Lithium Americas Soars After GM Invests $650 Million. The EV War Is Escalating.

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Lithium is becoming a battleground for auto makers looking to win the electric-vehicle wars.

General Motors

(ticker: GM) announced Tuesday it was investing $650 million in

Lithium Americas

(LAC) to develop a lithium deposit in Nevada.

The mine, referred to as Thacker Pass, is projected to begin lithium production in the second half of 2026. GM’s investment will be split into two portions and is contingent on

Lithium

Americas meeting certain conditions.

The Thacker Pass investment should amount to all the lithium GM needs to meet its goal of selling 1 million electric vehicles in North America by mid-decade.

“Direct sourcing critical EV raw materials and components from suppliers in North America and free-trade-agreement countries helps make our supply chain more secure, helps us manage cell costs, and creates jobs,” said GM Chief Executive Mary Barra in a news release.

Along with supply security, local sourcing and processing of EV raw materials are important for all EV makers in another way. Purchase tax credits, passed as part of the Inflation Reduction Act, require local sourcing and processing of certain materials. The local requirement ratchets up over time.

Lithium Americas

stock was up 14.8% at $25.24 on Tuesday. The

S&P 500
and

Dow Jones Industrial Average
rose 0.6% and 0.2%, respectively.

GM shares were up about 7.2% to $38.90. Along with the investment, GM also reported better-than-expected fourth-quarter earnings and gave financial guidance for 2023 that topped analysts’ estimates.

GM isn’t the only auto maker looking to secure lithium supplies.

Tesla

(TSLA) has an agreement with

Piedmont Lithium

(PLL) for lithium sourced in North America.

Tesla

also has plans to build a lithium refining business in Texas.

Lithium ores get refined before being shipped to battery cathode makers. Cathodes are one side of a battery that facilitates the movement of electrical charge. The other side of a battery is called the anode. Cathode materials are purchased by battery makers and turned into rechargeable lithium-ion batteries.

Most auto makers have joined forces with battery makers to build facilties close to where EVs are assembled. GM is building domestic battery capacity with partner

LG Energy Solution

(373220.Korea). Now auto makers are going further up the supply chain to ensure those battery plants have all the materials they need at prices they can afford.

Write to Al Root at [email protected]