Partnership between Microsoft and GM’s Cruise on self-driving cars

Yahoo Finance’s Alexis Christoforous and Dan Howley discuss Microsoft’s latest deal to enter the self-driving car space.

Video transcript

ALEXIS CHRISTOFOROUS: I want to change gears here now and check in with Dan Howley, our technical writer, for a story that came up this morning. Dan, more information on electric vehicles, everywhere, on how General Motors electric vehicles work. Now Cruise has the backing of some big companies, including Microsoft. Fill us in.

AND HOWLEY: Yeah, Microsoft is sort of getting into Cruise. It’s sort of a self-driving segment of GM. You can see here. It is one of the vehicles they put forward. They also have another vehicle that is supposed to be a kind of engine of people, rather than a personal vehicle. But Microsoft is investing $ 2 billion in Cruise, along with GM and Honda, to make it the cloud provider for the service.

And really, that is important because what everyone is talking about is how self-driving cars and vehicles like that will need cloud infrastructure and a good chunk of it to function. correctly. They will have to talk to each other, to the vehicles themselves, as well as to the infrastructure at some point. So the idea here is that if they see or were to see a full network of self-driving cars across the country and the world, they’ll need to be able to communicate, and using the cloud is the way to do that.

Now Microsoft is obviously one of the biggest cloud providers in the world along with Azure. They are right behind Amazon and AWS, no one else ahead of them. So it’s interesting to see Microsoft jump into this space. Obviously, it’s going to continue to heat up in this area, but having that kind of investment is really a big deal for Microsoft on its own. Because it shows they’re trying to get into spaces along these lines and say, listen, we’re not just focused on sidelining. We also want to invest in it.

ALEXIS CHRISTOFOROUS: We are also seeing a lot of movement among EV stocks. I know I had mentioned EV. It has to do with self-driving cars, the Cruise component within GM. But what about the EV space under a Biden administration? We see stocks take off, Tesla, once again, continuing its momentum. What do you hear from analysts as you talk to them about their expectations for the EV space in the coming months?

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AND HOWLEY: Yes, there has been a lot of talk about the performance of the EV space under Biden, especially because of any kind of federal credits that might be awarded to them or any kind of incentives that might be given to them, especially more than there is this push to move away from vehicles powered by internal combustion engines.

So whether it’s personal cars or even trucks, buses, anything like that, it’s really in that direction that we’re going to see governments all over the world, including Europe, saying they will fully phase out internal combustion engines within the next two decades. So – or at least the next two years.

So, this is something that I think we’re going to hear a lot more about from the Biden administration. But remember, there will be a lot of hindsight. Obviously, we have a lot of petroleum interests in the country and they will certainly want to be heard on what will happen in the future with internal combustion engines and what kind of emissions will result.

ALEXIS CHRISTOFOROUS: Yes, we learned today that a federal appeals court has overturned or rejected Trump’s rules on emissions from power plants. And we’re seeing some of the stocks related to that going up. Plus, Rivian seems to be – he’s doing very well here and is also capable of garnering a lot of interest from investors, raising $ 2.65 billion ahead of his first vehicle launch. What do you think about this?

AND HOWLEY: Yeah, you know, Rivian was interesting because they were in talks with Ford to help co-develop a platform there. It’s really this weird way of these big automakers of working with these outside companies to try to allow them to build the vehicles that they’re going to offer, and then implement that kind of technology in their own vehicles.

So we’ve seen that to some extent with GM and Nikola, where it obviously exploded, not necessarily in the right way for GM or Nikola. The idea was for GM to provide Nikola with more manufacturing capability, as well as some of the hydrogen technologies they use, hydrogen fuel cell technologies, which was really what Nikola was supposed to do on his own. This, obviously, however, struck them a bit. But this Rivian investment, obviously, will be much more impressive, at least as far as what we’ve seen.

Until now, the world leader in electric vehicles is still Tesla. And whoever tries to take on Tesla, whether it’s Ford with the Mach-E now, we know we’ve got GMC with a fully electric Hummer. I doubt it takes off as much as they want. But that’s a bit of a brand new image for this product. They’re all going to have to go through Tesla. And I think that’s really something they need to consider.

There are other electric vehicles currently available in different showrooms. People are just not interested in buying them. It seems like Tesla is the only one that people are looking at and saying, yeah, these are the kind of future vehicles I want. They don’t necessarily want one, you know – an EV style of an existing car type. So the Mach-E, I think, will really be the test of consumers’ appetites for EVs and the different styles they have. It was supposed to be a Mustang. It’s not. But we’ll see if some sort of reinvention of a legacy brand like this can play well in the EV space and if people are genuinely interested in buying them.