The Novonix Ltd (ASX: NVX) share price was one of the best performers on the Australian share market in 2021.
During the 12 months, the lithium-ion battery technology company's shares recorded a stunning gain of almost 650%.
This was despite the Novonix share price finishing the year 26% below its highest levels of the year.
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Why did the Novonix share price shoot higher in 2021?
Investors were scrambling to buy Novonix shares last year for a number of reasons.
One of course was the ongoing shift to renewable energy solutions, which is expected to lead to a significant demand for lithium-ion batteries over the next decade and beyond.
Another key driver of the Novonix share price gain was an announcement relating to a deal with US energy giant Phillips 66.
According to the release, Phillips 66 acquired a 16% stake in Novonix for US$150 million. It believes this investment will support its development of an entirely domestic supply chain for the growing US electric vehicle (EV) market and other energy storage systems.
In addition, Novonix revealed that Phillips 66's investment will provide it with the capital needed to support growth and ongoing research and development activities. These include continuing to scale its synthetic graphite production and developing new technologies for higher-performance energy storage applications.
What else happened?
Also giving the Novonix share price a boost late in the year was news that it has been added to the illustrious S&P/ASX 200 Index (ASX: XJO) at the December rebalance. This came just three months after the company's shares were added to the ASX 300 index.
When a share is added to a key index it can often lead to increased demand on the buy side. This is due to index funds needing to buy shares.
Furthermore, some fund managers have strict investment mandates that allow them to only buy shares from certain indices. This could mean there were some fund managers waiting in the wings to invest once they were given the opportunity to do so.
Shareholders will no doubt be hoping 2022 is another year of market-beating returns. Time will tell if that is the case.
