Tag: LIthium battery

GM to Invest $625 Million in Joint Venture to Mine EV Battery Materials, Strengthening U.S. Supply Chain

Posted on by slightbourne@noblecapitalmarkets.com
Key Points:
– GM partners with Lithium Americas to develop a lithium mining project in Nevada, investing $625 million.
– The Thacker Pass project will boost GM’s efforts to secure domestic lithium for EV battery production.
– The deal is a key step in GM’s goal of building a resilient, U.S.-based EV supply chain.

General Motors (GM) is making a significant move to strengthen its electric vehicle (EV) supply chain by partnering with Lithium Americas Corp. in a joint venture. This collaboration involves a substantial $625 million investment in the Thacker Pass lithium carbonate mining project, located in Humboldt County, Nevada. Lithium is a critical component for manufacturing the high-capacity batteries needed to power EVs, making this deal a pivotal step in GM’s goal of building a resilient, U.S.-based supply chain.

With EV demand surging and federal regulations tightening on emissions, GM is focusing on ensuring a steady and reliable supply of lithium, a key raw material for EV batteries. This partnership, which includes $330 million in cash at closing, $100 million upon final project decisions, and a $195 million credit facility, is designed to secure GM’s access to lithium for its growing fleet of electric vehicles. GM will hold a 38% interest in the Thacker Pass project, which is expected to create significant job opportunities and contribute to cost savings in battery production.

“We’re pleased with the significant progress Lithium Americas is making to help GM achieve our goal to develop a resilient EV material supply chain,” said Jeff Morrison, GM’s senior vice president of global purchasing and supply chain. Securing lithium and other essential raw materials domestically is critical for managing battery costs, providing value to customers, and meeting investor expectations.

This joint venture builds on GM’s earlier $320 million investment into Lithium Americas in February 2023, further cementing their relationship. As the Thacker Pass project moves forward, it will play a crucial role in GM’s ambitious plan to scale its EV business and produce electric vehicles more profitably, in line with tightening U.S. environmental regulations.

This development is particularly timely as it comes amid a broader focus on building out the U.S. EV supply chain. Just yesterday, Wolfspeed, a key player in the EV chip industry, secured a $750 million grant from the U.S. government to enhance its silicon carbide wafer manufacturing for EVs. The Wolfspeed funding aims to expand production capacity and contribute to the growth of energy-efficient technologies for the EV market, which aligns with GM’s efforts in securing lithium.

The Wolfspeed project and GM’s lithium venture highlight the importance of fostering a domestic EV supply chain to reduce reliance on foreign resources, ensuring that the U.S. remains competitive in the global EV race. By linking these two developments, the broader picture of the growing U.S. EV infrastructure comes into view, from essential raw materials like lithium to advanced chip technologies, all designed to power the future of transportation.

As GM continues to push its all-electric vision, its investment in Thacker Pass positions the company to meet the increasing demand for EVs, while simultaneously reducing costs and securing a vital component of the battery production process. With both Wolfspeed and GM making significant strides, the U.S. EV industry is poised for substantial growth in the coming years.

China’s BYD Overtakes Tesla in EV Sales as Global Competition Heats Up

Posted on by slightbourne@noblecapitalmarkets.com

The electric vehicle (EV) race is heating up on the global stage. Recent data shows Chinese automaker BYD has overtaken Tesla as the top selling EV maker in the fourth quarter of 2023. BYD sold over 525,000 battery electric vehicles from October to December, surpassing Tesla’s nearly 485,000 deliveries.

This shift signals China’s rising prominence as a major force in the EV industry. With enormous growth potential in the world’s largest auto market, Chinese companies like BYD are positioned to reshape the competitive landscape. Their success has wide-ranging implications for investors across the auto and battery supply chains.

BYD’s meteoric growth is fueled by China’s EV-friendly policies. The government has implemented aggressive targets, mandating that new energy vehicles comprise 20% of sales by 2025 and become mainstream by 2035. China is reaching these goals years ahead of schedule thanks to subsidies and infrastructure spending. New energy vehicle sales exceeded 30% of the market in the first 11 months of 2023.

Tesla still led BYD in total global EV sales for full-year 2023, delivering 1.8 million vehicles versus BYD’s 1.57 million. But BYD is closing the gap rapidly, with sales up 73% last year. The company aims to double its international dealer network in 2023 and boost overseas sales five-fold.

To accommodate this growth, BYD plans to construct its first passenger EV plant in Europe. The facility in Hungary will complement BYD’s existing European bus factory. This international expansion mirrors China’s broader effort to increase exports and take on traditional automakers like Volkswagen and Renault in their home markets.

The intense competition has sparked a price war in China, with Tesla and others slashing costs in 2022 to retain market share. While this boosted sales, it eroded industry profit margins. Surging raw material prices also squeezed margins across the supply chain. Battery-grade lithium carbonate rose over 280% last year.

Take a look at some emerging lithium companies by taking a look at Noble Capital Markets’ Senior Research Analyst Mark Reichman’s coverage list.

Sourcing enough lithium and other battery metals remains a concern. According to Benchmark Mineral Intelligence, demand growth for lithium-ion batteries will require global lithium supply to expand eight-fold by 2030. Companies are racing to secure upstream supplies and lithium producers’ stocks have benefited.

But the launch of new mines takes time. Geopolitical factors may also constrain near-term growth in critical mineral supply from key regions like South America. This supply/demand imbalance poses a risk to the pace of EV adoption worldwide.

Investors will closely watch how BYD navigates these headwinds. Vertically integrated automakers like BYD with control over more battery and mineral assets may have an advantage. But no company is immune from margin compression if prices remain elevated.

Regardless, China’s trajectory toward EV supremacy seems clear. The country boasts advantages in scale, cost, and the supply chain that will be difficult for rivals to replicate. Tesla’s position appears secure as the leading global luxury EV brand. But Chinese automakers are poised to dominate the larger mass-market segments.

For investors, this reshuffled landscape demands a reassessment of portfolio positioning. Companies tied to China’s booming EV ecosystem warrant consideration. However, risks around growth assumptions, valuation, and competitive dynamics in a rapidly evolving industry must be weighed. While the road ahead remains challenging, China has signaled plans to set the pace in the global EV race.