GM battery engineers make advanced prototype cells using a robotic stacking machine.
Courtesy of GM EV/AV CommunicationsActivist fund Engine No. 1 has taken a stake in General Motors , saying the auto maker can be a long run winner as gasoline powered cars cede ground to battery electric vehicles. Tesla, after all, can’t do it all.
General Motors (ticker: GM) is already aggressively pursuing EVs. CEO Mary Barra has laid out a zero-zero-zero vision for the future: zero tailpipe emissions, zero crashes and zero congestion on roads. That’s the correct call, according to Engine No. 1—the ESG activists running Engine No. 1 Transform ETF (VOTE).
“The scale of the [battery electric vehicle, or BEV] transition challenge is beyond what Tesla and other new entrants can surmount in the time frame needed to bend the emissions curve,” read Engine No. 1’s white paper.
Very roughly there are 80 million to 90 million light vehicles sold around the world each year. About 5 million or 6 million of those in 2021 will be all-electric. Tesla (TSLA) will sell about 860,000 vehicles this year. As EV penetration increases, there is room for others to succeed.
“After a period of ferment, a new set of dominant firms will emerge: a mix of new BEV-only firms and former [traditional] OEMs.” OEM is short for original equipment manufacturer and industry jargon for an auto makers such as Tesla and GM.
GM, for Engine No. 1, is in a good position. “GM, by virtue of its large strategic bet on BEVs, has perhaps the strongest foundation, starting with past R&D investments, substantial patenting, and now its proactive moves to secure future battery supply,” read the report. It also pointed out that GM was issued more than 660 battery-related patents between 2010 and 2015. What’s more, GM is spending billions to build battery plants in the U.S. with partner LG Chem (051910.Korea).
News of the investment boosted General Motors stock. Shares rose 1.6% Monday on a rough day for the markets. Shares added another 1.4% in premarket trading Tuesday.
Other traditional car companies, of course, have similar plans to go all-in on EVs, but Engine No.1 appears to favor GM. Volkswagen (VOW3.Germany) is strong in EVs, but isn’t as strong in North America as GM. Toyota Motor (TM) has expressed some skepticism about all-EV platforms, preferring hybrid vehicle architecture, and Ford Motor (F) “is behind GM,” but has increased its commitment to EVs of late.
The reason the internal combustion engine era is coming to an end, for the fund, is a mix of government policy and technical factors. Government’s want to cut carbon emissions and are supporting EV development. What’s more, EVs are becoming attractive vehicles. Battery costs are falling and vehicle performance can rival or exceed traditional cars.
GM stock is up about 30% year to date, better than the 14% and 11% comparable, respective gains of the S&P 500 and Dow Jones Industrial Average. Demand and vehicle pricing have improved coming out of the Covid-19 induced recession, boosting profits, even as a global semiconductor shortage has curtailed auto production.
Write to Al Root at allen.root@dowjones.com
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October 05, 2021 at 08:30PM
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Activist Fund Takes Stake in General Motors Because Tesla Can't Do It All - Barron's
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