Is Lithium Americas Stock Still a Buy?

Key Points

• A potential federal equity stake and $2.26 billion DOE loan would secure financing for Thacker Pass, one of America's largest lithium deposits, targeting 40,000 tons annually by 2028.

• General Motors has committed hundreds of millions of dollars to the project and may shift to "take-or-pay" offtake terms, guaranteeing revenue even if lithium prices remain weak.

• First production remains three years away while lithium prices languish, creating a high-stakes bet on EV adoption accelerating before capital runs dry.

• 10 stocks we like better than Lithium Americas ›

The Trump administration wants to own a piece of Lithium Americas (NYSE: LAC), and Wall Street can't decide if that's brilliant or terrifying. The stock spiked this week on reports that the U.S. government is negotiating a 5% to 10% equity stake tied to restructuring the company's $2.26 billion Department of Energy (DOE) loan. Add General Motors' $945 million commitment and potential shift to "take-or-pay" offtake agreements, and Thacker Pass suddenly looks like the most politically protected mining project in America.

Yet beneath the federal backstop lies an uncomfortable truth: Lithium Americas won't produce a single pound of battery-grade lithium until 2028. Spot lithium prices have crashed from their 2022 peaks. The company burns cash while building out one of the most capital-intensive projects in mining. That three-year gap between today's dilution and tomorrow's production creates a fascinating risk-reward equation.

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Is Lithium Americas stock worth the risk? Let's dig into the company's core value proposition to find out.

The American lithium ambition

Thacker Pass represents everything Washington wants in critical minerals: massive domestic scale, strategic location, and zero Chinese involvement. The Nevada deposit ranks among North America's largest lithium resources, targeting 40,000 metric tons of lithium carbonate equivalent annually in Phase 1 alone.

That's enough to supply batteries for roughly 800,000 electric vehicles per year. Later phases could double or triple output. The project sits just 200 miles from Tesla's Nevada Gigafactory, creating an all-American supply chain from mine to battery cell.

General Motors has already placed its bet, committing $945 million through equity investments and prepayments. The automaker's potential shift to "take-or-pay" offtake terms -- still under negotiation -- would guarantee Lithium Americas revenue regardless of market conditions, a crucial backstop given lithium's notorious price volatility.

The $2.26 billion DOE loan through the Advanced Technology Vehicles Manufacturing program provides the capital foundation. With the federal government potentially taking direct equity, Thacker Pass would transform from a speculative mining venture to what some view as quasi-national infrastructure.

The three-year reality check

Lithium Americas' timeline exposes the brutal mathematics of mining development. First production won't commence until 2028, assuming perfect execution. Multiyear buildouts face inflation pressures, permitting complications, and inevitable scope changes -- each a potential trigger for cost overruns and delays.

The company must navigate environmental challenges, including ongoing litigation from tribes and conservation groups opposing the project. Every quarter of delay burns more cash while lithium prices determine whether the project economics still work.

Spot lithium carbonate prices have plummeted from over $80,000 per ton in late 2022 to around $8,000 to $10,000 today. While analysts expect prices to recover as EV adoption accelerates, prolonged weakness would pressure project returns and could force phasing adjustments or additional capital raises.

The proposed government equity stake might reduce financing risk, but details remain fluid -- the structure could range from a straight equity purchase to a hybrid loan-equity conversion, each carrying different dilution implications.

The sovereignty premium

Lithium Americas offers the purest play on American lithium independence available to public market investors. The combination of federal backing, GM's strategic partnership, and Thacker Pass' massive scale creates a project that Washington appears determined to advance. The potential government equity stake signals unprecedented commitment to domestic critical mineral production. With China controlling 60% of global lithium processing, the strategic value transcends traditional mining economics.

For investors willing to underwrite both execution risk and commodity exposure through 2028, Lithium Americas represents a leveraged bet on the electric vehicle transition with uniquely powerful backers. For everyone else, waiting for clarity on government stake terms and construction progress might prove the wiser course. The race to secure American lithium supply will create winners -- whether existing Lithium Americas shareholders join that group depends entirely on the devil in the federal deal details.

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George Budwell has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.