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Alphabet's Waymo Hires Avis to Manage Autonomous Minivans

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Alphabet Inc.’s (GOOGL - Free Report) self-driving car wing, Waymo has reportedly hired Avis Budget Group (CAR - Free Report) to store and service its fleet of autonomous vehicles.

The deal adds to the long list of partnerships that Waymo has been making to strengthen its position in this competitive and lucrative business.

Waymo Gets to Use Avis’s Revamped Facilitates

A Bloomberg report notes that it’s a multiyear but non-exclusive contract (Waymo keeps itself open for similar deals with others) currently limited to Phoenix, AZ. The terms of the deal were not disclosed.

Per the deal that will be effective later this year, Waymo will use Avis’ select refurbished Phoenix facilities to get its fleet of autonomous Chrysler Pacifica minivans housed and serviced. Avis will take care of basic services such as cleaning, oil changes and tire rotations but will not take responsibility of management of specialized hardware including lidar systems.

Avis will arrange tailored tents to protect the vehicles from rain but is not buying additional real estate.

Alphabet Inc. Net Income (TTM)

Waymo Looks to Boost its Ride Sharing Efforts

There are high chances that Waymo will extend the partnership by offering its self-driving technology to Avis owned Zipcar fleet. Zipcar is an on-demand ride sharing network with more than one million members.

Therefore, Waymo could get access to this network, going forward. This will strengthen its position in the ride sharing space. Waymo Chief Executive Officer John Krafcik stated that Avis’ ownership in Zipcar was one of the key factors that attracted its interest.

Waymo Gearing Up for a First Mover Advantage

The process started when it was spun off as a separate company. Since then, Waymo has accelerated its push in this space predominantly with partnerships.  Apart from its plans to deploy 600 vehicles from its existing partner Fiat Chrysler Automobiles , it is said to be working on a self-driving vehicle partner program with Lyft and is also in talks with Honda Motors to include its vehicles in its fleet.

An early breakthrough in the space will be encouraging news for investors and will boost Alphabet’s share price that has gained 40.9% in the last one year compared with the Zacks Internet - Services industry’s gain of 31.9%.

Partnerships Gaining Significance

Alphabet has reportedly made significant progress in developing self-driving technology and seems to be firing on all cylinders to counter stiff competition from the likes of Uber. The deal is another example of how important partnerships are as more and more companies are making their presence felt in the space.

As they do so, they realize that the path is not without its share of potholes. Thus, a number of them are opting for partnerships to combine competencies of technology companies with traditional auto suppliers.

Apart from Waymo’s ongoing partnership with Fiat Chrysler, other notable partnerships include that of Microsoft (MSFT - Free Report) with Toyota to back its research with AI, robotics and self-driving technology. Lyft has an ongoing self-driving partnership with General Motors Company, which is also one of its investors.

Wrapping Up

The autonomous cars space is one of the best places to be in because the technology is still at a nascent stage. Also, early investors can sell their interest at a nice premium.

The primary selling point for self-driving cars is increased safety due to fewer possibilities of accidents. Research suggests that automated driving will remove the chances of accidents due to human errors (such as sleep, distraction, intoxication, carelessness, brake failure or other mechanical problems).

Alphabet sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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