A report regarding potential U.S. government investment triggered a historic surge for Canadian lithium company Lithium Americas (TSX, NYSE: LAC) on Wednesday, with its share price closing up 95.77%. This capital frenzy was ignited by a Reuters report indicating the Trump administration is considering adjusting the terms of a $2.3 billion loan in exchange for a potential stake of up to 10% in the company.
Lithium Americas subsequently confirmed that it is in discussions with the U.S. Department of Energy and its partner, General Motors (NYSE: GM), in the Thacker Pass lithium project in Nevada regarding the conditions for the first draw of this record loan. According to the company, the DOE loan would primarily cover most of the construction costs for a processing plant near the mine. The project is viewed as a core element of U.S. efforts to reduce reliance on foreign critical minerals and build a domestic electric vehicle supply chain.
The Thacker Pass lithium project was approved in the final days of Donald Trump’s first term and holds the largest known lithium resource deposit in North America.
According to the plan, Phase 1 is targeted for completion by the end of 2027, aiming to produce 40,000 tonnes of battery-grade lithium carbonate annually—enough to power approximately 800,000 electric vehicles. Upon achieving full production in 2028, the mine is poised to become the largest source of lithium in the Western Hemisphere, with an output that would far surpass that of larger peer Albemarle’s (NYSE: ALB) Silver Peak mine in Nevada, which produces about 5,000 tonnes per year.
This potential equity transaction reveals a deeper strategic intent by the U.S. government. The report notes that the Trump administration has previously explored taking stakes in strategic companies like MP Materials and Intel, aiming to strengthen domestic manufacturing and reduce dependence on foreign supply chains. Meanwhile, General Motors, as a key project participant, has invested $625 million to secure a 38% stake in the Thacker Pass project and the right to purchase lithium from it for 20 years. Lifted by the recent reports, General Motors’ shares also rose 2.5% in early trading.
Despite the enthusiastic market reaction, underlying risks cannot be ignored.
Greg Beard, a senior advisor in the Loan Programs Office at the DOE, has previously warned that the Thacker Pass project could struggle to compete with cheaper Chinese lithium. Furthermore, the deal itself is unusual: Lithium Americas is a Canadian company headquartered in Vancouver. If finalized, it would mark the first time the U.S. government attempts to take a direct stake in a foreign company, raising questions about legal and geopolitical implications.
For investors, a more immediate challenge is that Lithium Americas remains a start-up with no current revenue, and commercial lithium production is not expected to begin until 2028 at the earliest. This means the company will continue to rely on external financing until the project generates cash flow, by which time the political landscape may have shifted. These long-term uncertainties are factors the market must weigh amidst the surge in share price.
