After GM stake purchase, Engine No. 1 says car company is ready to take the lead in EVs
“scale of [electric vehicle] The transition challenge is beyond Tesla and other new entrants that could grow in the time frame needed to significantly reduce tailpipe emissions, the firm wrote. “The incumbent auto maker … is fully capable of becoming a central player in the transition.” ” [electric vehicles] And totally inspired to do so as well.”
According to FactSet, the investment firm held 397,000 GM shares as of June 30. It would be valued at about $22 million based on Monday’s trading price, which is a small stake relative to GM’s largest shareholders.
Engine No. 1 founder Christopher James said GM has an early lead on battery technology and is betting big on electrics, including the goal of largely eliminating gas and diesel-powered cars by 2035. He said he sees GM as a rare example. An industry functionary who is moving fast to stay ahead of disruption.
Mr James said he had no plans to lobby for a change in strategy or board structure, as he did in his fight with Exxon. He said he wants to formally express his support to help reduce the possibility that other shareholder activists may pressure GM to take a short-term approach.
“We realized that just going out in front of him and saying ‘this is the way to create long-term value,'” he said.
GM shares were up about 3% in morning trading on Monday.
The statement of support comes ahead of a one-day investor event planned for Wednesday at GM’s research center in suburban Detroit. The automaker has been asked to elaborate on its plans for plug-in cars and how it can increase profits from them.
Engine No. 1 said it has had “very constructive and collaborative two-way talks with GM.” In a statement, GM said it is making progress toward a full-electric future, but did not comment directly on Engine No. 1’s stake or the white paper.
In a proxy battle with Exxon this year, Engine No. 1 took advantage of a relatively small position in the oil company to secure three board seats for Mr. James’s candidates. The investment firm criticized Exxon for its lack of a clear plan to transition to clean energy.
Conversely, Engine No. 1 has backed GM’s plans, a sign that it doesn’t want to take the same belligerent approach.
GM has become more ambitious about electric vehicles over the years, announcing earlier than many car companies that it plans to make aggressive changes to plug-in models. In June, it pledged to spend $35 billion on the effort through mid-decade.
The company’s bet on electric cars is facing hurdles. Plug-in cars are currently more expensive than gas-powered cars due to the high cost of the battery. Analysts and dealers say a lack of space to charge cars also hinders adoption.
GM is also grappling with a safety crisis over the Chevrolet Bolt, its only electric vehicle on sale in the US. It has said it will spend about $1.8 billion to replace the batteries in about 142,000 bolts, citing the risk of fire in the battery pack.
In its white paper, Engine No. 1 gives Tesla accolades Inc.
for early electric-vehicle adoption, but says a growing number of California-based auto makers and electric-vehicle startups won’t be enough to achieve a meaningful reduction in emissions.
During her eight-year tenure as GM’s chief executive, Mary Barra worked with active shareholders who pressured the company to take bold steps to boost the auto maker’s valuation.
In 2017, investor David Einhorn pressured GM to split its stock into two sections, which would have separated the automaker’s dividend from its operations. Shareholders voted for the plan.
Investor Harry J. Wilson also began a potential proxy battle to get a seat on GM’s board in 2015, only to later abandon the plan after GM agreed to buy back about $5 billion in shares.
GM shares have rallied over the past 18 months after a massive decline in the decade following its postbankruptcy IPO in 2010 and the start of the pandemic in early 2020.
Mike Colias at [email protected]