04:31 PM EDT, 10/16/2024 (MT Newswires) -- General Motors ( GM ) and Lithium Americas ( LAC ) agreed to establish a joint venture that will see the automaker inject $625 million to develop and operate a lithium mine, a key raw material source for electric vehicles.

GM will acquire a 38% asset-level ownership stake in Nevada's Thacker Pass project for $625 million in total cash and letters of credit. Lithium Americas ( LAC ) will have a 62% interest in Thacker Pass, and manage the project.

This is the largest ever publicly announced investment by a US original equipment manufacturer in a lithium carbonate project, the companies said in the joint announcement. The move highlights the need to create a domestic supply chain for "critical minerals," they said.

Shares of GM closed 2.4% higher while Lithium Americas' ( LAC ) soared 23%. Lithium Americas ( LAC ) will contribute $387 million to the joint venture. The company had roughly $376 million in cash and cash equivalents as of June 30.

"We're pleased with the significant progress Lithium Americas ( LAC ) is making to help GM achieve our goal to develop a resilient (electric vehicle) material supply chain," Jeff Morrison, GM's senior vice president of global purchasing and supply chain, said. "Sourcing critical EV raw materials, like lithium, from suppliers in the US, is expected to help us manage battery cell costs, deliver value to our customers and investors, and create jobs."

The current investment replaces a $330 million common equity commitment that GM agreed to with Lithium Americas ( LAC ) in January 2023. The JV move is incremental to GM's February 2023 $320 million investment, which resulted in the automaker acquiring 15 million shares of Lithium Americas ( LAC ).

"Our relationship with GM has been significantly strengthened with this joint venture as we continue to pursue a mutual goal to develop a robust domestic lithium supply chain," Lithium Americas ( LAC ) Chief Executive Jonathan Evans said. "We will be working closely with GM to advance towards the final investment decision, which we are targeting by the end of the year."

Price: 49.01, Change: +0.01, Percent Change: +0.03