Novonix Ltd (ASX: NVX) shares are having a day to forget.
Shares in the All Ordinaries Index (ASX: XAO) battery materials and technology company closed yesterday trading for 56.5 cents. In early morning trade on Tuesday, shares plunged to 48 cents, down 15%. After some likely bargain hunting, in later morning trade, shares are swapping hands for 50 cents each, down 11.5%.
For some context, the All Ords is down a modest 0.3% at this same time.
Here's what's got ASX investors reaching for their sell buttons.
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Novonix shares tumble on offtake cancellation
In a release shortly before market open today, Novonix reported that Stellantis (via its subsidiary FCA US LLC) has terminated its offtake agreement for synthetic graphite material with the company, effective immediately.
In news that's sending Novonix shares sharply lower today, management stated that the company was unable to agree on the unique battery cell product specifications and milestones for mass production qualification with Stellantis.
On 11 November last year, Novonix announced the signing of the offtake agreement with Stellantis. That agreement was for a minimum of 86,250 tonnes of synthetic graphite material up to a target volume of 115,000 tonnes over what was meant to be a six-year term of the agreement.
The price of the synthetic graphite material was to be set via an agreed-upon market-based price formula, with the final product specifications then to be confirmed at a future date. Novonix and Stellantis have targeted the start of commercial supply for January 1, 2026.
Commenting on the agreement last November, Chris Burns, Novonix CEO at that time, said:
We are excited to have Stellantis' commitment, now as our largest customer, to support their North American EV growth plans. This contract allocates the remainder of our available volumes at our Riverside facility and a portion of volumes to be produced at our planned greenfield facility.
Offtake agreements with high-quality partners such as Stellantis solidify NOVONIX's position as a leader in onshoring the supply chain of synthetic graphite and accelerating the adoption of clean energy.
Today, management said that while they are disappointed with this decision to scrap the offtake agreement, Novonix remains focused on its deliveries for Panasonic and PowerCo. The company is also continuing to provide samples to 15 current and potential customers for battery and industrial applications.
Looking to what could support Novonix shares over the longer term, the company said its Riverside facility, located in the US state of Tennessee, "is poised to become the first large-scale production site dedicated to high-performance synthetic graphite for the battery, defence, and industrial sectors in North America".
Novonix said mass production will commence next year for its lead customer, Panasonic.
