Novonix (ASX:NVX) has signed a binding agreement with subsidiary Volkswagen PowerCo SE to supply a minimum of 32,000 tons of high-performance synthetic graphite from 2027 to 2031. The agreement strengthens Novonix’s influence in the North American battery supply chain and follows a Similar agreement with Stellantis earlier this month to deliver a minimum of 86,250 tonnes, up to a target volume of 115,000 tonnes of graphite.
Novonix develops and manufactures lithium-ion battery materials and technologies, focusing on synthetic graphite anodes, battery cell test equipment and zero-waste cathode synthesis. The company operates manufacturing facilities in North America.
PowerCo, founded by Volkswagen in 2022, oversees battery cell production for the auto giant. It operates gigafactories in Germany, Spain and Canada, with a combined capacity target of up to 200 GWh per year. The agreement with Novonix follows a test and development agreement signed earlier this year.
The Novonix plant in Riverside, Tennessee, which is expected to begin production in 2025, will supply the synthetic graphite. The plant is expected to initially reach a capacity of 20,000 tons per year, with additional capacity planned through a second site in the southeastern United States. Total production is expected to reach 150,000 tonnes per year to meet growing demand from the electric vehicle and energy storage sectors.
The agreement is contingent on Novonix achieving production milestones, securing financing and meeting compliance criteria. PowerCo reserves the right to terminate the contract if these conditions are not met.
Novonix previously received a $100 million grant and $103 million tax credit from the US Department of Energy to support its operations, highlighting its role in advancing the energy transition clean.
Novonix shares are trading up 14.86% at 85 cents.