Upstart activist Engine No. 1 takes stake in GM, supports EV transition plan
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Engine Number. Engine No. rose to prominenceA successful campaign was launched against this scourge. ExxonMonday’s announcement by Occidental Petroleum Company was of an investment in General Motors. The stake of the activist upstart signals support for the automaker in its transition to electric cars.
Engine No. Engine No. GM is, however, taking concrete steps to achieve what Exxon did not: link ESG criteria with economic outcomes.
With the help of a strong management team, and a fantastic board, GM has made the decision to embrace the future. They will make the required investments in order to succeed during this transition,” Engine no. CNBC’s Monday interview with Chris James, the founder of Engine No. 1. “Squawk Box.”
In January, GM revealed plans to offer only GM products electric vehicles by 2035The release is part of the company’s larger plan to make carbon neutrality by 2040. The company intends to emit 0 carbon dioxide by 2025. 30 new electric vehiclesAs part of the $27 billion global investment in autonomous and electric vehicles
James stated that GM’s willingness to embrace EVs with an “all-in, both feet are in the pool” approach is unusual for an automaker and will help it succeed. James explained that the company does not want to preserve its legacy business, as this is the usual move. Instead, it is accepting change.
TeslaSince its inception, the company has been focusing on electric cars. Wall Street has recognized the company’s leadership in this area. According to FactSet the company has a market capital of well over $700billion, which is significantly more than GM’s valuation of $77.1billion. James pointed out that Tesla produces millions more vehicles each year than Tesla, but that GM has the advantage of scale which positions it for future returns.
He stated that “we believe that this company can grow again…we think the stock could triple in five years and that’s something that really gets us excited.” We believe they can gain a huge market share for the first-time.
James stated that Exxon as well as GM were aiming to find the best long-term strategy for both companies. Instead of being called “activist investors”, he prefers to refer to himself as an active owner.
The firm has just completed a highly publicized campaign against Exxon. With a position of 0.02%, the firm started targeting Exxon in December 2020. Engine No. 1. Nominated its own slate, which was followed by months of back and forth. Three of the four nominated directors were placed on board.
James stated that GM is not hostile and that they are doing what is right. James said that Mary Barra, the CEO of GM, and all members of the management team were open to discussing the future plans and long-term goals.
He said, “It was an amazing difference and it couldn’t have been more 180 than what faced us when we talked to Exxon in the beginning stages.”
GM shares are now up more than 30% in 2021 and have risen by roughly 80% during the past year.
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