GM delays $330M Thacker Pass funding in latest sign of lithium slowdown

General Motors (NYSE: GM) has postponed a $330-million investment in Lithium Americas (TSX: LAC; NYSE: LAC), pushing the second tranche of their $650-million deal, announced in early 2023, to the end of the year. This delay coincides with Lithium Americas’ efforts to finalize a $2.3-billion loan from the U.S. Department of Energy (DOE) for its Thacker Pass lithium project in Nevada. 

Lithium Americas shares fell 6% by midday to trade at $2.45 per share. The company has a market cap of $717.2 million. 

A dive in lithium prices over the past two years has seen producers delay investments in new projects as their profits have shrunk. Automakers are also pulling back on their EV plans on slowing demand for the vehicles. 

“Our relationship with GM has been built on collaboration and a mutual goal to develop a robust domestic lithium supply chain,” said Lithium Americas president and CEO Jonathan Evans in a release. “We are fortunate to have GM’s partnership as we finalize the DOE loan and GM investment prior to making the final investment decision later this year.” 

The DOE has highlighted Thacker Pass as crucial for the U.S. electric vehicle (EV) sector and its potential to significantly boost domestic lithium production. In announcing its conditional loan for the project in March, the DOE said that supporting Thacker Pass aligns with its mission to enhance the country’s energy security and reduce reliance on foreign resources.

The first phase of the project is expected to cost US$2.9 billion to build.

Thacker Pass has the largest known measured and indicated lithium resource in North America, with 385 million tonnes of measured and indicated resources averaging 2,917 parts per million (ppm) lithium, equivalent to 6 million tonnes of lithium carbonate. Additionally, 147 million tonnes of inferred resources averaging 2,932 ppm lithium could provide another 2.3 million tonnes of lithium carbonate equivalent (LCE). Once operational, the mine has the potential to produce enough lithium to power 1 million EVs annually. 

The upcoming U.S. presidential election could affect government support for critical minerals mining. Former President Donald Trump has pledged to “end the electric vehicle mandate” if re-elected.  

GM’s delay could impact the investment timeline. If the deal is not finalized by Dec. 20, Lithium Americas may need to negotiate additional terms with GM to proceed.