What happened

Shares of Lithium Americas (LAC) shot up on Thursday, closing the day up 8.9% thanks to an analyst turning bullish about the lithium market and lithium stocks.

So what

JPMorgan initiated coverage on Lithium Americas stock with a price target of $28 a share. JPMorgan foresees strong lithium markets over the next decade driven by rising demand and prices, and believes Lithium Americas is well poised to take advantage of that. JPMorgan's price target represented a solid 37% upside from the lithium stock's opening price Thursday.

There's some merit in JPMorgan's views, as Lithium Americas' prospects are enticing.

A person plugging a charger into an electric car.

Image source: Getty Images.

Lithium prices have skyrocketed this year to all-time highs on rising demand for electric vehicles (EVs), sending shares of EV stocks flying through the roof. Albemarle, the world's largest supplier of battery-grade lithium, projects global demand for lithium to grow at a whopping compound annual rate of 30% through 2025 as EV production rises tenfold by 2030.

Lithium Americas is developing two lithium mines, one each in Argentina and the U.S. It has 49% stake in the Cauchari-Olaroz project in Argentina, with China-based Ganfeng Lithium owning the remaining stake. While this plant is expected to start production by mid-2022, its Thacker Pass mine in Nevada is still under development.

Now what

Lithium Americas is among the many companies betting on EV growth, and while the prospects are enticing, investors should be aware of potential risks. For Lithium Americas, Thacker Pass is proving to be tough ground as the company is embroiled in a long-drawn-out legal battle with indigenous tribes.

Although a federal judge's recent refusal to tribal leaders' request for an injunction has paved the way for excavation work at the mine, the tribes are reportedly planning their next step to stop the mine from developing. This is just one of the risks to keep in mind as a Lithium Americas investor while you explore other electric vehicle -- and lithium -- stocks worth a bet for the next decade.