Einhorn's Greenlight Capital urges GM to create two share classes

The company's shares jumped 3.9 percent to $35.96 on Tuesday.

Greenlight Capital said the move would help the carmaker improve its financial flexibility and boost the stock's value.

The plan would lower the company's cost of capital and unlock between $13 billion and $38 billion of shareholder value, Greenlight Capital said.

"Our plan ... would provide the company complete strategic flexibility without adding any default, refinancing, or balance sheet risk," Einhorn said.

Greenlight Capital owned about 0.88 percent of General Motors' shares as of Dec. 31, according to Reuters data.

GM said it expects to return about $7 billion in cash to shareholders in 2017, bringing total cash returns to about $25 billion since 2012. (http://bit.ly/2ndE3Nt)

(Reporting by Arunima Banerjee in Bengaluru; Editing by Sriraj Kalluvila and Saumyadeb Chakrabarty)