GM (GM) is upping the ante on its EV bet, investing $625 million directly into a US-based lithium mine project.
GM and miner Lithium Americas (LAC) announced the two companies will create a joint venture to develop and mine a site known as “Thacker Pass” in Humboldt County, Nev. GM will invest the $625 million in the form of a $430 million direct payment and $195 million in credit to support construction of the site. The inclusion of the $195 million in credit unlocks a critical Department of Energy loan worth $2.3 billion to support the project.
"Sourcing critical EV raw materials, like lithium, from suppliers in the US, is expected to help us manage battery cell costs, deliver value to our customers and investors, and create jobs," said Jeff Morrison, GM senior vice president of global purchasing and supply chain, in a statement.
Added Lithium Americas CEO Jonathan Evans, "Today’s joint venture announcement is a win-win for GM and Lithium Americas. GM’s JV Investment demonstrates their continued support and helps us to unlock the previously announced $2.3 billion DOE Loan.”
Per the agreement, GM will acquire a 38% stake in Thacker Pass by committing $625 million to the joint venture. Lithium Americas will contribute $387 million for 62% ownership in the project.
Previously, GM invested $320 million into Lithium Americas in exchange for 15 million shares back in February of last year. In total, GM has now invested $750 million into Lithium Americas and the joint venture, not including the $195 million line of credit.
The project investment shows GM's deep commitment to insourcing its own minerals for EV batteries, especially from domestic sources. Lithium is a critical element needed for most EV batteries (including for cell phones and laptops), and currently, China supplies the world with 80% of the world’s refined lithium.
The Biden administration has promised to spend heavily in order to build up EV supply chains and critical materials needed to support EV production in the US and preferred trade partners. The $2.3 billion DOE loan speaks to that investment.
For GM, the investment comes as the federal government pushes domestic mineral and component production amid rules that will penalize use of Chinese materials in the future.
In addition, GM last week committed to build and sell 200,000 EVs this year, a number that has come down over the past year; most recently GM saw EV output in the 200-250K range.
Nevertheless, GM said in Q3 it sold just over 32,000 EVs, with its US EV market share hitting 9.5% (up from 7.1% last quarter). The company claimed more than 50% of EV customers were new to GM, unlocking a subset of buyers that had never purchased GM vehicles (EVs, gas, or otherwise) before.
GM will issue more guidance on its EV trajectory when it reports third quarter financial results on Oct. 22.
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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