Stocks were poised to finish January with solid gains for the month, even if stock index futures suggested that Tuesday might open with a slight decline. Investors have been pleased to see some relief from 2022's bear market, and many believe that the first month of the year could set the tone for how Wall Street will perform throughout 2023.
General Motors (GM -0.04%) has a long history as an industrial leader in the U.S., but it has recently had to fight to keep up in the fast-moving electric vehicle (EV) space. In an effort to catch up with EV pioneer Tesla, GM has set out an ambitious strategy that makes the most of its size and financial resources. In releasing its fourth-quarter financial report, General Motors celebrated strong results and fired the latest salvo in its battle against Tesla. Yet neither of the two automotive stocks climbed as much Tuesday morning as the company that GM has chosen to help it make its vision a reality. Read on to find out which stock that is and why it's soaring.
GM closes out a strong 2022
General Motors shares were up 5% in premarket trading Tuesday morning. The automaker's fourth-quarter results finished what was an impressive year at GM.
GM's fourth-quarter revenue jumped 28% year over year to $43.11 billion. Adjusted earnings saw even faster growth, as the automaker posted $2.12 per share on its bottom line, up 57% from year-ago levels. For 2022 on the whole, revenue jumped 23% to $156.7 billion, with earnings finishing the year at $7.59 per share on an adjusted basis.
General Motors led the U.S. in total sales, claiming the largest year-over-year boost to market share of any original equipment manufacturer in the industry. Improving supply chain conditions helped contribute to GM's success, with its Chevy and GMC marks staking their claims to the lucrative pickup and SUV markets. In addition, the Chevy Bolt enjoyed record sales, with GM asserting that they were the best-selling mainstream electric vehicles in the second half of last year.
EVs are playing an increasingly important role for General Motors, and the automaker intends to make even more progress in 2023. With its Ultium Cells joint venture for battery technology and production, GM is going to boost its production of existing EV models including the Cadillac Lyriq, the GMC Hummer EV, and the BrightDrop Zevo 600. EV fans can also expect the launch of the EV versions of the Silverado, Blazer, and Equinox during 2023, as GM targets 400,000 units of EV production from 2022 through the first half of 2024.
GM's buying what this company's selling
Yet as well as GM did, Lithium Americas (LAC) posted even bigger gains early Tuesday. The stock rose 9% as the lithium producer announced a major partnership with the automaker.
Lithium Americas and GM said that they had come to an agreement to help bolster lithium supplies from U.S. sources. GM will make a $650 million investment in Lithium Americas, with the intent of jointly developing the Thacker Pass lithium mine in Nevada. Thacker is the biggest lithium source in the U.S. and ranks third worldwide, and Lithium Americas estimates that the material taken from the mine should be able to support battery production for 1 million EVs annually.
To be clear, Thacker isn't expected to start producing lithium until the second half of 2026. However, GM will have exclusive access to production in phase 1 of the development of the mine, and will also have rights to make a first offer for phase 2 production.
Plenty of investors are engaged in strong debate about whether GM stands a chance to catch up to Tesla in the EV market. Regardless, though, pick-and-shovel plays like Lithium Americas stand ready to meet demand from all interested parties, and that's why the lithium producer is the big winner today.
