LAC & GM Close Thacker Pass JV: Is Lithium Americas a Buy Now?

Group 1: Joint Venture Overview - Lithium Americas Corp. (LAC) shares increased by nearly 6.7% following the closure of its joint venture with General Motors (GM) focused on the Thacker Pass lithium project, which is crucial for North America's critical minerals supply chain [1] - GM acquired a 38% stake in the Thacker Pass project for $625 million, which includes $430 million for Phase 1 construction and a $195 million letter of credit facility, while Lithium Americas retains a 62% interest and will manage the project [2] - The partnership represents GM's largest investment in securing raw battery materials, highlighting the increasing need for long-term lithium supplies to support electric vehicle (EV) production [3] Group 2: Project Details and Production Capacity - Thacker Pass aims for an annual production capacity of 80,000 tonnes of battery-quality lithium carbonate, divided into two phases of 40,000 tonnes each, with Phase 1 expected to start production by late 2027 [4] - GM will have exclusive access to the Phase 1 output, ensuring a consistent supply of lithium carbonate for its battery cells, which are essential for its EV lineup [4] Group 3: Market Context and Demand - The demand for lithium is projected to remain strong as the world shifts towards clean energy, with the U.S. aiming to reduce reliance on foreign suppliers, especially in light of clean energy tax incentives favoring domestically sourced materials [9] - Lithium is essential for lithium-ion batteries due to its high energy density, rapid charging capability, and durability, although prices have faced downward pressure since 2023 due to increased global supply [5] Group 4: Financial Considerations and Future Outlook - Initial funding for the joint venture has commenced, with GM contributing $330 million and Lithium Americas adding $138 million, with further contributions expected after the final investment decision for Phase 1 in early 2025 [8] - Bottom-line estimates for LAC have been revised downward, indicating caution, with loss per share estimates for 2024 and 2025 widened by a cent each, suggesting that Lithium Americas remains a speculative investment at this time [11]