Shares of General Motors Corp. shot up into record territory Tuesday, after the automaker said it was partnering with Microsoft Corp. to speed up the commercialization of driverless cars.
As part of the “long-term strategic relationship,” Microsoft will join General Motors /zigman2/quotes/205226835/composite GM +2.91% , as well as Honda Motor Co. Ltd. /zigman2/quotes/207173990/composite HMC +2.74% /zigman2/quotes/200490352/delayed JP:7267 +1.61% and institutional investors on a combined new $2 billion equity investment in GM’s self-driving vehicle startup Cruise. GM said the investment brings the “post-money valuation” of Cruise to $30 billion.
GM’s stock soared 9.1% in very active afternoon trading, to trade well above its Jan. 14 record close of $51.53 . Trading volume ballooned to 47.4 million shares, compared with the full-day average over the past 30 days of about 16.8 million shares.
Microsoft shares /zigman2/quotes/207732364/composite MSFT +2.78% rose 1.3%.
GM’s stock has now run up 30.9% so far this year, as investors are reaping the benefits of GM’s all-in move into the electric vehicle market. GM has outperformed other electric vehicle makers year to date, as shares of Tesla Inc. /zigman2/quotes/203558040/composite TSLA -3.38% have rallied 18.5% and of China-based Nio Inc. /zigman2/quotes/204905836/composite NIO -3.92% have climbed 18.6%.
Cruise will use Microsoft’s Azure cloud platform to commercialize its autonomous vehicles at scale, while Azure will use Cruise’s industry expertise to enhance product innovation and serve its transportation customers.
“Microsoft is a great addition to the team as we drive toward a future world of zero crashes, zero emissions and zero congestion,” said GM Chief Executive Mary Barra. “Microsoft will help us accelerate the commercialization of Cruise’s all-electric, self-driving vehicles and help GM realize even more benefits from cloud computing as we launch 30 new electric vehicles globally by 2025 and create new businesses and services to drive growth.”
The valuation of GM’s Cruise is now closing in on that of Ford Motor Co. /zigman2/quotes/208911460/composite F +2.24% , which has a market capitalization of $40.1 billion. Also in the EV space, Nikola Corp.’s /zigman2/quotes/208704275/composite NKLA -6.86% market cap is $7.7 billion.
Microsoft Chief Executive Satya Nadella said: “Advances in digital technology are redefining every aspect of our work and life, including how we move people and goods. As Cruise and GM’s preferred cloud, we will apply the power of Azure to help them scale and make autonomous transportation mainstream.”
GM’s tock has soared 63.5% over the past three months, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.85% has gained 10.9%.