Unfurling Battery Materials Growth: Global Perspective & NOVONIX’s Lucrative Stance

Summary

• NOVONIX Limited plans to be a tier one global supplier in rapidly growing cathode and anode advanced materials market; the only company to break into this market from NA/Europe region.
• Decreasing battery costs is critical in increasing adoption of technologies such as EVs and grid storage systems, also an active area of work for NOVONIX.
• Experts opine that battery EV market is nearing a tipping point, owing to a constructive change in consumer perceptions, technological improvements, and better involvement of governments towards adoption.
• Cathode material market is USD 7 Bn, growing 13% Y-o-Y as per the company, with current precursor synthesis process deemed complicated, inefficient, and expensive.
• NOVONIX’s DPMG involves dry synthesis of high nickel materials at a significantly lower cost.

The ones that control critical raw materials, bear production and processing expertise are likely to hold balance of industrial power in energy storage and auto industries.

Industry experts believe that demand for lithium-ion batteries (LIB) may climb a mammoth tenfold over a decade. Consequently, this anticipation has been forcing both businesses and governments to establish plans for consistent and dependable supply of raw materials and to reconsider battery technology.

The demand for battery-powered electric vehicles (EV) is also likely to soar over the next 1-2 decades. So much so, Deloitte analysts opine that there has been a noticeable “sea change in attitudes” towards EV.

In this backdrop, Australian-based NOVONIX Limited (ASX:NVX) deserves special attention as it continues to make high-performance, synthetic graphite anode material for use in LIB. Aiming to make better batteries for EVs, phones, laptops, cordless equipment and renewable energy storage, NOVONIX is redefining manufacturing processes to deliver lower costs, wastes and emissions.

Battery Materials Growth

Recently, NOVONIX projected that renewables and green energy demand will possibly drive battery materials growth, specifically 10x by 2030. The equation is simple- more EVs will need more batteries and more batteries will demand more battery materials.

Battery Materials Growth (Source: NVX’s Presentation)

The Company further projected that-

• Annual passenger EV sales may rise to 10 million per annum in 2025, 28 million in 2028 and 56 million by 2040.
• In order to fill this increasing demand for EV, there are 99 LIB megafactories in pipeline with over 2k gigawatt hours (GWh) of capacity for 2028.
• Consequently, demand for high performance battery materials is expected to grow >7x.
• Total addressable market of anode and cathode materials is expected to take a leap from ~USD 10 billion currently to USD 50 billion - USD 100 billion in the next 5 to 10 years/

Battery Market: A Global Perspective

Trade tensions and virus spat between the US and China have been raising concerns about certainty of supply for essential materials. Parallelly, global competition for strategic materials like cobalt, lithium and graphite remains intense. It should be noted that battery manufacturers need long-term access to cobalt, lithium, and graphite for LIB production.

China is the biggest supplier of these materials and a rapidly expanding user in its manufacturing processes. However, dwindling trade relations has led to concerns of banning exports of strategic minerals despite the fact that US manufacturers rely heavily on imports of rare earth elements for technology manufacturing.

Subsequently, the global market may tighten with China’s need for rare earth elements to supply its own LIB makers increasing, causing commercial ramifications for battery makers around the world.

This is where reliance and diversification of battery-powered technology comes into picture.

The US Department of Energy has reportedly been offering grants for development of better materials to put into batteries and more efficient battery production. In 2019, there were 70 mega-sized, LIB manufacturing plants under construction worldwide. Moreover, cleaner energy requirements imposed by governments and shift by businesses and consumers to renewable energy sources have demanded development of industrial-scale, high-performance, battery-based energy storage systems.

On this note, here is a fact: Synthetic graphite, derived from petroleum feedstock, can be used to make battery anodes. It generally provides a much longer lasting anode, and that makes it ideally suited for batteries installed in EVs. And, EV batteries need premium, long-life battery materials that need to last more than a decade.

NOVONIX continues to be a promising company as it is efficiently prepping for a surge in demand as consumers and businesses switch to EV. Let us cast an eye on its unique attributes-

NOVONIX’s Lucrative Stance in Battery Materials

To start with, NOVONIX has all three critical elements in-house for the Million-Mile Battery-

Quest for Million-Mile Battery (Source: NXV’s Presentation)

The Company offers promising synthetic graphite anode material with improved coulombic efficiency and cycle life compared to industry leading materials at competitive costs, guaranteeing safety and adhering to green alternative.

Besides this, NOVONIX has agreements with two of the largest battery makers, who represented 40% of the Global LIB Market in 2018- the SAMSUNG Supply Agreement and R&D Collaboration with SAMSUNG SDI, and SANYO Commercial Collaboration with SANYO Electric Co.

Another lucrative offering of the Company is the DPMG Technology that offers low cost cathode synthesis which is entering pilot scale and commercialisation phase. In the LIB field, this technology demonstrates huge potential for lowering battery costs, improving battery performance, reducing waste and environmental effect of battery manufacture. Moreover, it could further support in pharma, structural materials, fields that use engineered particles.

To know more about DPMG, READ HERE: NOVONIX Advancing Well With Its Patented Advanced Cathode Material Manufacturing Method

NOVONIX’s technologies support “million-mile+ battery” performance. While Single Crystal Cathode (SCC) is emerging as a key factor in the million-mile battery, patents have been filed by NOVONIX with 100% royalty-free rights for this dry synthesis method with potential to significantly lower cost and reduce waste.

Further, NOVONIX BTS received government support to develop advanced electrolytes for better cycle life and high-power applications. The Company reports that its electrolytes outpace benchmark electrolytes under long term cycling at 40°C. IP filing has commenced from results of this work around high performing electrolyte packages.

ALSO READ: NOVONIX Marking Strong Presence in Rapidly Growing Advanced Materials Market

NVX soared ~3.7% to $ 1.005 on 10 July 2020. Notably, the stock has delivered impressive returns of 391.46% in the past three months.

(Note: All currency in AUD unless otherwise specified)