GM will invest $625 million in a joint venture to mine raw materials for EV batteries in the US

detroit – General Motors The automaker has agreed to establish a joint venture with Lithium Americas Corp. that includes providing $625 million in cash and credit to the Canadian mining business, the companies announced Wednesday.

The agreement focuses on the development, construction and operation of a lithium carbonate mining operation called Thacker Pass in Humboldt County, Nevada. Lithium is a key component for batteries that power electric vehicles.

Securing raw materials like lithium from the U.S. is critical to GM's plans to grow its all-electric vehicle business profitably to meet federal requirements for vehicles and the large batteries needed to power them.

“We are pleased with the significant progress Lithium Americas is making to help GM achieve our goal of building a resilient EV component supply chain,” Jeff Morrison, GM senior vice president of global purchasing and supply chain, said in a release. “Sourcing critical EV raw materials such as lithium from suppliers in the United States is expected to help us manage battery cell costs, deliver value to our customers and investors, and create jobs.”

The announcement sent shares of Lithium America up more than 20% during premarket trading on Wednesday to around $3.25 per share. GM's stock was relatively unchanged in the deal, which was previously announced as an equity deal.

According to the release, GM will own a 38% interest in Thacker Pass. Investments in the joint venture are expected to include $330 million in cash contributed by the closing date; A $100 million cash contribution to the “final investment decision” for one phase of the project; and a $195 million letter of credit facility prior to the first draw on a $2.3 billion Department of Energy loan.

“This joint venture significantly strengthens our relationship with GM as we pursue a mutual goal to build a strong domestic lithium supply chain through the Thacker Pass development,” Lithium America CEO Jonathan Evans said in a release.

The joint venture is in addition to GM's $320 million investment in Lithium Americas in February 2023. As part of the investment, GM Lithium acquired approximately 15 million common shares of America.

In August, GM and Lithium America agreed to delay a $330 million second-tier investment in the mine to explore alternative structures for the investment.