While here, thought would post below which I posted elsewhere recently.
I know holders are aware of Jordan after starting to read through threads.
Here is a blog / article from a week or so ago written by Jordan Giesige at The limiting factor which is reasonably balanced imo and thought provoking enough in its analysis.Also a paste of a May 2020 article end of post around some of those aforementioned overlaps in personnel. Doesn't mean jack till something tangible signed but a network is a network.https://techsolution.design/2020/08/13/advanced-technology-joint-stock-company/Advance technology:
Welcome back, everyone! I’m Jordan Giesige and this is The limiting factor. Today we’ll be discussing the publicly traded company Novonix Group. When production starts this year in Tennessee for their PUREgraphite anode, Novonix will be the first manufacturer of synthetic graphite in North America. However, there’s more to the story than that. Novonix is lining up a series of products to become a one stop shop for low cost, long cycle life battery materials that are more environmentally friendly. This video will cover Novonix market potential,their products, and how these products might help battery producers de-risk their supplychains. Before we begin, a special thanks to Bradford Ferguson of Halter Ferguson Financial and the Patreon supporters listed in the credits. It’s the support on Patreon that keeps me grinding away on interesting, niche topics
The company that supplies that blend to GigaNevada would have to incorporate Novonix anode into the blend. That supplier would have spent years developing and testing that blend. They could make changes to the blend, but I’m assuming there would need to be very good reason for the change and it would take time to implement. As for cathode, Novonix will be manufacturing single crystal cathode. However, it’s still in the development stage. Production is expected to start ramping for single crystal cathode in two years. Then, it will take a couple years after that to ramp volume significant enough to interest Tesla. In other words, if Novonix does sell single crystal cathode to Tesla, it’ll be some years away. I’ve also heard speculation that Tesla could acquire Novonix. I’ll provide my own speculation here. If Tesla were to buy Novonix, it would mean Tesla is going into battery raw materials processing.Back to Novonix. Much of the commentary around Novonix has focused on the links that Novonix has to Tesla through its Chief Operating Officer, Chris Burns. Chris Burns worked under Tesla’s battery Research Partner, Jeff Dahn, and he also worked directly for Tesla for two years. I’m tackling the Tesla connection right out of the gate because I don’t think that Novonix needs Tesla nor does Tesla need Novonix for either company to grow an order of magnitude or more over the next decade. There are two reasons for this:First, let’s look at the demand picture for Novonix. By 2030 analysts expect two terawatt hours a year of global battery production, and as each year passes, analysts are raising their forecasts.
Two terawatt-hours of battery production will require 2 million tonnes of graphite anode material per year. Depending on which analyst you check with, this could be predominately synthetic OR predominately natural graphite. Regardless, both synthetic and natural each appear poised for growth at an order of magnitude or more. My view is that both natural and synthetics have their place in the market, and the last video in this anode series will compare these two materials in depth. Second, let’s look at the supply side for Novonix. Novonix plans to be producing 100,000 tonnes of anode per year in 2030. The entire global production of batteries in 2019 required 160,000 tonnesof anode material for 160gwhs of production. Let that sink in. One penny stock from Australia expects to be producing 100,000 tonnes of an anode in 2030 which is 63% of 2019 global production. Novonix is a small fish that will grow into a big fish if they can execute on their plan and hit the production cost targets discussed in the last video. In other words, Novonix doesn’t need Tesla. Third, Tesla is a big fish already, and they usually make agreements with suppliers that can provide ridiculous quantities of materials.
This is why Tesla works with the largest players in the game, like Ganfeng and Glencore. In other words, Tesla doesn’t need Novonix. However, if Tesla did purchase battery materials from Novonix, how could this be worked into Tesla’s supply chain? As we’ll see when we get into Novonix products,they’ll offer both anode and cathode battery materials. These materials aren’t interchangeable in batteries. This is because materials from different suppliers and sources have different shapes and internal structures at the particle level. Batteries are designed around the specific characteristics of the materials provided by each supplier. As for anode, Tesla’s Giga Nevada most likely uses a blend of synthetic and natural anode. They don’t manufacture this themselves and purchase that blend from a supplier.
There doesn’t seem to be a persuasive reason for Tesla to do this. I do agree that Tesla might partner on a mine to secure raw materials at a fixed price, but that doesn’t require purchasing the companies that process the raw materials between the mine and the factory. In other words, partnering on a mine to capture supply is low touch, whereas getting into materials processing might over complicate their business model. The fact that Tesla hasn’t made a play for Novonix yet doesn’t tell us anything. One could argue that it takes years for anode producers to prove themselves, so we wouldn’t expect an acquisition by Tesla at this early stage. One could also argue that Tesla typically buys out a company when they have a technology that Tesla wants, even if that technology hasn’t been scaled yet. This is a strong counterargument as to why we should have seen an acquisition already.
With that said, what if Tesla did start processing their own raw materials? They wouldn’t necessarily have to acquire Novonix. As stated in the last video on Dry Particle Microgranulation, or DPMG, the machine that Novonix uses for their patented DPMG process is widely available. The patent is for the process rather than the machine. I asked Chris Burns if he would be open to licencing the technology and he responded that they’re exploring this idea. DPMG can be also used in the production of fertilizers, pharmaceuticals, toners, pigments, fillers, and catalysts. If they choose not to licence the technology to their competitors in the battery industry or Tesla, they could instead profit by licencing DPMG to other industries. One last note on the Tesla connection. Sanyo is a Panasonic company and Panasonic is a supplier to Tesla. Sanyo has signed a non-binding memorandum of understanding to assess Novonix materials. This MOU was a result of positive test results carried out by Sanyo on Novonix materials. To me, this means it may take some time before Sanyo takes a bigger bite of the Novonix apple. The image on screen is for cathode material,where it takes 5-8 months to qualify material in a best case scenario. The process for a battery manufacturer to qualify anode materials can take 18 months.
This is because anode material can be much more variable than cathode material in terms of consistency and therefore it takes longer to qualify anode material. This means it could be a year or two before Sanyo signs purchase agreement. With that said, Novonix was able to complete the anode qualification process with Samsung SDI in 11 months, including time for contract negotiation. We don’t know how far along Sanyo is with the anode qualification process or if Sanyo is just waiting to see how the scaling ramp goes for Novonix. Regardless, things are looking good so far and it appears to be a matter of time and effort before Sanyo signs a purchase agreement with Novonix. IF Novonix did sign an agreement with Tesla-Sanyo-Panasonic or other tier 1 battery manufacturers, I asked Chris if Novonix could scale more quickly. I asked this question because in 2030 I expect Tesla to need 2 million tonnes of anode material per year rather than 100,000. His response was as follows:“As you know, large factories…can consume 30,000+ tonnes per year so if we have the opportunity to become suppliers to a few of these facilities we would need to ramp faster.”
For the stock bugs, how much revenue will Novonix be capable of in 2030 at 100,000 tonnes per year? I’m not a financial analyst, this is just information to get you started if you’d like to do some analysis. Please do your own due diligence before investing in any company. The price of synthetic anode averages $13,000 per tonne. Novonix has modelled a production cost of $5,000 dollars per tonne for their synthetic graphite.
This leaves $8,000 per tonne after production costs. If Novonix expects to be producing 100,000 tonnes of Anode per year in 2030, this would come to 800 million dollars a year after production costs. This doesn’t include potential revenue from Novonix other products and it also doesn’t factor inflation, which means we can expect the numbers to be much higher if everything goes according to plan. Let’s take a closer look at Novonix product line. Novonix has three primary battery materials in the pipeline with the goal of providing the three key battery materials required for a million mile battery. These materials are the cathode, anode, and electrolyte. The Novonix single crystal cathode material was just unveiled in June. It’s in development and moving to pilot scale. Everything I noted earlier about the potential market size for anode material is also true for cathode material. In fact, the numbers probably work out better for DPMG Cathode versus DPMG graphite anode. This is for three reasons: First, cathode is a more expensive product than anode material.
Cathode costs $20,000-25,000 per tonne vs 6,000-18,000 dollars per tonne for anode material. Second, the cathode production process has more opportunities for efficiency. This image illustrates the simplicity of the DPMG process vs a typical CSTR process for manufacturing cathode. The DPMG process has a 100% yield rate and is a dry process. The CSTR process involves a large amount of chemical and material waste and typically uses 99,000 litres of water a day. Several people have asked me what the difference is between Maxwell Dry Battery Electrode technology and Novonix Dry Particle Microgranulation. Maxwell Dry Battery Electrode is an electrode production process, whereas Novonix Dry Particle Microgranulation is the process that makes the materials that go into battery electrodes. Third, the DPMG process can use class 2 Nickel Oxide. Typical CSTR processes require Class 1 Nickel Sulphate. Class 2 nickel looks to be at least 30% cheaper than class 1. Nickel is the most expensive part of the cathode and makes up almost 45% of the material cost of cathodes.
This means a shift to Class 2 Nickel could reduce the total cost of a battery cell by around 8% if we assume a 30% cost reduction in the cost of the Nickel in the cathode. There’s been a lot of speculation that because Novonix has a patent for single crystal cathode and Tesla is looking at using single crystal cathode in their batteries, that Novonix will be supplying single crystal cathode to Tesla. My view is that if Tesla is using single crystal cathode in any chemistry revealed on battery day, supply would have been secured earlier this year or last year. As stated earlier, Novonix cathode materials are still two years away from production and probably another two years after that for production at a large scale. In other words, I don’t expect Tesla to be using Novonix single crystal cathode in the near future.
While we’re on the topic, Tesla may be able to source single crystal cathode from other suppliers if they decide to include it in the battery that we expect to be unveiled on battery day. For example, Jeff Dahn used off the shelf single crystal cathode pouch cells from China for the million mile battery research paper. However, the question is, in the long term who can make this material cheap enough to make it commercially viable. There are several competing methods, and DPMG could take the crown. Next, the synthetic PUREgraphite anode.
The image on screen gives a clear indication of how PUREgraphite compares to two different types of synthetic and one type of natural graphite. Based on the products in the table, PUREgraphite looks the best value by far in terms of synthetic graphite. The value proposition for natural graphite is very different. The value proposition for synthetic and natural graphite will be discussed in depth in the final video of this series. There’s a reason why Tesla is most likely using a blend of synthetic and natural and there are also reasons why that might change. Synthetic anode requires a huge amount of energy to crystallise the raw materials into graphite, which is the primary source of CO2 emissions from manufacturing synthetic anode. PUREgraphite is balancing that out by building their plant in Tennessee, where the electricity is cheap and green hydroelectric power. We’ll come back to this in a moment. Finally, the development of Novonix electrolyte products is ongoing. As you can see, they already have two electrolyte packages. I expect to they’ll offer more products in the future.
For example, at some point in the next 5-10 years, we may see high voltage electrolyte packages or electrolyte packages targeted at pure lithium anodes. Even without those innovations, I expect further electrolyte optimisations to extend battery life and reduce cost. How do these materials perform? This chart speaks for itself. For reference, I assume 4000 cycles with a 250 mile battery pack is how Tesla defines a million mile battery. The cathode used in this graph uses a commercial,non-Novonix single crystal cathode. Chris has advised that this single crystal cathode is representative of Novonix minimum performance targets for their cathode program. With that stand-in cathode, a Novonix Synthetic Anode, and Novonix Electrolyte, the battery cell appears to hit 1.5 million miles.
Novonix used 330 miles as the base range. 1.5 million divided by 330 is 4545 cycles. Novonix example battery appears to be right in line with Jeff Dahn’s million mile benchmark chemistry. Bear in mind that this is Novonix minimum target and we might see better numbers with Novonix single crystal cathode. Let’s talk about what I consider is most important about Novonix. If Novonix missed its price targets and only manged to hit price parity with competitors, it still offers something that’ll attract buyers. Working with Novonix will de-risk the supply chains of its customers in three primary ways. First, is geopolitical risk. In 2020, it’s finally dawned on Western countries that, over the past 40 years, they’ve opened their flank to China and are vulnerable to Chinese control through manufacturing. For governments, they’re in a weak bargaining position if they’re dependent on China for strategic products and resources. For corporations, China has a strangle hold in many areas of production. If there is conflict between the government of the country they operate in and China, they run the risk of being collateral damage in trade wars. China has essentially captured the anode market.
Novonix claims that they can compete head on with Chinese products, providing a product that’s better value for money. Although Novonix synthetic anode is more expensive than Chinese synthetic anode, it’s cheaper than Japanese synthetic anode, it’s safer than Chinese anode, has higher energy density, loses less of its capacity, has longer cycle life, and has higher safety and reliability. Second, localisation. The closer that suppliers are to your factory,the more agile your company can be with its supply chain and the better you can monitor those suppliers. Novonix will operate out of the US and supply to companies in the US. Their Chattanooga, Tennessee manufacturing facility is centrally located and has access to major freight corridors to every part of the country. This improves integration with rail and trucking routes.
And finally, Chinese synthetic anode material is not environmentally friendly. Synthetic anode is made from petroleum and coal by-products. Chinese coal mining is notoriously dirty. Furthermore, synthetic anode is energy intensive to produce because the raw material is heated to 3000 degrees Celsius. Chinese power production is 64% coal fired. Novonix will be using hydroelectric power to produce their anode. Thanks to DPMG, Novonix will also generate very little toxic waste due to the 100% efficiency of their process. As mentioned in the last video, the conventional method for producing cathode produces toxic waste that contains toxic metals. In China, this waste if often dumped untreated back into the environment. Customers will be looking ever more closely at the materials that go into their vehicles as they become more educated. This slide makes it clear the impact that those materials make. This is a VW EV vs VW Internal Combustion vehicle. It’ll be some time before there is enough competition and data in the market to influence EV buyer decision making based on how much CO2 is used to produce the vehicle.
However, if you’re a battery producer, it’s better to get ahead of this and secure green production materials now. In summary, demand for battery materials over the next decade will grow by more than an order of magnitude. Novonix intends to ride that wave and ramp a supply of high quality anode material that’s competitive with China. The production ramp for that anode material is starting now. If they are successful, they’ll have the entire field to themselves in the North American synthetic anode market and potentially European synthetic anode market. The PUREgraphite anode may then act as a flywheel to launch the single crystal cathode product. Novonix invests heavily in battery R&D programs with Mark Obrovac and also has internal R&D programs in Halifax for cell assembly and testing. This R&D backbone has already provided an innovative product line and we can expect further high end products to keep Novonix competitive. Finally, the kicker is that it’s in the best interest of companies to localise their supply away from China and move towards greener products. I expect they will out of necessity, competitiveness,and for the sake of their public image.
Others are also (very loosely imo) speculating on any VW connection as well given NVX is in Chattanooga Tennessee and VW also announced end last year "Volkswagen’s $800M Tennessee factory expansion to include battery pack plant"
The plant will be a battery pack assembly facility but always worth watching for any geographical benefit developments down the track in supply chain.
https://techcrunch.com/2019/11/13/volkswagens-800m-tennessee-factory-expansion-to-include-battery-pack-plant/
https://www.autoblog.com/2020/05/14/tesla-battery-research-dalhousie-university-jeff-dahn-novonix/
Teslais a leader inelectric vehiclebattery technology, but the company doesn't do all its own research.
Tesla Chief ExecutiveElon Muskhas reached out to battery experts clustered at Dalhousie University in Halifax, Nova Scotia. Tesla in 2016 agreed to fund a group of scientists led for the past 24 years by Jeff Dahn, a pioneer in lithium-ion battery development.
The work with Dahn's team is now playing a key role in Tesla's plans to introduce a new low-cost, long-life battery in itsModel 3sedan in China by early next year,Reuters reported on Thursday. The goal is to bring the cost of electric vehicles in line with gasoline models, and allowEVbatteries to have second and third lives in the electric power grid.
Tesla's funding of Dahn's work is public, and Dahn has talked about some of his group's accomplishments at public and private forums, including a presentation in February at the University of British Columbia in Vancouver. Videos of that presentation and at least two others where Dahn discussed his work were posted onYouTube, but since have been removed.
Dahn started working on lithium batteries in the late 1970s as a graduate student at the University of British Columbia, and chemistries developed by his Dalhousie team are used in one of 10 electric vehicles today, Dahn said in a 2017 TEDx talk in Halifax. After conducting battery research for 3M and Medtronic, Dahn in 2015 signed a new research partnership with Tesla that runs through mid-2021.
Dahn declined to be interviewed, citing a potential conflict with Tesla.
Tesla began hiring Dahn students and graduates in 2012 and built connections in 2015 to a small battery testing facility in Halifax that was spun out of Dahn’s lab at Dalhousie. That same year, Tesla set up its own battery research lab in Halifax to cement its connection with Dalhousie and with Novonix, the test lab spinout. A former PhD student of Dahn’s, Novonix CEO Chris Burns, helped Tesla build its Halifax facility.
Since 2016, Tesla has funded much of the battery research work at Dalhousie and has filed at least six patent applications since 2017 that list Dahn and members of his research team as co-inventors.
Tesla’s Dahn/Dalhousie connection goes even deeper: At least eight of Dahn’s former students and researchers currently work for Tesla; another seven previously worked for or interned at Tesla.
Dahn and his team have been among the most active battery researchers on the planet. They have published more than 600 academic papers, and Dahn is listed as a co-inventor on more than 40 battery patents dating to 1988.
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