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Microsoft and GM’s Cruise partnering on self-driving cars

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Yahoo Finance's Alexis Christoforous and Dan Howley discuss Microsoft's latest deal to get into the autonomous car space.

Video Transcript

ALEXIS CHRISTOFOROUS: I want to switch gears here now and check in with Dan Howley, our tech editor, for a story that broke this morning. Dan, more on EV, all over the place, General Motors' electric vehicle operation. Now Cruise getting some big backing from some big name companies, including Microsoft. Fill us in.

DAN HOWLEY: Yeah, Microsoft is kind of going in on Cruise. This is sort of GM's self-driving segment. You can see here. This is one of the vehicles that they kind of are pushing forward. They also have another vehicle that's meant to be kind of a people mover, rather than a personal vehicle. But Microsoft putting $2 billion into Cruise, along with GM and Honda, to make them the cloud provider for this service.

And really, that's important because what everybody's talking about is how self-driving cars and vehicles along these lines will need Cloud Infrastructure and a good deal of it to actually function properly. They're going to have to need to talk to each other, the vehicles themselves, as well as infrastructure at some point. So, the idea here is that if they're to see or were to see a full self-driving network of cars around the country and the world, they're going to need to be able to communicate, and using the cloud is the way to do that.

Now, Microsoft's obviously one of the largest cloud providers on Earth with Azure. They're just behind Amazon and AWS, nobody else in front of them. So it's interesting to see Microsoft jumping into this space. Obviously, it's going to continue to heat up in this area, but having this kind of investment really a big deal for Microsoft in and of itself. Because it shows that they're trying to get into spaces along these lines and say, look, we're not just focused on sitting on the sidelines. We want to invest in this as well.

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

DAN HOWLEY: Yeah, a lot of talk has been made about how well the EV space would do under Biden, specifically because of any kind of federal credits that could go to them or any kind of incentives that could go to them, especially as there's this push to move away from vehicles powered by internal combustion engines.

So whether that's personal cars or even trucks, buses, anything along those lines, that's really kind of going to be the direction that we're going to be seeing governments across the world, including in Europe, say that they're going to fully do away with internal combustion engines in the next couple of decades. So-- or at least the next couple of years.

So, this is something that I think we're going to hear a lot more about from the Biden administration. But don't forget, there's going to be plenty of pushback. Obviously, we have a lot of oil interests in the country, and they will definitely want to be heard as far as what happens to the future of internal combustion engines and the kind of emissions that result.

ALEXIS CHRISTOFOROUS: Yeah, we found out today that a federal appeals court has vacated or thrown out Trump's rules on emissions at power plants. And we're seeing some of the stocks related to that move higher. Also, Rivian looks like it is-- it's doing very well here and also able to garner a lot of interest from investors, raising $2.65 billion ahead of its first vehicle launch. What do you make of that?

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

So, we saw this to a degree with GM and Nikola, where that, obviously, kind of blew up, not necessarily in the right way for GM or Nikola. The idea there was for GM to provide Nikola with more manufacturing capabilities, as well as some of the hydrogen technologies that they use, the hydrogen fuel cell technologies, which was really what Nikola was supposed to be doing on its own. That, obviously, though, kind of knocked back on them a little bit. But this Rivian investment, obviously, going to be much more impressive, at least as far as what we've seen.

So far, the EV leader globally is Tesla still. And anyone that's trying to take on Tesla, whether it's Ford with the Mach-E now, we know that we have GMC with an all electric Hummer. I doubt that's going to really take off as much as they might want. But it's a little bit of a rebranding for that product. They're all going to have to go through Tesla. And I think that that's really something that they need to take into account.

There are other EVs available now in different showrooms. People just aren't interested in buying them. It seems as though Tesla is the only one that people look at and say, yeah, that's the kind of future vehicles that I want. They don't necessarily want a, you know-- an EV style of an existing kind of car. So the Mach-E, I think, really will be the test as to what consumers' appetites are for electric vehicles and the different stylings that they have. This was supposed to be a Mustang. It's not. But we'll see if kind of reinvention of a legacy brand like that can play well in the EV space and if people are actually interested in buying them.