Lithium Americas (TSX, NYSE: LAC) has raised the estimated cost of the first phase of its flagship Thacker Pass lithium project in Nevada by 31% to $3.83 billion, citing rising labour, construction and logistics expenses.

The revised budget adds $895 million in capital costs and increases the project’s funding requirement by about $995 million, the company said Wednesday. Lithium Americas expects to cover the additional amount through company contributions and available reserves under a US Department of Energy (DOE) loan.

Investors reacted negatively to the news, sending Lithium Americas shares down almost 8% to C$2.48 apiece in early Toronto trading. The decline left the company with a market capitalization of nearly C$544 million ($382 million).

“Thacker Pass is on track to deliver America’s largest fully integrated source of domestic battery-quality lithium carbonate, and we are building it at pace,” CEO Jonathan Evans said in a statement. “Phase 1 is advancing toward peak construction activity by year end 2026, with mechanical completion targeted for late 2027.”

The cost increase underscores the challenges of building a domestic lithium supply chain in the US, where rising wages, skilled labour shortages and tariffs are adding pressure to major mining developments. Thacker Pass, a joint venture with US automaker General Motors (NYSE: GM), is expected to supply enough lithium for about 1 million electric vehicles annually.

Construction Pressures

Higher labour installation rates for piping, steel and equipment accounted for $245 million of the increase, while tariffs and logistics added approximately $100 million.

Lithium Americas now expects to spend between $1.7 billion and $2 billion on Phase 1 in 2026, compared with its previous forecast of $1.3 billion to $1.6 billion.

Despite the higher costs, the company continues to target commercial production in 2028, with Phase 1 designed to produce 40,000 tonnes of battery-grade lithium carbonate annually at full capacity.

The revised estimate puts greater pressure on construction productivity and cost controls as the project moves through its most labour-intensive stages. Further increases could strain available financing even if the company maintains its production schedule.

Funding Requirements

Lithium Americas expects to meet the additional funding requirement through contributions to the joint venture and available DOE loan reserves, reducing the need to seek entirely new financing.

The company held about $1.3 billion in cash and restricted cash as of Sept. 30, including approximately $360 million at the Thacker Pass joint venture.

The DOE-backed financing provides an important source of capital for the development, which is intended to strengthen US access to battery-grade lithium and reduce reliance on imported materials.