The Novonix Ltd (ASX: NVX) share price is sinking again on Wednesday.
In morning trade, the battery materials technology company's shares are down 5% to a new 52-week low of $1.59.
This means the Novonix share price is now down over 85% in 2022, as you can see below.
Why is the Novonix share price falling?
Investors have been selling down the Novonix share price today despite the company announcing a major offtake agreement.
According to the release, the company is expanding its high-performance synthetic graphite anode materials production at its Riverside facility in the United States in order to support a 10,000 tonnes per annum (tpa) offtake requirement from energy storage company KORE Power.
This follows news that KORE Power has secured financing for its lithium-ion battery cell production gigafactory. Novonix signed an agreement with KORE Power last year to be its exclusive supplier of graphite anode material.
Novonix intends to begin production at a rate of approximately 3,000 tpa in 2024, before ramping up to approximately 12,000 tpa in 2028.
So why the selling?
While the above sounds very positive at first glance, it's actually a production guidance downgrade when you read between the lines.
Novonix was previously guiding to production of 10,000 tpa in 2023 but now only expects 3,000 tpa a year later in 2024.
In fact, it was approximately two months ago that management said:
The Company is on track for reaching annual production capacity of 10,000 tpa of synthetic graphite in 2023 at its existing Riverside facility.
In light of this, meaningful revenue generation could still be some way off for Novonix.
Management commentary
Novonix's co-founder and CEO, Dr Chris Burns, didn't speak about the production guidance downgrade and focused only on the offtake agreement. He said:
I am excited to begin delivery of our high-performance synthetic graphite from our Riverside facility to KORE in 2024, our first significant volume offtake. We are pleased with the progress at our Riverside facility as we start to bring production online to support mass production qualification with KORE and other customers.
Dr Burns also revealed that the company won't be stopping at production of 12,000tpa and is already planning the next facility to boost its output. He concludes:
As we commence our production ramp schedule for Riverside, we plan to begin construction of our next production facility in the first half of 2023 to bring an additional 30,000 tonnes of annual production. We are one of the only companies scaling production of battery-grade graphite in North America, and we are confident in our position to meet growing battery demand for the electric vehicle and energy storage sectors.
