Olemedia
The news that General Motors (NYSE:GM) will invest $650M in Lithium Americas (NYSE:LAC) to secure access to lithium is the first of what surely will be more to come, Benchmark Mineral Intelligence CEO Simon Moores told CNBC on Tuesday.
Automakers are starting to realize owning or owning a controlling stake in a lithium source (NYSEARCA:LIT) is "the only way you're going to have the edge and guarantee can make EVs over the next 20 years," Moores said.
It takes at least two years to build a gigafactory and 10 years or more to finance and build a lithium mine, according to Moores, adding automakers will need to make even larger investments.
GM's (GM) $650M investment is "significant" but "what the industry really needs" is checks in the billions, Moores said, also noting that nickel will be critical for automakers.
For Lithium Americas (LAC), the investment - the largest made so far by an auto OEM directly into upstream lithium - is "an extremely favorable outcome," Cowen analyst David Deckelbaum said, according to Bloomberg.
The deal comes with a 10-year offtake agreement and a five-year extension option "that will supply lithium carbonate at market pricing," Deckelbaum noted.
Lithium Americas (LAC) +13% on the news, with lithium peers also showing broad gains; Albemarle (ALB) +3.4%, Livent (LTHM) +3.3%, Piedmont Lithium (PLL) +4.3%, Snow Lake Resources (LITM) +3.9%, SQM (SQM) +1.8%.
The Lithium Americas (LAC) shows GM (GM) "sees Thacker Pass as the key," Austin Craig writes in an analysis newly posted on Seeking Alpha.