Lithium | GM Delays $330 Million Investment in Lithium Americas

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Lithium | GM Delays $330 Million Investment in Lithium Americas

Date：2024-09-03

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Keyword tags： Lithium EV North America

Lithium Americas Corp., a Toronto-listed company, announced on August 30 that General Motors (GM) has agreed to postpone an additional $330 million investment in the miner until the end of the year.

In January 2023, GM signed a purchase agreement with Lithium Americas, declaring a $650 million equity investment (10%) in the company to aid in the construction and development of the Thacker Pass lithium project in Nevada. This investment was divided into two tranches: the first tranche of $320 million was completed on February 16, 2023.

The Thacker Pass project, which began construction in early 2023, is expected to commence principal construction in 2024 and aims to start production in the second half of 2026. The project's lithium output is anticipated to supply enough for the annual manufacturing of 1 million electric vehicles in North America.

Lithium Americas is currently exploring alternative structures for the second tranche of the transaction and has extended the deal closure date to around December 20, 2024. If the company fails to close the deal by that date, it will have to grant additional rights to GM, particularly regarding the expansion of Thacker Pass from an annual capacity of 40,000 tonnes to 80,000 tonnes in its Phase-2 expansion. Previously, GM had secured an exclusive purchasing right for 15 years for the initial 40,000-tonne-per-year Phaes-1 facility at Thacker Pass.

One of the conditions for GM's second tranche investment is the successful acquisition of a $2.26 billion loan from the U.S. Department of Energy, which the mining company is rushing to finalize before President Biden's term ends, amidst uncertainties caused by the November U.S. presidential election. Republican presidential candidate Donald Trump has pledged to "end the electric vehicle mandate," and there are concerns that the loans program office, which supports the electric vehicle industry, could be shut down under his administration.

Lithium Americas stated it will continue to work closely with the U.S. Department of Energy to close the loan and the additional GM investment by the end of the year.

GM, in an emailed statement, said, "They are making good progress toward scaling commercial production. This agreement will support the successful completion of the project."

According to Nasdaq, GM aims to improve sales and profitability in its EV business by reducing battery costs, introducing new models, and scaling expansion, expecting EVs to achieve variable profit by Q4 of 2024. GM has launched the modular battery platform Ultium Drive system to aid its electrification goals and plans to scale up production at its battery plants in Ohio, Tennessee, and Lansing. Additionally, GM's battery joint venture with Samsung SDI in New Carlisle, Indiana, is scheduled to commence production in 2027.

GM has also launched Ultium Charge 360 to enhance the charging experience and the Ultifi platform, aiming for leadership in software and services.

GM's current and upcoming EV offerings, including the Cadillac Celestiq, Chevrolet Silverado EV, Cadillac Escalade IQ, Chevrolet Blazer EV, Chevrolet Equinox EV, Cadillac Lyric, GMC Hummer EV SUV and pickup, GMC Sierra EV, Cadillac Optiq, and BrightDrop Zevo, are expected to drive the company's EV momentum.

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