Graphite One (GPHOF) signs second graphite deal with Lucid Motors to strengthen U.S. EV battery supply chain

Why Is Graphite One’s New Supply Agreement with Lucid a Milestone for the U.S. EV Sector?

Graphite One Inc. (TSXV: GPH, OTCQX: GPHOF) has expanded its strategic partnership with Lucid Group Inc. (NASDAQ: LCID) by entering into a second non-binding supply agreement, this time focused on natural graphite anode active materials (AAM). This follows their July 2024 agreement covering synthetic graphite and now positions Graphite One as the only known supplier offering both natural and synthetic graphite materials to a U.S. electric vehicle manufacturer.

This latest agreement is a clear signal of growing momentum toward building a fully domestic critical mineral supply chain for battery-grade graphite. With China’s dominance in global graphite production continuing to trigger geopolitical and supply risk concerns, the U.S. Department of Energy and Department of Defense have urged domestic players to accelerate material localization—a trend directly reinforced by this new deal between Graphite One and Lucid.

What Are the Key Terms of the Natural Graphite Supply Agreement?

While non-binding, the agreement outlines Lucid’s intent to source natural graphite AAM from Graphite One once commercial production begins. The initial term is five years, with pricing structured around a mutually agreeable formula. The materials will be processed at Graphite One’s proposed downstream facility in Warren, Ohio, using raw graphite from the company’s Graphite Creek deposit in Alaska.

This second supply agreement serves as a complement to the 2024 synthetic graphite arrangement and reinforces Lucid’s broader strategy to diversify its battery supply chain. As regulatory tailwinds push for greater onshore sourcing and carbon-reduction compliance in battery production, this agreement enhances both companies’ positioning within a shifting energy transition economy.

How Do the Alaska and Ohio Facilities Fit into Graphite One’s Supply Chain Vision?

Graphite One’s vertically integrated strategy starts with its Graphite Creek deposit—recognized by the U.S. Geological Survey as the largest in the country and among the largest globally. Located north of Nome, Alaska, the site anchors the upstream component of Graphite One’s production plan. In April 2025, the company completed its NI 43-101 compliant feasibility study 15 months ahead of schedule, aided by a $37.3 million U.S. Department of Defense Title III award under the Defense Production Act.

The study revealed a tripling of proven and probable graphite reserves and outlined a projected output of 75,000 tonnes of concentrate annually over a 20-year mine life. This output is designed to feed the Warren, Ohio processing facility, which will convert the concentrate into anode-grade material for EV batteries. The site will also host a graphite recycling facility to recover used materials, creating a closed-loop circular supply chain that directly addresses sustainability concerns among both federal agencies and institutional investors.

How Does This Move Advance Lucid’s Sustainability and Supply Chain Goals?

For Lucid Group, the partnership with Graphite One addresses two urgent needs: material traceability and localized sourcing. Interim CEO Marc Winterhoff stressed that critical materials sourced from within the U.S. will reduce the company’s exposure to global market shocks and geopolitical supply constraints while reinforcing efforts to lower the carbon footprint of its vehicles.

Lucid, which manufactures the Lucid Air and Lucid Gravity at its vertically integrated facility in Casa Grande, Arizona, has been working to strengthen its supply relationships across the battery component spectrum. The dual graphite agreement reflects Lucid’s intent to lead on domestic supply sourcing, ESG alignment, and long-term battery cost management.

What Is the Market Sentiment and Stock Impact for Graphite One?

Graphite One Inc. (OTCQX: GPHOF) is trading at $0.65 as of June 4, 2025, up 7.44% from the previous session and up nearly 12% over the past two weeks. The positive reaction from retail investors follows the company’s announcement of this second agreement with Lucid, suggesting that the market views it as validation of Graphite One’s strategic roadmap.

Institutional ownership remains low, with only 0.296% of shares held by institutions. The majority of the float is held by private companies and individual investors, which makes the stock more volatile and sentiment-driven. While the lack of institutional support may be a near-term limitation, the company’s inclusion on the FAST-41 permitting dashboard and direct DPA funding are seen as strong credibility markers that may attract more institutional attention over time.

Investor forums and clean tech analyst commentary suggest that Graphite One is increasingly perceived as a critical infrastructure play rather than a speculative mining stock, especially in light of its full-cycle value proposition.

Buy/Sell/Hold Tip: Currently leaning toward speculative “Buy” among clean energy-focused retail investors, contingent on future financing and production milestones.

What Are Analysts and Investors Saying About Lucid Group Stock?

Lucid Group Inc. (NASDAQ: LCID) is trading at $2.185, down 0.23% on the day but up 27.48% year-to-date—outpacing the S&P 500’s 9% return over the same period. While Lucid continues to face headwinds from high capex burn and limited volumes relative to Tesla and Rivian, its recent delivery growth of 58% YoY in Q1 2025 and a strong push toward localized material sourcing are seen as bullish indicators.

Institutional investors continue to dominate the LCID float, with 75.17% institutional ownership. Major holders include the Public Investment Fund (Saudi Arabia), Vanguard Group Inc., and BlackRock Inc. Despite a Q1 loss of $0.24 per share and a negative net margin of over 400%, Lucid’s strategic moves to secure long-term materials, like graphite, have helped stabilize long-term sentiment.

Buy/Sell/Hold Tip: Rated as “Hold” by most institutional trackers, with upside potential tied to successful production ramp-up and deeper vertical integration.

Why Does This Agreement Matter for the Broader Graphite Sector?

The supply agreement’s significance extends beyond the two companies. Graphite One’s success demonstrates how domestic resource developers can engage directly with U.S. OEMs to align with federal priorities and de-risk long-lead mining projects. This deal may also influence broader industry behavior, particularly among other EV manufacturers under pressure to secure compliant, low-carbon graphite supply chains amid Chinese export controls.

China still accounts for over 70% of global graphite anode production, and its 2023 restrictions on graphite exports elevated the urgency for U.S. firms to diversify. The Department of Energy’s Critical Materials Assessment 2025 underscores graphite’s vulnerability, placing additional importance on projects like Graphite Creek and companies that can close the loop with recycling.

What’s Next for Graphite One and Lucid?

For Graphite One, the next key milestones involve securing financing to begin construction on its Ohio facility, obtaining full permitting on its Alaska project, and potentially entering binding offtake or equity-linked agreements with Lucid or other EV manufacturers. Industry observers also note that Graphite One’s dual-positioning across mining and processing makes it a potential M&A target or partner for global battery firms seeking a U.S. foothold.

Lucid’s next steps likely include expanding sourcing agreements across other battery input materials (lithium, nickel, cobalt) and ramping up Gravity SUV production for a late 2025 commercial launch. While risks remain—particularly around cost structure and unit economics—the company’s deeper supply chain integration strategy is aligned with its premium EV positioning and regulatory compliance outlook.