Novonix (ASX:NVX) Presentation, FNN Online Investor Event, August 2020

Company Presentations

Novonix Limited (ASX:NVX) Managing Director, Philip St Baker discusses how his company is improving batteries for electric vehicles, phones, laptops, cordless equipment and renewable energy storage.

Philip St Baker:
Thanks Clive. And thanks for the opportunity from the network Finance News to present Novonix. First of all, I'll move you to slide number two, which is a company overview. Just quickly, Novonix is I battery materials and technology company based in North America. ASX ticket code is NVX. Just on this slide you'll see this three main areas of the business. There's not Novonix Battery Technology Solutions on the left, where we develop battery technologies and materials and sell them globally. In the middle there, we have our pure graphite anode materials business based in Chattanooga in Tennessee. I should have mentioned the technology solutions business in based in Halifax in Canada.

And then on the right is a new business that we're forming right now to pursue and commercialise some very exciting cathode material developments that we've invented in filed patents on recently. So essentially that's the company at the moment, those three main areas. With that, we'll move to the next slide.

This is the market that we are in. We are focused on battery materials and really it's being driven by the renewables and green energy demand. And that's driving demand for battery materials. And as you can see these charts really, focusing on the left there is the electric vehicle demand growth. In the middle, the consequential demand for batteries. And then on the right hand side, the consequential forecast demand for battery materials. And specifically we are looking at the anode and the cathode. So the negative and the positive electrodes within the battery and the materials that form those. Our pure graphite anode business of course, is focused on the anode and the new cathode business I mentioned before will be focused on the cathode.

Just before I move off this slide, I just want to highlight a couple of important points here, is in terms of anode and cathode materials. The forecast growth over the next five to 10 years is very substantial, of a factor of five to 10. And if you look at the very bottom point there, it's showing you that the combined anode and cathode materials market is going from about $10 billion US today to about $50 billion. So the 5X movement minimum up to $100 billion in the next five to 10 years. So both these cathodes and anodes are very sophisticated advanced materials and I guess they are the focus of our company.

The other point I wanted to make is that the growth here is being driven by electric vehicles and energy storage, which means long life battery materials are required. And that's exactly what Novonix is focused on. And I'll move to that a little bit later. Just before I do that, I wanted to show you slide four here, which gives you a snapshot of the growth in battery factory plans for the USA.

Essentially, there's a huge amount of gigafactory, I guess construction taking place and going to take place in the US. It's forecast to grow to 130 gigawatt hours by 2023, which is not far away. And on the right there, we also make a note that Europe has similar very large plans to build significant gigafactories to manufacture batteries to meet demands for electric vehicles and energy storage. I'll come back to this a little bit later.

Novonix is very much focused on helping meet this demand for ultra long life materials for these special EV and grid storage applications. A term you'll hear quite a bit is the million mile battery. And all major auto companies making EVs are really seeking to produce a car with a battery inside of it that will last for 10 to 20 years or even longer. And this is where the term, the million mile battery comes into play. So you'll see General Motors talking about it. You'll see Tesla talking about it, and essentially all really good EV auto makers are having to produce very high quality batteries that last a long time. And this is exactly what Novonix has been working on.

 We've been working on ultra long life materials. In the last two years, our focus has been on commercialising what we call our pure graphite anode material, which provides very high performance long life. And this material was released to the market last year for qualification testing. And very happy to say that we now have signed our first major global customer, and we are the first company to do that outside of Asia. So the first North American company, first company in North America or Europe, actually to sign a major anode supply agreement with a major battery maker. So that's really the first main product that we are now commercialising in terms of battery materials.

As you'll see on this slide here, we are also working very much on cathodes and electrolytes and developing specific forms of those materials to also contribute towards achieving the million or multimillion mile battery in the future. Not too long ago, a couple of months ago, we released some announcements around some very exciting high potential innovations that we've filed patents for in relation to single crystal cathode, which is emerging as a very exciting material for the industry going forward. We've developed a new product, single crystal product, and also a new manufacturing method called DPMG. And we've recently announced that.

We are also working on very, I guess, long life electrolyte packages, and we're working towards falling IP on those as well in the very near future. So really that is what Novonix is all about, is providing these ultra long life materials to support the world and these battery makers and auto makers and energy storage companies to put very high quality long life batteries into those applications.

The next slide is just some hard data coming from our technology centre in Halifax, where we are making full-size battery cells with commercial materials, and also adding in our specific materials, be they our pure graphite anode materials, our single crystal cathode materials or our advanced electrolytes. And what we're showing you here is that the data is quite compelling. The batteries that we are making or battery materials that we are making are delivering very long life in full commercial cells. And you'll see the extrapolation here on the chart.

Up the very top of, the green is where you're applying all of our products together with a good commercial single crystal cathode in the market combined with our pure graphite anode materials and our advanced electronic packages extrapolating to give demonstrated life well beyond a million miles, more like one and a half million miles. So when people talk about, is it possible? Absolutely it is possible. And the materials we are making will help make it possible.

The other key part of this is not only developing great materials that can achieve that, but doing that at very competitive prices and helping auto makers and battery makers drive down the cost of the batteries and the vehicles and the grid storage. And that's exactly what we had doing. On this next slide, slide seven, is really a snapshot of Novonix's grid technology ride map. And then as you'll see, we've been at this for quite a while and we have kicked some failing major goals already and more to come. If you look back at the top of this slide, it was started really with the development of very specialised high precision battery testing technology, which accelerated R&D, or battery R&D. And the speed at which scientists can iterate and improve battery materials and battery design.

Now that technology is made by Novonix and sold worldwide to tier one battery makers and OEMs in 15 countries. And it is the most advanced, most accurate battery testing technology in the world. We also use that technology ourselves to develop materials, of course. And if you move to the third line down there, there you've got our very long life synthetic anode materials that are already a commercial material. And we are now building our first commercial plant to supply Samsung SDI, starting later this year.

We are also in terms of looking towards the future, I'll take you down to autumn number five there, which I've mentioned before. This is working on long life cathode materials in the same vein, and then beyond that electrolytes. So that really is a snapshot of a Novonix's grid technology roadmap. What we've done, where we are today and what's coming in the future.

Just moving to a very high level corporate snapshot of the company. The key things that have happened in recent times. In December we signed with Samsung SDI, one of the largest global battery makers to supply our first user product to them starting at the end of this year from our pure graphite anode business. We also, in January we signed an agreement with Sanyo, which is a subsidiary of Panasonic. And both Samsung and Sanyo have tested them materials. Samsung of course, have qualified it and signed up to buy it. Sanyo have tested our materials. They like it and they're moving. And we've got an agreement in place to move to full scale testing of our materials to supply Sanyo. So they are very, very important agreements. As I said before, we're the only company outside of Asia to have signed such an agreement in recent years.

Importantly, now we need to build our first commercial factory to start supplying these customers. So on the left hand side here, you'll see that we did a $63 million equity raise in June. And this equity raise had a couple of key purposes. One of course is to raise the funds necessary for us to build a 2,000 ton capacity plant to get us started in commercial production and supply. The other one was to clear the company's debt, re-establish and strengthen the balance sheet and pay off all of our loans. So essentially we're effectively debt free. Now we have sufficient funds to execute our plan, and we've also raised some funds to bring forward and start to commercialise that exciting cathode technology as well. So really from a high level corporate point of view there, the main drivers as activities of the company.

Just diving quickly down into our first real commercial product, which is now going to market. And what did SDI and why are other companies are very interested in our materials. Well slide nine is a snapshot of that. It essentially shows that we've successfully developed a synthetic graphite material, which performs and competes with the best in the world and the cheapest in the world. And all of these synthetic materials exceed and outperform the natural graphite in terms of long life, which is needed for electric vehicles and energy storage. So this is a snapshot of why these global battery makers are so interested in our materials from a performance point of view.

The other point of course that they're very interested in Novonix and our supply because we are the only non-Asian, essentially non-Chinese company offering materials that meets their performance requirements and we're manufacturing in the USA based on US precursors. So that's a really big factor in these companies having extreme interest. Of course, we have to deliver the performance and we need to deliver the cost, which is what we are doing.

Just another chart here. I won't to spend a lot of time on this. But this is some hard data showing the performance of our materials when compared to industry standards and also leading batteries. So I won't go through all of it, but the grey line on these charts is the Novonix materials, the pure graphite Novonix materials. The yellow is Tesla/Panasonic. So these are actual commercial cells taken out of vehicles and benchmarked head to head. And we consider these the most advanced, highest performance cells in the world.

Then we have a standard cells made with a standard commercial grade synthetic material, which is the black and the green represents a standard commercial grade natural graphite taken from the market as well. But these show that our materials outperform all of those. So just moving on, what are we doing? What's our plan to grow this anode business? There it is laid out in three horizons.

Basically this year and next year, 2020, 2021, we're ramping to 2,000 tons. We're starting to fill that Samsung SDI contract. And we're looking to convert our agreement with Sanyo into a supply agreement. So really, that's the focus for this year, the rest of this year and next year. Of course, we'll be working towards the plan to ramp the business quickly beyond that. Between 2022 and 2025, we plan to ramp to 25,000 tons per year and expand our customer base. And then the longer term plan is to get to 100,000 tons per annum within 10 years. So that's our initial plan at the moment.

The growth of this market is such that there is a high degree of opportunity for us to accelerate that ramp to 100,000 tons a lot quicker than what we're showing you on this plan. This plan is what we consider a very modest plan for what we believe we can achieve in 10 years. But as I said before, it's a plan that we plan to improve on significantly as we move forward.

Just going to conclusions now. Novonix is delivering battery materials that are required by the EV and renewables markets. We are redefining the manufacturing processes to deliver lower cost, low waste, and lower emissions. Our company has core competencies right across the wholesale area. So we're working on cathode, anode, electrolytes. All of the key things required to achieve that million mile battery. We have demonstrated our technology advances already in cathode and anode and electrolyte, and we have more coming. We have our first commercial technology already being rolled out, which is our pure graphite anode business with Samsung SDI as our first customer. We're the only company to break into this market outside of Asia. So the only company in North American and Europe to do this in recent years.

We also have a cathode technology, which is entering pilot scale and commercialisation phase right now. But essentially, this is a very hot market. It's growing very strongly. I believe that electric vehicles are now beyond the tipping point, and this market really needs these good quality supplies and it needs alternative supply from China. So Novonix is perfectly positioned to play a major role in this in the future. And with that, I'm going to hand back to the moderator, to Clive. Thank you very much. Goodbye.