# 1 Activist Investor Engine Praises GM on Electric Vehicle Push


In a white paper, the San Francisco-based investment firm said it believes GM and other traditional automakers have the size and know-how to drive adoption of electric vehicles. The No.1 Engine took a stake in GM in the first quarter, but had not publicly exposed its thinking behind the move.

“The scale of the [electric vehicle] The challenge of the transition goes beyond what Tesla and other new entrants can overcome in the timeframe necessary “to significantly reduce tailpipe emissions, the company wrote. “The car manufacturers in place… are quite capable of becoming central players in the transition to [electric vehicles] and are also fully motivated to do so.

The investment company held 397,000 shares of GM as of June 30, according to FactSet. It would be worth around $ 22 million based on Monday’s stock price, a small stake compared to GM’s larger shareholders.

The founder of the No.1 engine, Christopher James, said GM has a rapid lead in battery technology and is betting big on electricity, including its goal of largely phasing out gasoline and diesel cars from by 2035. He said he sees GM as a rare example of a historic industry that moves quickly to stay ahead of disruption.

Mr James said he had no intention of pushing for changes in strategy or board composition, as he did in his battle with Exxon. He said he wanted to formally express his support to help mitigate the possibility that other activist shareholders could pressure GM to take a shorter-term view.

“We wanted to put ourselves in front of that and say ‘This is the way to go to create long term value,’ he said.

GM shares rose about 3% in morning trading on Monday.

The statement of support precedes a one-day investor event scheduled for Wednesday at GM’s research center in suburban Detroit. The automaker is expected to detail its plans for plug-in cars and how it could increase profits.

The No.1 engine said it has had “very constructive and collaborative two-way conversations with GM.” In a statement, GM said it was making progress towards an all-electric future, but did not directly comment on the No.1 engine’s participation or whitepaper.

In a proxy battle with Exxon this year, Engine No. 1 leveraged a relatively small position in the oil company to secure three board seats for Mr. James’ nominees. The investment firm criticized Exxon for its lack of a clear plan to transition to cleaner energy.

In contrast, the No.1 engine has endorsed GM’s plans, an indication that it isn’t looking to take the same combative approach.

GM has become more ambitious when it comes to electric vehicles in recent years, earlier saying that many automakers plan to aggressively switch to plug-in models. In June, he pledged $ 35 billion to the effort through the middle of the decade.

General Motors plans to phase out virtually all of its gasoline and diesel vehicles by 2035. Leading this transition is the first fully electric Cadillac. Mike Colias of the WSJ visited a GM testing site for a tour and an exclusive interview with GM President Mark L. Reuss. Photographic illustration: Alexandre Hotz

The company’s bet on electric cars is running into obstacles. Rechargeable cars are currently more expensive than gasoline cars due to the high cost of batteries. Lack of places to charge cars is also a barrier to adoption, analysts and dealers say.

GM is also grappling with a safety crisis over its only electric vehicle on sale in the United States, the Chevrolet Bolt. He said he would spend around $ 1.8 billion to replace batteries of around 142,000 bolts, citing the risk of the battery catching fire.

In its white paper, Engine No. 1 salutes Tesla Inc.

to drive early adoption of electric vehicles, but says the California automaker and the growing number of electric vehicle startups will not be enough to achieve significant emissions reductions.

During her eight-year tenure as CEO of GM, Mary Barra dealt with activist shareholders who urged the company to take bolder steps to increase the valuation of the automaker.

In 2017, investor David Einhorn pressured GM to divide its shares into two categories that would have separated the automaker’s dividend from its operations. Shareholders voted against the plan.

Investor Harry J. Wilson also staged a potential proxy battle in 2015 for a seat on GM’s board, only to then abandon the plan after GM agreed to repurchase roughly $ 5 billion in shares.

GM shares have rallied in the past 18 months after languishing largely in the decade following its post-bankruptcy IPO in 2010 and collapsing at the onset of the pandemic in early 2020.

Write to Mike Colias at [email protected]

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