Google to make driverless cars an Alphabet company in 2016

Google plans to make its self-driving cars unit, which will offer rides for hire, a stand-alone business under its parent company Alphabet Inc next year, Bloomberg reported.

The service could be launched in San Francisco and Austin, Texas locations, where it has tested the cars extensively, Bloomberg said, citing a person briefed on the company`s strategy.

The fleets could be deployed first in confined areas like college campuses, military bases or corporate office parks, Bloomberg reported.

Alphabet declined to comment.

The company reorganized itself in August to separate the core web advertising business from newer ventures like driverless cars.

Under the new structure, search, advertising, maps, YouTube and Android are part of the Google unit. Alphabet`s businesses include connected home products maker Nest, venture capital arm Google Ventures, and Google X, the secretive research arm which houses the self-driving car unit.

Alphabet`s pet project of driverless cars started in 2009 and it along with other automakers have said the technology to build self-driving cars should be ready by 2020.

The company said in July it was testing a fleet of 23 specially equipped Lexus prototypes, which had logged more than 1 million test miles.

In June, the company began testing tiny, bubble-shaped self-driving prototype vehicles of its own design on public roads around Mountain View. The company has also started testing self-driving prototypes in Austin.

Google`s move to put the self-driving cars up for hire will put it in direct competition with ride hailing services such as Uber [UBER.UL] and Lyft.

Uber also currently uses Google Maps to help users hail a cab as well as chalk out routes. But, Uber awarded TomTom a contract in November to provide digital maps and traffic data for the software used by its drivers.

Google-owned online mapping company Waze in July launched a carpooling pilot programme called RideWith in Israel where commuters pay fellow drivers a small fee for a ride.