General Motors and Lithium Americas have announced a groundbreaking joint venture that will entail a significant investment of $625 million from GM to develop and operate a lithium mine, a crucial source of raw material for the burgeoning electric vehicle market. This strategic partnership marks a pivotal step in creating a domestic supply chain for critical minerals essential to the electric vehicle industry. Through this joint agreement, GM will obtain a 38% asset-level ownership stake in the Thacker Pass project located in Nevada, with an overall investment amounting to $625 million in cash and letters of credit.
Meanwhile, Lithium Americas will retain a 62% interest in the project and will be responsible for its management. According to the companies, this investment represents the largest publicly announced commitment by a U.S. original equipment manufacturer towards a lithium carbonate project. The significance of this move emphasizes the pressing need for a reliable domestic supply of critical minerals, a sentiment echoed in their joint statement.
The news has positively impacted the shares of both companies, with GM witnessing a 2.4% increase in its stock price, while shares of Lithium Americas surged by an impressive 23%. As part of this joint venture, Lithium Americas plans to contribute $387 million, which is noteworthy considering the company reported approximately $376 million in cash and cash equivalents as of June 30. Jeff Morrison, GM's senior vice president of global purchasing and supply chain, expressed satisfaction regarding the substantial advancements Lithium Americas is making in aiding GM's objective to cultivate a resilient electric vehicle material supply chain.
He highlighted the importance of sourcing critical raw materials like lithium from U.S. suppliers, noting that this strategy is expected to help manage battery cell costs, provide value to customers and investors, and ultimately generate job opportunities. This latest investment supersedes a previous commitment of $330 million in common equity that GM had established with Lithium Americas in January 2023.
It also builds on GM's earlier investment of $320 million made in February 2023, which resulted in the automaker acquiring 15 million shares of Lithium Americas. Jonathan Evans, Chief Executive of Lithium Americas, emphasized the strengthening of their relationship with GM through this joint venture, as both companies continue to pursue their mutual aim of establishing a robust domestic lithium supply chain.
He added, "We will be working closely with GM to advance towards the final investment decision, which we are targeting by the end of the year." Price: 49.01, Change: +0.01, Percent Change: +0.03.