General Motors (GM) to Invest $650M in Lithium Americas
General Motors GM and Lithium Americas LAC are collaborating to develop the Thacker Pass mine located in Nevada, the largest and most popular lithium mine in the United States. Lithium, with its exceptional energy density and the ability to withstand repeated charging and discharging, is the core material of lithium-ion batteries used in EVs. The lithium extracted and processed from this development project can lead to the production of up to one million EVs per year.
With this announcement, GM is set to lead the pack by making the largest-ever investment made by an auto manufacturer in the production of battery raw materials. GM is investing a total of $650 million in Lithium Americas. The investment will provide GM with exclusive access to phase one of lithium production and the right to make the first offer for phase two of lithium production. The lithium production at Thacker Pass is expected to begin in the second half of 2026.
According to Marry Barra, Chairperson and CEO of GM, the company has access to all the battery material it needs to reach its target of building more than 1 million battery-operated vehicles annually in North America in 2025. For future production, they will rely on raw materials sourced from domestic sites, like the one in Nevada. Sourcing raw materials and components from domestic suppliers and free-trade agreement countries would ensure an unswerving supply chain and help them manage cell costs. Barra affirms that the company is on track to meet its goal of producing 400,000 EVs in North America from 2022 through mid-2023.
GM's total sum of $650M investment will be paid in two portions. The first chunk of the payment is to be held in escrow until the outcome of the Record of Decision ruling, currently pending in the U.S. District Court, meets the conditions. The second payment is expected after the separation of Lithium Americas U.S. and Argentina businesses and when Lithium America will have sufficient funds to develop the Thacker Pass.
General Motors’ big push toward EVs is commendable. The automaker plans to roll out 30 new EV models by 2025-end. GM’s battery plants in Ohio, Tennessee and Lansing are likely to scale up its e-mobility prowess. The BrightDrop venture, designed to offer an integrated ecosystem of electric first-to-last-mile products, is set to boost prospects. The launch of Ultium Charge 360, aimed at improving the charging experience, also bodes well. Besides the Ultium platform, which is set to rev up its electrification capabilities, GM’s Ultifi platform seeks to enable the firm to achieve leadership in software and services.
Zacks Rank & Key Picks
General Motors currently carries a Zacks Rank #3 (Hold).
A few better-ranked players in the auto space include Mercedes-Benz Group AG MBGAF and Wabash National WNC. While MBGAF sports a Zacks Rank #1 (Strong Buy), WNC carries a Zacks Rank #2 (Buy).
Mercedes-Benz develops, manufactures and sells passenger cars, including premium and luxury vehicles. The Zacks Consensus Estimate for MBGAF’s 2023 sales implies year-over-year growth of 4%.
Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimate for WNC’s 2023 sales and earnings implies year-over-year growth of 5.5% and 18.7%, respectively.
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