Engine # 1 Supports GM’s Electric Vehicle Transition Strategy

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October 4 (Reuters) – Hedge fund Engine No. 1 officially announced Monday that it has taken a stake in General Motors Co (GM.N) and is supporting its transition to battery-electric vehicles, sending the Shares of the No. 1 US automaker were up 3.2%.

GM’s supportive stance contrasted with the hedge fund’s contrarian challenge against Exxon Mobile Corp (XOM.N) earlier this year that saw it secure three seats on the board. The No. 1 engine criticized the energy giant’s record and targets for reducing its carbon footprint. Read more

However, the No.1 engine said in a statement Monday that it believes in the path set by GM and general manager Mary Barra, to eliminate tailpipe emissions in all light vehicles sold by 2035.

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“The company’s lead in battery technology, along with Mary Barra and board leadership, is creating tremendous benefits,” said Chris James, Founder of Engine No.1. “There is a narrative that only tech companies can act quickly to embrace change and win as the world changes. We don’t think that’s true. GM has that leadership.”

The No.1 engine took its stake in GM in August but had not spoken publicly about its intentions around the automaker since then. The No.1 engine has a stake of nearly 400,000 shares in GM, according to data from Refinitiv.

The No.1 engine said it had had “very constructive and collaborative conversations” with GM, and said the automaker was on the verge of “winning back market share” with its advantages in battery technology.

GM said it will spend $ 35 billion on electric and autonomous vehicles until 2025 and is expected to set additional financial targets until 2030 at an investor conference on Wednesday. Read more

The No.1 engine launched in December 2020 and immediately caused a stir as it took on Exxon and put pressure on the oil giant to reduce its carbon footprint.

Coming from a small business founded by seasoned investor James, the battle to challenge Exxon quickly turned into a David vs. Goliath tale on Wall Street, where many seasoned investors expected the newcomer to falter. But the arguments resonated with some of the world’s biggest fund managers, including Vanguard, BlackRock and State Street, who backed the No.1 mover’s bid to win board seats.

Engine No. 1’s activism campaigns are led by Charlie Penner, who has joined the new firm from activist Jana Partners where they made headlines by taking on Apple (AAPL.O) to push the manufacturer iPhone to do more to limit the use of smartphones by children. Shortly after Exxon’s victory, Engine No. 1 launched an exchange-traded fund, betting Main Street investors want portfolios to support environmental, social and governance proposals.

The hedge fund also released a white paper on Monday explaining why the auto industry needs to switch to battery-electric vehicles and what role automakers, especially GM, will play in that transition.

“We value the views of all stakeholders as we continue to drive the future of mobility,” GM spokesman Jim Cain said in an email.

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Reporting by Ben Klayman and Svea Herbst-Bayliss in New York; Editing by Steve Orlofsky

Our standards: Thomson Reuters Trust Principles.


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