General Motors (GM) has entered into a joint venture with Lithium Americas Corp., involving a commitment of $625 million in cash and credit from GM to the Canadian mining company. This partnership, announced on a Wednesday, focuses on the Thacker Pass lithium carbonate mining operation in Humboldt County, Nevada. Lithium serves as a critical component in batteries that power electric vehicles.
This initiative is an essential part of GM’s strategy to sustainably expand its electric vehicle (EV) business and comply with federal requirements for incentives related to producing and selling these vehicles and their batteries. Jeff Morrison, GM’s senior vice president of global purchasing and supply chain, expressed satisfaction with Lithium Americas’ progress, noting the importance of sourcing essential raw materials like lithium from U.S. suppliers to control battery cell costs, provide value to customers and investors, and generate employment.
The announcement sent Lithium Americas’ shares up by approximately 10% in early trading, reaching around $3 per share. The shares had increased by more than 20% during premarket trading following the announcement, previously publicized as an equity deal. GM will acquire a 38% stake in Thacker Pass through this joint venture. The investment breakdown includes $330 million in cash on the closing date, an additional $100 million upon a “final investment decision” for a project phase, and a $195 million letter of credit facility before the initial draw on a $2.3 billion Department of Energy Loan.
Jonathan Evans, CEO of Lithium Americas, stated that this joint venture significantly strengthens their relationship with GM and supports their mutual objective of developing a robust domestic lithium supply chain by advancing Thacker Pass.
The joint venture follows GM’s $320 million investment into Lithium Americas in February 2023, through which GM acquired about 15 million common shares of the mining company. In August, GM and Lithium Americas agreed to postpone a second tranche investment of $330 million to explore alternative investment structures.
