General Motors "Blue Sky" Scenario Could Send Stock To $160: B Of A

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This morning we noted that GM had risen to all time highs on the back of an autonomous driving investment from Microsoft and comments from incoming Treasury Secretary Janet Yellen about the importance of EVs for the country under a Biden administration.

Now, Bank of America - like the rest of the market - appears to be waking up to the idea that a "new autonomous General Motors" (as they refer to it) still could have plenty of runway ahead of it. 

B of A says that the tie up with Microsoft "provides important cloud/computing value" to GM, especially for ride-hailing and fleet services:

Perhaps more important than the equity investment and increased valuation for Cruise (versus last mark of $19bn in 2019), the announcement with Microsoft this morning marks another important strategic partnership for Cruise (and GM), not dissimilar to the one that was established with Honda in 2018. As a reminder, Honda’s value-add to Cruise/GM was shared investment and core competencies (small car programs and form factors) to develop a purpose-built autonomous vehicle to be deployed in a mobility services model, as well as theoretical access to the Japan market for deployment.

As noted above, Microsoft’s value-add to the partnership will be its Azure cloud computing platform, which will help manage the extensive amount of data required for robust autonomous capabilities of the vehicles in fleet, not to mention mapping/point location, vehicle communication with Cruise’s back office (as well as infrastructure, vehicles, etc.), and the customer-facing app for ride-hailing services, among other potential collaborations.

The note continues: "Moreover, Microsoft’s cloud computing platform to enable Cruise to commercialize its autonomous vehicles and mobility services business puts the partnership at least in the league of the likes of Waymo/Google and Zoom/Amazon."

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