General Motors today announced it will invest $650 million in a US lithium mine in order to secure the materials for its batteries. That includes $320 million this year for the rights to the first stage of lithium production at the Thacker Pass mine owned by Lithium Americas and a $330 million later on that includes 10% of the company's shares.
“It’s a landmark transaction, and it certainly won’t be the last major supply chain announcement for GM,” chief executive Mary Barra said.
The investment follows similar moves from Tesla and other automakers as angst about supply of materials builds. It highlights that automakers see the potential for shortages and price spikes of critical supplies.
A look at the Thacker Pass projection -- which I've written about before -- is a great primer into the past a future of problems. Despite the necessity of lithium production, it's been stuck in permitting hell for a decade but will hopefully now advance towards first production in H2 2026, but a critical court decision is coming this year as conservationists try to protect sage grouse habitat.
There is no shortage of materials in the earth's crust but the speed of the green transition is going to run up against the hard realities of lower grades and the difficulty of permitting mines. Ironically, it's environmental approvals that stifle and delay mine openings.
Shares of Lithium Americas are up 12.3% today on the news but the mineral and company are an interesting case study. Battery researchers are working hard on replacing lithium in EV batteries. If successful, the price of lithium could crater. However if they're not successful, there could be critical shortages of lithium, driving the price parabolic for years until supplies can be brought online. This dynamic makes it tough for companies to invest in lithium mines because of the 10-year lead time and the possibility of being rug-pulled by technology at any moment. In turn, that dangerous risk-reward dynamic will lead to less investment and a supply shortfall.
