In This Article:
By M. Marin
NASDAQ:NVX
READ THE FULL NVX RESEARCH REPORT
‘Synergistic’ operating units complement one another as company advances strategy
Technology company Novonix (NASDAQ:NVX) is developing a local battery materials supply chain for North America. Tariffs and international trade prospects shine a light, we believe, on the need for an onshore supply chain to support the battery and clean energy sectors. NVX believes its strategy aligns with the administration’s goal to secure critical mineral supply chains and support domestic manufacturing, with its existing Tennessee plant and plans to construct a second production facility, Enterprise South.
The current tariff and trade backdrop also highlight the importance of reducing reliance on other countries for critical materials. Sourcing critical battery materials primarily from China has potential risks, including geopolitical, economic particularly the impact of tariffs and quotas and logistics and supply side disruptions. Currently, manufacturers in China produce about 65% to 80% of the world's graphite, according to the U.S. Geological Survey and United States Trade Representative (USTR). China accounts for roughly 79% of global production of synthetic anode material and an estimated 80+% of the market for automotive battery anodes.
Export controls from China also highlight the need for local supply sources, in our view. In 4Q23, China imposed export controls for graphite. The International Trade Commission (ITC) also is taking measures to protect North American synthetic graphite producers from unfair trade practices. On January 8, 2025, the U.S. Department of Commerce initiated antidumping duty (AD) and countervailing duty (CVD) investigations of active anode material from China. Reflecting these challenges, as well as the cost benefits of its proprietary production process, NVX expects its material can be a more reliable supply and more competitively priced.
Company believes its multiple competitive advantages include first mover advantage
Multiple factors are driving growing need for battery materials, including rising consumer adoption of electric vehicles (EVs) and installations of electric storage systems (ESS), among others. To benefit, Novonix’s strategy is to become a tier-one global supplier in the rapidly growing advanced materials market and lithium-ion battery space. The company believes the location of its plant and competitiveness of samples of its materials will be competitive advantages as North American battery demand climbs.
Importantly, Novonix believes it has first mover advantage as an early manufacturer of synthetic graphite in North America and a competitive advantage through what it calls its synergistic operating structure. The company’s three operating units – Novonix Anode Materials, Novonix Cathode Materials and Novonix Battery Technology Solutions (BTS) divisions – complement one another and are each expected to play important roles in its development and growth, as Novonix leverages its proprietary R&D to develop critical materials for the battery and ESS sectors. The company also believes it has a competitive advantage through the insight it has developed over the past several years of operation into what key existing and prospective customers need.