General Motors (GM) has announced a joint venture with Lithium Americas Corp., involving a commitment of $625 million in cash and credit to the Canadian mining company. This collaboration focuses on the development of a lithium carbonate mining operation named Thacker Pass, situated in Humboldt County, Nevada. Lithium is a crucial component in the manufacturing of batteries for electric vehicles.
Access to raw materials such as lithium from domestic sources is pivotal for GM’s strategy to expand its all-electric vehicle business profitably and to comply with increasingly stringent federal incentives for the production and sale of electric vehicles and their batteries. Jeff Morrison, GM’s senior vice president of global purchasing and supply chain, emphasized the importance of securing essential EV raw materials from U.S. suppliers. He stated that doing so would assist GM in managing battery cell costs, providing value to customers and investors, and creating jobs.
The announcement led to a roughly 10% increase in Lithium Americas’ shares during early trading on Wednesday, reaching approximately $3 per share. Shares had already surged over 20% in premarket trading based on the deal, which had been previously announced as an equity arrangement.
As part of the agreement, GM will hold a 38% stake in Thacker Pass. The joint venture investment comprises an initial $330 million cash contribution at closing, $100 million upon reaching a “final investment decision” for a project phase, and a $195 million letter of credit facility before the first draw on a $2.3 billion Department of Energy Loan.
Lithium Americas CEO Jonathan Evans expressed that the joint venture significantly strengthens their relationship with GM and furthers their shared ambition to build a strong domestic lithium supply chain through the advancement of Thacker Pass.
This joint venture supplements GM’s previous $320 million investment in Lithium Americas made in February 2023, during which GM acquired approximately 15 million common shares of the company. Furthermore, in August, GM and Lithium Americas decided to postpone a second tranche investment of $330 million in order to consider alternative investment structures.
