A few things you probably know about the Phoenix area: It has a lot of golf courses (more than 200). It’s hot (85% of the days per year are sunny). You might also know that it’s one of the top five growth markets for tech in the U.S. Intel alone has two factories in the region, and there are 66,000 IT workers—more than in Denver or Austin. It’s also home to the Barrett-Jackson collector car auctions, where for decades, Craig Jackson and his team have put some of the greatest examples of automotive history across the block and on TV.
What probably don’t know is that it’s not just the car industry’s history that’s making money there these days—but also its future. The Phoenix region is fast becoming a key center of the burgeoning self-driving car industry.
Google (GOOGL) announced earlier this year that it will make Chandler—one of the 23 cities that comprise the greater Phoenix metro area—the next hub for testing and developing its expanding fleet self-driving test cars. Google has 55 autonomous vehicles on the road today and recently announced a deal with Fiat-Chrysler for another 100. “We want to learn how sensors react to the dust in the air, and other area quirks—unique vegetation and golf-cart crossings, for example,” says Google spokeswoman Lauren Barriere. “There’s a lot of enthusiasm for tech in Chandler and residents are supportive of self-driving cars being on the road.”
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Two years ago GM (GM) also chose Chandler as the site of one of its four IT centers responsible for inventing global software systems across the company’s business units, with some 900 employees—roughly 40% of whom graduated from college within the last two years. And Cruise Automation, a startup exploring self-driving systems that GM recently acquired for more than $1 billion, has opened facilities in Phoenix. Others, too, from behemoths such as Uber and Toyota (TM) to start-ups—like Beepi, a used-car buying and selling solution, and Turo, a peer-to-peer car rental service—have built significant presences in the region.
One of Phoenix’s most interesting and fast-growing businesses is Local Motors, a next-gen manufacturing and consulting company that uses 3D printing, modular construction and open-source technologies to rapidly build vehicles customized to solve specific transportation challenges. To that end, Local Motors just launched its first autonomous vehicle, a public “bus” designed for a mixed-use community in National Harbor, outside of Washington, D.C. Using its building-block approach to construction, the company can go from design to mobile prototype in less than a month; the traditional OEM approach takes years.
Why Phoenix over, say, Silicon Valley? Or even Detroit? Businesses say they like the low costs, strong infrastructure, and huge pool of computer-science grads from local universities. Moreover, the state’s governor issued an executive order calling for autonomous driving in the state “regardless of whether the operator is physically present.” Plus, robots don’t mind the heat.
A version of this article appears in the August 1, 2016 issue of Fortune with the headline “The country’s hottest new automotive city is …Phoenix?”