In a white paper, the San Francisco-based funding agency mentioned it believes GM and different conventional auto makers have the size and know-how to drive electric-vehicle adoption. Engine No. 1 took a stake in GM within the first quarter however had not publicly outlined its considering behind the transfer.
“The size of the [electric vehicle] transition problem is past what Tesla and different new entrants can surmount in the timeframe wanted” to considerably scale back tailpipe emissions, the agency wrote. “Incumbent auto makers…are absolutely able to turning into central gamers within the transition to [electric vehicles] and are additionally absolutely motivated to take action.”
The funding agency owned 397,000 GM shares as of June 30, in accordance with FactSet. That might be price about $22 million primarily based on Monday’s buying and selling value, a tiny stake relative to GM’s largest shareholders.
Engine No. 1 founder
mentioned GM has an early lead on battery expertise and is betting massive on electrics, together with its objective of largely phasing out gas- and diesel-powered vehicles by 2035. He mentioned he sees GM as a uncommon instance of an trade incumbent that’s shifting swiftly to remain forward of disruption.
Mr. James mentioned he has no plans to foyer for modifications in technique or board composition, as he did in his battle with Exxon. He mentioned he wished to formally categorical his backing to assist mitigate the likelihood that different shareholder activists may stress GM to take a shorter-term view.
“We felt like simply getting out in entrance of that and saying ‘That is the trail to create long-term worth,’ ” he mentioned.
GM shares rose about 3% in morning buying and selling Monday.
The assertion of help comes forward of a daylong investor occasion, deliberate for Wednesday, at GM’s analysis middle in suburban Detroit. The auto maker is anticipated to element its plans for plug-in vehicles and the way it may increase earnings from them.
Engine No. 1 mentioned it has had “very constructive and collaborative two-way conversations with GM.” In an announcement, GM mentioned it’s making progress towards an all-electric future however didn’t remark immediately on Engine No. 1’s stake or white paper.
In a proxy fight with Exxon this yr, Engine No. 1 leveraged a comparatively small place within the oil firm to safe three board seat for Mr. James’s candidates. The funding agency criticized Exxon for missing a transparent plan to transition to cleaner power.
In distinction, Engine No. 1 has endorsed GM’s plans, a sign that it isn’t trying to take the identical combative method.
GM has gotten more ambitious about electrical autos inside the previous few years, declaring sooner than many automotive corporations that it plans to make an aggressive shift to plug-in fashions. In June, it pledged to spend $35 billion on the hassle via mid-decade.
The corporate’s guess on electrical vehicles faces hurdles. Plug-in vehicles are at present costlier than gas-powered vehicles due to the excessive price of batteries. A scarcity of locations to cost vehicles additionally poses a barrier to adoption, analysts and sellers say.
GM is also grappling with a security disaster on its lone electrical car on sale within the U.S., the Chevrolet Bolt. It has mentioned it might spend roughly $1.8 billion to exchange batteries in about 142,000 Bolts, citing the chance of the battery pack catching fireplace.
In its white paper, Engine No. 1 provides accolades to
for driving early electric-vehicle adoption, however says the California-based auto maker and the rising variety of electric-vehicle startups gained’t be sufficient to realize a significant discount in emissions.
Throughout her eight-year tenure as GM chief govt,
has handled activist shareholders who pressed the corporate to take bolder steps to spice up the auto maker’s valuation.
In 2017, investor David Einhorn pressured GM to divide its inventory into two courses that will have separated the auto maker’s dividend from its operations. Shareholders voted down the plan.
Investor Harry J. Wilson additionally mounted a possible proxy battle in 2015 to get a seat on GM’s board, solely to later drop the plan after GM agreed to purchase again about $5 billion in shares.
GM shares have rallied during the last 18 months after largely languishing within the decade following its postbankruptcy IPO in 2010 and plummeting on the onset of the pandemic in early 2020.
Write to Mike Colias at Mike.Colias@wsj.com
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https://www.wsj.com/articles/activist-investor-engine-no-1-says-it-backs-gm-s-electric-vehicle-push-11633355636?mod=pls_whats_news_us_business_f | Activist Investor Engine No. 1 Commends GM’s Electrical-Automobile Push