published report.  “One of the wonderful things about partnerships like this is that they are open,” he said.

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