GM and Toyota are the biggest losers in the EV transition


GM may have Mortgaged my future last week.

On Wednesday, the automaker announced it would boost its dividend and buy back $10 billion worth of its shares, effectively wiping out this year’s net income and then some. The move pleased shareholders, with GM’s stock trading about 10% higher than before the financial engineering steps were announced.

But shareholders’ happiness may be fleeting. GM Chairman Mark Reuss said last year that profits from the sale of fossil fuel vehicles would fuel the transition to electric vehicles. That doesn’t seem to be the case anymore, partly because the company is desperate to boost its share price, which is the same as it was five years ago.

CEO Mary Barra probably thinks the market is being unfair, as the company has been profitable for more than a decade, except for a few quarters. The share buyback is undoubtedly a ploy to get GM out of its tracks.

Any boost to the share price from buybacks will only mask the likely reason shareholders are indifferent to GM: the company lacks the ability to execute on its plans.

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