Engine No. 1, the company that rose to prominence after a successful campaign against Exxon, announced an investment in General Motors on Monday. This time, the upstart activist’s share signals support for the automaker in transitioning to electric vehicles.
Engine # 1 pointed out the similarities between Exxon and GM, noting that every company is in an industry that is changing. Unlike Exxon, however, GM is taking actionable steps in what the company believes is essential to long-term success: linking ESG criteria to economic outcomes.
“With the support of a really strong management team and a great board of directors, GM has decided to face the future. They will make the necessary investments to be successful during this transition. ” 1 founder Chris James said Monday in the “Squawk Box” by CNBC.
In January, GM announced that it would offer only electric vehicles by 2035, part of a broader plan to become carbon neutral and autonomous vehicles by 2040.
James said GM’s “all-in-both-in-the-pool” approach to electric vehicle adoption is rare for an established company and is aligning the automaker for success. Instead of primarily protecting his old business, which is the typical move, James said the company is embracing change.
Tesla has focused on battery electric vehicles from the start, and Wall Street has rewarded the company for its leadership in electric vehicle manufacturing. The company’s market cap is well over $ 700 billion, according to FactSet, well above GM’s $ 77.1 billion valuation. But the latter ships millions more cars each year than Tesla, and James noted this advantage of GM’s positions on the scale for future returns.
“We believe this can turn into a growth company again. … We think this stock could triple in the next five years and that’s something we’re pretty upset about, ”he said. “We believe for the first time that they are able to gain enormous market share.”
James said that Exxon and GM’s goal was to find the best for the company over the long term. He shies away from being called an “activist investor” and prefers to call himself an active owner.
Nevertheless, the company is launching a high-profile campaign against Exxon. The company began targeting the oil giant in December with a position of just 0.02%. After months of fighting, Engine No. 1 successfully three of its four nominees to Exxon’s board of directors.
“We’re not acting hostile at all, we think they’re doing the right thing,” James said of GM. He added that CEO Mary Barra and the automaker’s entire management team were open to discussion about the company’s future and long-term goals.
“It was a real difference and it couldn’t have been more than 180 than what we saw at the beginning of our talks with Exxon,” he said.
GM’s shares are up more than 30% for 2021 and are up about 80% last year.
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