With ten million electric vehicles forecast to roll off the production line within five years, the industry is no longer in its infancy thanks in no small part to the commercialisation efforts of Elon Musk’s Tesla.
With the role of the lithium-ion battery technology well entrenched, it’s now a case of continuously improving the technology to win the faith of wavering consumers worried about battery durability, performance and –crucially – cost.
Just as runners strived to crack the four minute mile in the 1950s, the electric vehicle industry has set itself an informal target of achieving a battery life of one million miles (1.6m kilometres) – roughly double the current maximum life expectancy.
As a pioneer of advanced battery materials the ASX listed technology house Novonix is playing a key role in cracking the battery equivalent of Roger Bannister’s four-minute-mile in 1954.
“Our company’s focus is to support long-life battery materials at lower cost,” says Novonix chief operating officer Dr Chris Burns.
“The growth in battery demand over the next decade is going to be huge and most of that is from electrical vehicle and energy storage systems.”
Well before “pivoting” became fashionable, Novonix started out as an aspiring graphite miner, having listed as Graphitecorp in 2015. The company re-focused on downstream battery applications via the 2017 through acquiring Novia Scotia based Novonix, founded by Dr Burns and chief technology officer Dr David Stevens, and establishing PUREgraphite.
As it happened, the move was perfectly timed as it steered the company from the glutted markets for graphite and lithium, to the booming battery milieu.
Novonix’s most advanced efforts are focused on PUREgraphite, its Tennessee based subsidiary. In the first quarter PUREgraphite began commercial production at its facility at Chattanooga, at the foot of the Appalachian Mountains.
“This is really our first commercial opportunity out of our research ecosystem,” Dr Burns says.
Currently PUREgraphite is the only supplier of synthetic graphite for anode material in the US. Most global supply emanates from China, at a time when the coronavirus has highlighted the supply chain risks of relying on the Middle Kingdom.
According to Dr Burns, synthetic graphite is more conducive to longer battery life because of its superior purity and consistency compared with the natural product.
In order to be “battery ready”, natural graphite requires multiple processes to reach upwards of 99.95 per cent purity.
The synthetic product can obtain 99.999 per cent purity – which in layman’s terms is about as good as it gets.
In December last year Novonix announced its maiden deal to supply lithium-ion battery anode material to Korea electronics giant Samsung.
The deal – the first one in which Samsung has sourced material outside of Asia– sees Novonix deliver 500 tonnes of material from October this year.
In January this year, Novonix followed up with a non-binding agreement to provide material to Sanyo. The two S’s – Samsung and Sanyo – account for 40 per cent of the global lithium-ion battery market.
“We hope to advance both of these relationships significantly over this financial year,” Dr Burns says.
Then there’s the company’s Battery Technology Solutions arm, which has patented a new method to make cheaper and better performing cathode materials.
The ‘secret sauce’ lies in Novonix’s patented process called dry particle microgranulation (DPMG), which results in reduced wastage and lower costs.
DPMG involves consolidating fine materials into minute particles tens and microns wide. As a ‘dry’ process, it does not produce waste water and uses materials otherwise destined for the waste hopper.
“The cathode market is notably larger than the anode market,” Dr Burns says. “The material cost is two to three times higher and you need 1.5-2 times more kilograms per kilowatt hour of battery output than anode.
“It is a huge market.”
Novonix’s third research leg involves developing improved electrolyte systems – another key aspect of lithium-ion batteries – but it is a secondary priority behind the company’s anode and cathode programs.
“We are in the process of filing our first patent around electrolyte systems and if we find some interesting things we will potentially use them with partners, or else license them,” Dr Burns says.
“But the likelihood we ever become an electrolyte maker in our own right maker is quite small.”
Hitherto reluctant investors have warmed to the Novonix story, with the shares rising more than five-fold since the start of April.
In part, the market’s animal spirits were fuelled by unsubstantiated reports of Tesla’s interest in the company. Novonix management has not commented on the rumours, but Dr Burns concedes they prompted investors to listen to the company’s story “which frankly we have been telling for the last two years.”
Reflecting the renewed interest investors flocked to the company’s just-completed $63 million equity raising, by way of an oversubscribed institutional placement and rights offer along with a retail entitlement offer.
Of the proceeds $25.5 million will be used to tidy up the balance sheet by recouping convertible notes and repaying director loans.
A further $23.5 million will be deployed to expand the Chattanooga facility to a 2000 tonnes per annum plant, with a five year target of 25,000 tpa and a ten year target of 100,000 tpa.
A further $5 million is earmarked to develop the DPMG process.
On industry forecasts, the synthetic graphite anode material will soar from the current 115,000 tonnes per annum to 700,000 tpa by 2030.
Electric vehicle output is predicted to rise to 10 million units in 2025 to 56m in 2040.
“Between the anode graphite and cathode market it’s about a $US10 billion ($14 billion) market today, growing to $US50-100 billion over the next five to ten years,” Dr Burns says.
History shows that Roger Bannister’s record run was bettered after only 46 days – and the performance bar is being raised in the battery space as well.
“The demand on those materials is for high performance and low cost and that’s where all our innovation is focused,” Dr Burns says.
