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GM Stock Rose 2% Yesterday as Honda Joins Cruise Ride

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Oct. 4 2018, Published 7:10 a.m. ET

GM stock

On October 3, General Motors (GM), the largest US automaker (XLY), rose 2.1%. Ford (F), Fiat Chrysler (FCAU), Tesla (TSLA), and Honda (HMC) fell 0.8%, 1%, 2.1%, and 3.6%, respectively, that same day. Let’s take a look at what drove optimism in GM stock.

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Honda joins GM’s Cruise ride

On October 3, General Motors revealed that “Honda will work jointly with Cruise and General Motors to fund and develop a purpose-built autonomous vehicle for Cruise.” According to the deal, HMC has agreed to make “a $750 million equity investment” in GM’s Cruise. In addition, “Honda will contribute approximately $2 billion over 12 years to these initiatives.”

In GM’s statement, chairman and CEO Mary Barra said, “Together, we can provide Cruise with the world’s best design, engineering and manufacturing expertise, and global reach to establish them as the leader in autonomous vehicle technology – while they move to deploy self-driving vehicles at scale.”

GM and Honda in EV segment

In the last few years, General Motors has increased its focus on autonomous vehicle development, personal mobility services, and electric vehicles (or EVs).

In June, GM and Honda partnered to work together on next-generation battery development in order to stay ahead of the competition in the EV segment. In a statement, GM said, “Under the agreement, the companies will collaborate based on GM’s next generation battery system with the intent for Honda to source the battery modules from GM. The collaboration will support each company’s respective and distinct vehicles.”

Now that we know how this partnership between GM and Honda evolved, let’s see how General Motors has benefited from the Cruise Automation acquisition.

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