Battery technology business Novonix (ASX: NVX) has entered a binding offtake agreement to supply its high-performance synthetic graphite material to the battery cell manufacturing partners of multinational automotive titan, Stellantis. 

Commencing in 2026, the six-year deal will see Novonix deliver a minimum of 86,250 tonnes of graphite and up to 115,000 tonnes of the material from its Riverside facility in the US state of Tennessee, and from a planned expansion site also located in the nation.

Management noted that Stellantis will now become the company’s largest customer.

The $60 billion market-cap car manufacturer was formed in 2021 through the marriage of Italian American conglomerate Fiat Chrysler Automobiles and French outfit PSA Group. Today, it produces vehicles under 14 household brands such as Alfa Romeo, Fiat, Dodge, Jeep, Peugeot, and Maserati.

Over the next ten years, Stellantis plans to invest more than €50 billion ($80 billion) in its electrification push as it targets a sales mix of 100 per cent electric vehicles (EVs) in Europe and 50 per cent in the US by the end of the decade.

The graphite sourced from Novonix will be used to support Stellantis’ EV growth plans in North America.

Graphite is a key ingredient in lithium-ion batteries used to power EVs. It is utilised in anodes which store lithium ions during the charging process and releases them during discharge. The material can either be sourced naturally from mines and then purified, or produced synthetically as is the case with Novonix’s proprietary technology.

The company believes its synthetic graphite offers a string of significant advantages including longer life batteries, higher energy efficiency, as well as reduced waste and chemical use.

Under the agreement with Stellantis, the price of the synthetic graphite sold by Novonix will be determined by a market-based formula. The deal is also subject to certain compliance and production thresholds.

Novonix chief executive officer, Dr Chris Burns, said:

“This contract allocates the remainder of our available volumes at out 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.”

Riverside is set to become the first large-scale production site dedicated to high-performance synthetic graphite for the battery sector in North America. It has an output target of 20,000 tonnes of graphite material per annum, with first production at the facility penned for next year.

Novonix has previously received a US$100 million grant from the US government for Riverside’s construction. It was also selected for a US$103 million investment tax credit to help with its funding.

Separately, the company is moving forward with its plans to build a new synthetic graphite material production facility in the southeastern region of the US. 

Here, the group is targeting an initial capacity of 30,000 tonnes of material annually, with plans to boost this number to 75,000 tonnes each year. Novonix remains in discussions with the US ‘Department of Energy Loan Program Office’ in efforts to secure funding for the site’s construction.

All up, the company believes anticipated customer demand could drive its future production of synthetic graphite material to at least 150,000 tonnes per annum.