Lithium Americas Stock Rockets 81% After Trump Administration Seeks 10% Government Ownership Stake in Loan Renegotiation
Trump Administration Moves to Secure Slice of Lithium Future
Government Seeks Stake in Lithium Americas as Mineral Strategy Heats Up
The closing bell had barely faded on September 23 when Wall Street was jolted by unexpected news. Lithium Americas Corp, the Nevada-based lithium developer, suddenly found itself at the center of Washington’s shifting energy strategy. Reports revealed the Trump administration wants up to a 10% equity stake in the company in exchange for reworking a $2.26 billion Department of Energy loan. The revelation sent Lithium Americas stock soaring 81% in after-hours trading, jumping from $3.07 to as high as $6.08.
This wasn’t just a speculative frenzy. The rally reflected something bigger: Washington’s willingness to step directly into ownership stakes as it scrambles to secure the raw materials needed for the energy transition.
Uncle Sam as a Business Partner
According to market insiders, the administration is pushing for “no-cost warrants” representing 5% to 10% of the company. That would mark a dramatic break from the DOE’s traditional role as a lender, not a shareholder.
It’s not the first time the government has tested this approach. Earlier this year, Washington took a near-10% stake in Intel as part of its effort to bolster domestic chipmaking. Analysts say the pattern is clear—taxpayer dollars are no longer just backstopping loans. They’re buying a piece of the upside too.
“The government’s message is simple: if taxpayers are footing the bill for these strategic projects, they should share in the gains,” one analyst said, requesting anonymity because the talks are still unfolding.
The timing is no accident. U.S. officials are increasingly alarmed about reliance on Chinese lithium supplies. Prices for battery-grade lithium carbonate in China hover around ¥73,000 a ton after a sharp drop this year, underscoring both the volatility and the stakes.
Thacker Pass Under the Microscope
At the heart of these negotiations sits Thacker Pass, a massive Nevada mine that could become one of the country’s largest lithium producers. Lithium Americas secured its DOE loan commitment in late 2024. The first phase alone aims to churn out 40,000 tons of lithium carbonate per year by 2028.
But Washington is re-examining the deal. A Bloomberg report revealed DOE advisers worry about whether Thacker Pass can compete with lower-cost Chinese production. They’ve called for “stronger commercial underpinnings” before finalizing the loan.
General Motors, which has already committed cash and letters of credit for a 38% stake in the project, has been pulled deeper into the talks. Sources say the White House is pressing GM for longer-term purchase guarantees and governance concessions to shore up the economics.
The scale of Thacker Pass makes these demands more than routine. Building Phase 1 will require nearly $3 billion in capital, and feasibility studies estimate operating costs around $6,743 per ton.
Markets React with Fire and Caution
The after-hours stock explosion captured the dual nature of this moment: excitement about government backing, but also the volatility of lithium markets. Lithium Americas’ short interest sits around 11% to 13%, which added extra fuel to the price surge.
On paper, Phase 1 could generate annual EBITDA between $130 million and $330 million depending on lithium prices. But those numbers rest on fragile assumptions. Lithium Americas’ current $700 million market cap still bakes in plenty of risk, especially if weak prices persist.
The company’s financing is already complicated. It has a $195 million convertible from Orion priced at $3.78 per share, plus its DOE loan commitment and GM partnership. Any new government stake would have to navigate this web while also satisfying demands to protect taxpayers.
A Broader Shift in Washington’s Playbook
What’s happening here goes beyond one company. The administration’s willingness to take equity reflects a broader rethink of how the U.S. secures its critical minerals. DOE officials are reviewing the entire green loan portfolio, paying closer attention to binding purchase agreements and project governance.
The precedent could reshape how future projects structure their financing. Hybrid models blending private capital with direct federal stakes may become the new norm, especially in industries where China enjoys state-backed dominance.
Still, big questions hang in the air. How much of Lithium Americas will the government actually take? Will the stake be at the corporate level or carved out of the Thacker Pass project itself? And how will this affect existing shareholders and governance?
Investors Weigh Risks and Rewards
For investors, the situation cuts both ways. On one hand, government involvement could reduce execution risk if GM agrees to binding long-term purchases. On the other, equity dilution from federal warrants complicates the math for current shareholders.
Add in China’s unpredictable production and pricing policies, and the path forward looks anything but smooth. Success will depend on building a project that can compete globally, not just survive on U.S. subsidies.
A New Financing Era
As negotiations grind on, Wall Street is watching closely for filings that spell out the deal terms—equity size, pricing, and milestone triggers. Whatever emerges could become the blueprint for how America finances its critical mineral future.
Lithium Americas may just be the first test case. If Washington succeeds in creating a workable hybrid model at Thacker Pass, it could set the stage for similar arrangements across the entire energy transition supply chain.
For now, one thing is clear: the old playbook of simple loan guarantees is fading. In its place, the U.S. is adopting a more hands-on approach—one that blends taxpayer protection with a stake in the nation’s energy independence.
House Investment Thesis
| Category | Details |
|---|---|
| Significance of Equity Ask | Part of an emerging government playbook for strategic supply chains (e.g., ~10% stake in Intel). Unusual for DOE debt programs, suggesting a non-routine, high-level strategic move. |
| Current Capital Structure | Debt: $2.26B DOE ATVM loan. Thacker Pass JV: LAC (~62%), GM (~38% asset-level stake). Orion Financing: $195M convertible note at $3.78, 9.875% PIK/cash; $25M production payment. Shares Outstanding: ~218.9M (as of Apr 24, 2025). Short Interest: 11-13% of float. |
| Project Economics (Thacker Pass Phase 1) | Scale: 40ktpa LCE. Target Production: 2028. Capex: ~$2.9B. Opex (2023 FS): Lithium Price Sensitivity: Dominant equity driver; China spot price volatile ( |
| Valuation Framework (Rough EBITDA, Phase 1) | @ $10k/t LC: ~$130M EBITDA (LAC share: ~$81M). @ $12k/t LC: ~$210M EBITDA (LAC share: ~$130M). @ $15k/t LC: ~$330M EBITDA (LAC share: ~$205M). Implied Market View: Current ~$0.7B market cap prices in significant delay/execution risk or mid-cycle prices of $10-12k/t. |
| Government Stake Scenarios | 1. Corporate No-Cost Warrants (Discounted): Value transfer from shareholders; stock negative unless offset by better terms. 2. Asset-Level Minority Interest: Complicates JV governance. 3. Warrants with Triggers/Premiums (Preferred): Least dilutive; provides upside alignment. |
| Bull Case / Constructive Triggers | Official 8-K/DOE statement detailing equity mechanics (capped, premium-priced), no delay to first draw, binding GM offtake guarantees, and milestone-based covenants. |
| Bear Case / Risks | Hard dilution without contractual de-risking, protracted renegotiations causing delays, lithium price relapse, or reagent cost surprises. |
| Trading Dynamics & Outlook | After-hours spike driven by headline + short squeeze (high short interest). Bias: Expect high volatility and partial retracement unless formal, favorable terms are announced quickly. Follow-through depends on specifics of the deal. |
| Diligence Checklist (Next 72H) | 1. Company 8-K on stake %, instrument, pricing, milestones. 2. DOE/LPO statement on covenant changes. 3. GM response on offtake/guarantees. 4. Options market implied volatility (IV). |
| Analyst's Bottom Line | The rally is not a clean de-risking. The key question is whether government support translates into binding guarantees and a fast loan amendment, or into protracted, dilutive renegotiations. Risk/reward improves medium-term only if a formal framework ties potential dilution to clear, favorable milestones and GM support. |
NOT INVESTMENT ADVICE