(Adds details on Arizona testing, Volkswagen, U.S. motor vehicle safety regulator, adds SAN FRANCISCO to dateline)
By David Shepardson and Alexandria Sage
WASHINGTON/SAN FRANCISCO, Oct 30 (Reuters) - Alphabet Inc's Waymo unit on Tuesday became the first company to receive a permit from the state of California to test driverless vehicles without a backup driver in the front seat, the state's Department of Motor Vehicles said.
California said Waymo can use about three dozen test vehicles without drivers behind the wheel in Santa Clara County, part of the greater technology hub of Silicon Valley.
Although self-driving vehicles are designed to eliminate the need for a driver, most testing thus far has been with a safety driver behind the wheel who can take over in case of emergency.
About 60 companies have permits in California to test self-driving cars with such a backup driver, including most major automakers and Apple Inc. New regulations adopted by the state allowing companies to test on public roads without a driver with a special permit took effect in April.
As part of winning approval, Waymo must continuously monitor the status of test vehicles and provide two-way communication with passengers, carry at least $5 million in insurance and notify local communities.
Waymo's permit includes day and night testing on city streets, rural roads and highways with posted speed limits of up to 65 miles per hour (105 kph). The company said its vehicles can safely handle fog and light rain, and testing in those conditions is allowed.
Waymo said it will begin driverless testing on city streets in Silicon Valley and expand to other areas after it notifies local communities. The company will first use Waymo employees in tests and eventually "create opportunities for members of the public to experience this technology, as we've done in Arizona with our early rider program."
In Arizona, Waymo has been conducting some testing of vehicles without backup drivers and has said it plans to launch a commercial self-driving ride hailing service in the state by the end of 2018.
Last week, Alphabet Chief Financial Officer Ruth Porat said on an earnings call that customers were beginning to pay for rides in Arizona and the company was testing pricing models.
Waymo is considered to be at the forefront of self-driving, due to its decade of testing and millions of miles driven. Also on Tuesday, Volkswagen AG Chief Financial Officer Frank Witter cited Waymo as an industry leader and said the German automaker would be open to deeper alliances with others.
California's new requirements call for remote control technology, which allows for a remote operator to take control of a vehicle if the underlying autonomous system inside the car encounters problems. Companies like Waymo, Nissan Motor Co and startups Zoox, Phantom Auto and Starsky Robotics have been working on such technology.
The National Highway Traffic Safety Administration declined to comment on Tuesday but reiterated earlier this month that as long as driverless vehicles have steering wheels and pedals, they do not need preapproval from the agency to test on public roads. (Reporting by David Shepardson in Washington and Alexandria Sage in San Francisco Editing by Dan Grebler and Matthew Lewis)