Shares of General Motors (NYSE:GM) opened higher on Tuesday, after the company announced that tech giant Microsoft (NASDAQ:MSFT) will join a new round of investment in self-driving start-up Cruise.
As of 10 a.m. EST, GM's shares were up about 6.8% from Friday's closing price.
GM and Cruise said on Tuesday that they have entered into a "long-term strategic relationship" with Microsoft. Here are the key points of the deal:
- Cruise's autonomous taxis will use Microsoft's Azure cloud-computing platform.
- Azure will become the preferred cloud-computing platform for General Motors.
- Microsoft will join GM, Honda Motor (NYSE:HMC), and some unnamed institutional investors in a new funding round of more than $2 billion for Cruise.
Cruise's "post-money" valuation, meaning its valuation after this funding round closes, will be $30 billion, the companies said. That's why shares of GM, which holds a majority interest in Cruise, are higher today.
The size of Microsoft's investment wasn't revealed -- it's part of that "more than $2 billion" total -- but there's no doubt it's a significant deal for Cruise, and for Cruise's majority investor, GM.
I expect auto investors will learn more about the deal when GM reports its fourth-quarter and full-year 2020 earnings in early February.