I've been a holder for a very long time. Many here are despondent and understandably so with the massive share price decline seen in the last 2 years. I fell down a deep well of obsession with all things related to the energy transition some time ago and was a HODLR of TSLA when the 2018 Model three ramp (AKA production hell) happened and the share price there dipped to a low of 180 (split adjusted $12) That time period felt a lot like this one does now with NVX. There was a website "Tesla Death Watch" Constant depression on the boards. There was a dedicated troll army with the refrain "Tesla will never make any money" "The more cars they make the more money they lose." "Whompy wheels" "The board are fraudsters" "We need new leadership." Etc, etc...
During that period (though even following it closely it was impossible to see from the outside) Tesla continued to execute, laying the foundation for an explosive stock appreciation event. Improving the foundation of the company (if not the "Wall-street fundamentals.") From the outside we could see the quality of the product they were putting out, the excitement around the product, and the vision of the founder. We had at that time, no solid proof that the company would excel and become valued unlike any other car-maker. The trust in the company came from a relatively simple understanding of the mission and the people working toward it, combined with the understanding of cost declines in the battery and cell production reaching the point of parity and eventually becoming cheaper than the ICE counterparts. There were many days when I would look at the deep crimson on my trading platforms and question my decision to invest in that belief.
In this case, I've invested in Novonix at a pre-revenue level with a number of assumptions as they have not yet been able to show any profit. When I first invested, they had a lot of risks and only a promise of being a big player. Certainly in retrospect, the share price appreciation was premature, but the story could still play out the way it was envisioned. That is:
Primary assumptions:
ESS for both home and grid will grow very quickly over the next decades.
Electrification of most transportation is a virtual certainty as cost declines overwhelm the ability of ICE vehicles to compete in value.
Geopolitical considerations will drive the regionalization of critical supply chain production outside China over the next decade.
Novonix is one of the battery technology leaders worldwide and has extremely valuable intellectual property, with a core mission to become a supply chain provider supplying regional battery specialty chemicals.
Those chemicals will demand good-very good margins as they are premium and that product market fit will enable extraordinarily high cycle life.
Risks:
Novonix will need to prove the premium nature of its products.
They must secure feedstocks for the processes which are cost-effective and have good availability and price
They must scale from bench to pilot to manufacturing scale, validating for each offtake partner at each step.
They must secure funding in a timely, well-priced, not extremely dilutive way, aligned with the offtake agreements such that payments on the debt can be made and shareholders rewarded.
They must maintain a technological lead over rivals as a premium product.
No surprise chemistry (aka solid-state) will overwhelm the market.
In the last few years, each and every one of the primary assumptions I have for the market continue apace. Grid scale battery production is exploding, BEV market share has continued to grow, the IRA in the US has passed, and the Eurozone and MENA have made less grand gestures at securing local supplies, Novonix continues to publish and grow it's IP in partnership with Dalhousie. Margin is still a big question until we start selling product at scale.
The risk too, have been mitigated in many ways. Still we need to prove at scale the ability to produce good product, but the Phillips66 partnership all but assures good access to the needle coke. Precursor materials for cathode is a way down the road at scale, so we'll see what the board does with that issue in a few years. Riverside is currently dialing in production, but reports that the product has met qualification guidelines were music to my ears. Clearly on the cathode side, the early reports from the pilot scale are positive too. For me, the biggest news we have seen so far is the LGES partnership. In addition ot Phillips66, we now have two well funded companies with expertise in this space in strategic partnership. This along with the funding they have brought to the table is very comforting indeed. The $150MM grant plus the likely upcoming LPO from DOE bring us within one step of this company having massive success. (pending margins of course.)
Could Novonix fail? Of course. Tesla was a bit closer to the edge than known at the time.
This is a very high risk/very high reward stock. I'm here for the ride, and I still believe.
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