GM and Toyota are shaping up to be the biggest losers in the EV transition

GM may have mortgaged its future last week.

On Wednesday, the automaker announced that it would boost its dividend and buy back $10 billion worth of its shares, effectively erasing 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 moves were announced.

But shareholders’ delight may be fleeting. Profits from sales of fossil fuel vehicles are supposed to bankroll the transition to electric vehicles, GM president Mark Reuss said last year. That doesn’t appear to be the case anymore, in part because the company is desperate to prop up its share price, which is the same as it was five years ago.

CEO Mary Barra probably thinks the market is being unfair given that the company has, with the exception of a few quarters, been profitable for more than a decade. The share buybacks are undoubtedly a ploy to wrench GM out of its rut.

Any boost the buybacks give to the share price will only paper over the likely reason shareholders are lukewarm on GM: The company lacks the ability to execute on its plans.

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