Apple and Hertz Partnership for Self-Driving Car Fleet Testing

Apple Inc. is partnering with Hertz Global Holdings Inc. to test its self-driving auto technology in six of the car rental company’s automobiles, according to a report. The news report was published Monday based on California Department of Motor Vehicle documents. This agreement echoes a larger deal between competitors Alphabet Inc. and Avis Budget Group Inc.

Hertz shares increased the most in nearly two years.

The news comes not long after Tim Cook, Apple CEO, told reporters that the company was focusing on “autonomous systems” rather than its original plan for an entire self-driving car.

“We sort of see it as the mother of all AI projects- it’s probably one of the most difficult AI projects actually to work on,” Tim Cook said in an interview.

It also comes just hours after the announcement, on Monday, that Avis Budget Group Inc., Hertz competitor, formed a partnership with Alphabet Inc.’s autonomous vehicle division, Waymo. The Avis-Waymo deal will take the form of Avis servicing 600 of Waymo’s self-driving cars in Phoenix, Arizona.

The iPhone maker is renting Lexus RX450h sport-utility vehicles from Hertz’s Donlenfleet- management unit, according to recently released documents. 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. Presumably, this partnership is a way for Hertz to test self-driving vehicle technology rather than letting its customers actually rent self-driving cars at this point in time.

A half- dozen vehicles have been testing Apple’s autonomous technology on public roads in and around the San Francisco Bay Area at least a year. The intentions of Apple’s move into driverless car technology, codenamed Project Titan, changed last year when the company stopped working on its own car to develop self-driving AI that could be fitted into other vehicles.

Meanwhile, Hertz stock slumped by more than 75% over the past 12 months in the middle of falling revenue and profit, and investor concern about the role rental companies will play in an automotive industry where self-driving cars and ride-hailing play a greater role. The shares trimmed some of those losses after Alphabet’s Waymo unit tapped Avis to manage its fleet of autonomous vehicles in Phoenix.

According to a report, Hertz shares increased 12.5% to $10.70 on a news Monday morning and were trading in the high-single-digit percentages before the report at 2:24 PM ET. Within three minutes, Hertz shares jumped 17.8% to $11.27, the biggest rise since July 2015. And as of 3:30 PM ET, the stock was trading just below $11.

On one hand, Avis did not move significantly right after the Hertz-Apple news, but had gradually climbed to $27.53 as of 3:30 PM ET.

When asked whether Apple wanted to build its own car in the future, Mr. declined and said, “We’re not really saying from a product point of view what we will do.”

However, Apple Inc. traded 0.31%, or 0.46, to $145.82, by 4:25 AM GMT-4. It opened in $147.17, with a session high of $148.28, and a session low of $145.38. Its market capitalization was $763.68 billion, its P/E ratio was 17.06, and its dividend yield was 1.73%.

However, Hertz Global Holdings traded 13.52%, or 1.29, to $10.83, by 4:30 AM GMT-4. It opened in $9.50, with a session high of $11.27, and a session low of $9.26. Its market capitalization was $798.61 million.

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