Lithium Americas

We will discontinue analyst coverage of Lithium Americas on or about Jan. 2, 2026. We provide analyst research and ratings on over 1,600 companies globally and periodically adjust our coverage according to investor interest and staffing. Long view: We forecast Lithium Americas will successfully finish construction of the US-based Thacker Pass project and ramp up production over the next few years. Once in production, Lithium Americas should benefit from higher lithium prices. We see long-term prices roughly doubling from current levels to $20,000 per metric ton, based on our estimate for the marginal cost of production. We point to strong lithium demand growth from rising global electric vehicle sales and the buildout of energy storage system batteries. Yet, in response to low lithium prices, we see supply growth slowing. This should move the market from oversupplied to balanced, driving prices higher.

We will discontinue analyst coverage of Lithium Americas on or about Jan. 2, 2026. We provide analyst research and ratings on over 1,600 companies globally and periodically adjust our coverage according to investor interest and staffing. Long view: We forecast Lithium Americas will successfully finish construction of the US-based Thacker Pass project and ramp up production over the next few years.

Once in production, Lithium Americas should benefit from higher lithium prices. We see long-term prices roughly doubling from current levels to $20,000 per metric ton, based on our estimate for the marginal cost of production.We point to strong lithium demand growth from rising global electric vehicle sales and the buildout of energy storage system batteries. Yet, in response to low lithium prices, we see supply growth slowing. This should move the market from oversupplied to balanced, driving prices higher.

We raise our fair value estimate to USD 6 from USD 5 following Lithium Americas' announcement that the US government will take a 5% stake in the Thacker Pass project and a 5% stake in Lithium Americas. The increase is largely due to our assumption that Lithium Americas' offtake agreements will feature a higher floor price, ensuring project profitability at midcycle prices.

Our valuation assumes a roughly 11% weighted average cost of capital that includes a 1% equity risk premium, which accounts for the additional risk of Thacker Pass currently being in development. We value free cash flows generated beyond our 10-year explicit forecast horizon at a multiple of 11 times midcycle EBITDA. Our valuation also includes that the US Department of Energy's ATVM loan closes and funds USD 1.97 billion of phase 1 capital expenditures.

We forecast that Thacker Pass will enter production in 2028 with an initial 40,000 metric tons of capacity. We assume the phase 1 capital expenditures are USD 2.93 billion, in line with management's estimate, and includes contingency spending. We forecast Thacker Pass ramping to a total 160,000 metric tons of capacity over the long term, in line with management's guidance over four stages. After phase 1, we assume additional capital expenditures at Thacker Pass are funded by equity ownership, with Lithium Americas contributing 62% and GM contributing 38%.

Longer term, we expect lithium prices will remain volatile, but average selling at roughly the marginal cost of production, which we estimate to be USD 20,000 per metric ton. Our price forecast is based on our forecast for the marginal cost of lithium production on an all-in sustaining cost basis. We expect lithium demand to grow at nearly a 20% annual rate from 1.2 million metric tons in 2024 to 3.2 million metric tons by 2030. By 2030, roughly 95% of lithium demand will come from batteries that require high-quality lithium with few impurities. To meet demand, higher-cost supply will need to come online from lower-quality resources that will require higher processing costs.

Given the wide range of potential lithium prices, we see a range of outcomes for Lithium Americas. In a downside scenario, we forecast lithium prices to average USD 10,000 per metric ton for the remainder of the decade, which is below our estimate for the current marginal cost of production on an all-in sustaining cost basis, as we assume a wave of new low-cost supply alters the cost curve and keeps prices lower. We also assume no long-term floor price. Additionally, we assume Lithium Americas does not expand Thacker Pass beyond the first two phases ending with 80,000 metric tons of total annual capacity. In this scenario, our fair value estimate would be USD 1.

We assign Lithium Americas a no-moat rating. The firm’s only asset, Thacker Pass, is under construction; we estimate it will enter production in 2028.

Globally, lithium has been produced from either the evaporation of brine or the mining of hard rock minerals (spodumene or lepidolite). In general, lithium carbonate production via brine, which is prominent is Chile and Argentina, costs less than that of spodumene production, which is prevalent in Australia, and far less than lepidolite, which is produced in China.

With Thacker Pass, Lithium Americas aims to introduce a new type of lithium resource, clay mining, which will more closely replicate hard rock-based production. Global lithium demand has quickly been ramping over the last several years, given EV adoption, but historically, the lithium market was relatively small. New greenfield projects weren’t needed to supply the market, with brownfield investment being enough to meet demand growth. However, we estimate global lithium demand will more than triple by 2030 to 2.5 million tons, well above the roughly 800,000 metric tons in 2022. As such, new greenfield projects will be required to supply the market, including new methods of lithium extraction, such as clay-based mining.

Thacker Pass is located in the McDermitt Caldera, in the mountains in northwest Nevada. Based on management’s recent technical studies, the caldera is one of the largest rock-based lithium resources in the world. Lithium Americas also owns land rights to the northern part of the caldera, where there is potential for additional investment in production capacity.

Once the project enters production, Thacker Pass should sit on the bottom half of the lithium carbonate cost curve, at what we estimate as the second-lowest rock-based resource globally (behind Albemarle's and Tianqi’s Greenbushes asset). As such, Thacker Pass should be profitable on an all-in sustaining cost basis, which accounts for operating costs, taxes and royalties, and maintenance capital expenditures. Based on economics alone, we estimate the asset to be a relatively low-cost producer on the global cost curve, producing at USD 8,000 per ton. Our no-moat rating is due to the material threat of value destruction related to project uncertainty. Although project feasibility studies indicate clay-based mining is a viable method for lithium extraction, the project carries additional risk as it is the first of its kind. Thacker Pass is currently under construction and could face material delays and cost overruns that could hurt shareholder returns. Even after construction is finished, we see risk that clay-based mining may ultimately prove to have a materially higher cost than currently forecast, potentially ending up on the higher end of the global cost curve. Given the material threat of value destruction for the project, we view a no-moat rating as appropriate for now but will revisit our rating as the project enters production.

As a lithium pure play, Lithium Americas is well positioned to increase profits from EV growth through lithium batteries.

The company's resource, the McDermitt Caldera, is one of the largest lithium resources in the world. This should allow annual production capacity to expand to 160,000 metric tons.

Lithium prices will remain well above the marginal cost of production through at least the remainder of the decade, leading to excess profits and return on invested capital for Lithium Americas.

Thacker Pass is a new greenfield lithium project that will likely face delays and cost overruns, similar to other greenfield projects in the industry.

Lithium prices will fall as new supply comes online faster than demand, which will weigh on profitability. Lithium Americas' project could prove value-destructive in the wake of lower prices.

As Thacker Pass will be the first clay-based lithium resource in the world, it will likely have higher operating costs than management forecasts, leading to a materially higher position on the global cost curve.