US Gets High-Volume Synthetic Graphite For EV Supply Chain

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After outgoing President Joe Biden cleans out his desk in January, he will leave behind quite a mess for fossil energy stakeholders to untangle. Exhibit A is a new — and expanding — synthetic graphite factory in Tennessee, funded partly by the 2021 Bipartisan Infrastructure Law. The venture has already attracted domestic EV supply chain stakeholders, with Stellantis being the latest example.

Graphite And The EV Supply Chain

Graphite has been a key material for EV battery electrodes since the early 2000’s. Solid state batteries and other alternative battery formulas are beginning to emerge, but slowly. The transition to a more diversified EV supply chain will be a long one.

In the meantime, concerns have been raised over the concentration of graphite mining and refining in China. “Battery manufacturers are currently dependent on China for graphite, as the country extracts around 70% of the world’s natural graphite and controls almost 100% of the refining process, according to the International Energy Agency,” the firm S&P Global reported last year.

“A boom in EV sales is expected to help raise graphite demand by more than four times by 2030 as compared to 2022,” S&P added for good measure.

Synthetic Graphite And The Domestic EV Supply Chain

Synthetic graphite provides one means of relieving the EV supply chain from the grasp of international geopolitics. The US has plentiful resources to support a new, domestic synthetic graphite industry. Specifically, the US has a lot of coal and petroleum on its hands, and these are the main precursors to synthetic graphite.

The conventional process for synthesizing graphite from needle coke is an expensive, time-consuming, energy-sucking endeavor, and innovators have been in hot pursuit of less costly, lower-carbon alternatives. Among them is the Australian company NOVONIX, and that’s where the Bipartisan Infrastructure Law comes in.

Last year, the company’s NOVONIX Anode Materials branch won a $100 million cost-sharing grant carved out of the Bipartisan Infrastructure Law to equip an existing facility in Chattanooga, Tennessee for a new synthetic graphite production process. The project is one among a suite of EV battery materials and battery recycling selected by the US Department of Energy and funded by the BIL.

“The Project will be the first commercially active synthetic graphite facility in North America, allowing for future cost improvements and providing a base for product qualification to scale production significantly in the United States,” the Energy Department explains, noting that it anticipates a 60% reduction in carbon intensity compared to conventional synthetic graphite sourced from China.

For the record, NOVONIX and its new facility also benefit from a $103 million 48C federal tax credit. Initially established through the American Recovery and Reinvestment Act of 2009, the 48C credit was renewed and expanded during the Biden administration through the 2022 Inflation Reduction Act.

EV Supply Chain Stakeholders Are Piling On

In May of this year, NOVONIX announced the completion of an independent engineering assessment of the Chattanooga facility, confirming that it is on track for an initial commercial-scale production capacity of 3,000 tonnes of synthetic graphite annually (about 3,307 US tons) by the end of this year.

When the facility is fully up and running, NOVONIX expects to pour 20,000 tonnes of synthetic graphite into the North American EV supply chain each year.

“At the targeted capacity for Riverside, NOVONIX anticipates achieving operating margins in the range of 23-30%, with an operating cost range of US$6-8/kg and an anticipated selling price of US$7-10/kg,” the company also reported.

Panasonic, for one, was not waiting around for the EV supply chain dust to settle. Predating the engineering assessment by four months, in February the company’s Panasonic Energy branch announced an off-take agreement with NOVONIX from the Chattanooga facility beginning in 2025, for a total of 10,000 tons over a four-year period.

“Synthetic graphite offers enhanced battery durability, allowing for reliable performance during repeated charging and discharging cycles,” Panasonic Energy noted.

Here Comes Stellantis … And More Synthetic Graphite, Too

Another EV stakeholder to hook up with the new supply of synthetic graphite is Stellantis. On November 10, NOVONIX announced that the automaker has signed up for a minimum of 86,250 tonnes of synthetic graphite, with an eventual target of 115,000 tonnes over a six-year period beginning in 2026.

NOVONIX slipped a little something extra into the announcement as well. “The Company is also progressing plans to build a new production facility (in the southeastern United States) that will have an initial capacity of 30,000 tpa [tonnes per annum] and plans to expand that facility to 75,000 tpa,” NOVONIX stated.

Between the two facilities, NOVONIX is looking at an output of 150,000 tonnes per year, and that’s just the floor.

The ceiling may depend on negotiations with the Loan Programs Office of the Energy Department. In the November 10 announcement, NOVONIX mentions that it “remains in discussions” for a loan in support of the new facility, under the LPO’s Advanced Technology Vehicles Manufacturing Program.

It Takes A Village Of Federal Assistance

If the DOE Loan Programs Office rings a bell, there’s a good reason for that. The LPO has played a key role in kickstarting the clean tech movement in the US, with the EV supply chain being just one example. LPO prioritizes clean tech startups, though legacy firms that have new technologies under development are also targeted for loan assistance (see more Loan Programs Office background here).

The office was established under the 2005 Energy Policy Act, during the Bush administration. It kicked into high gear during the Obama administration in 2010, when it provided a loan of $456 million to the EV maker Tesla Motors (now Tesla), aimed at developing an affordable electric car for everyday drivers. At the time, Tesla Motors was spinning its wheels in the rarified world of expensive, zero emission sports cars. The company launched in 2006 and produced about 2,500 units of its two-seater sports car before eventually halting production.

With the loan in hand Tesla began producing the Model S sedan in 2012. It sold 3,000 units in the first year and the rest is history.

After a semi-hiatus during the four years after Obama left office, the LPO got a new shot of adrenaline under the Biden-Harris administration. In a recap last year, LPO Director Jigar Shah noted underscored the impact of the Advanced Technologies Vehicles Manufacturing program on the domestic EV supply chain.

“It’s one of our oldest programs,” Shah said, “And it’s a program that was made popular by our loan to Tesla, Ford, and Nissan.”

“The goal of the program is to onshore and reshore a lot of the supply chain for the automotive sector as we decarbonize it in this country,” he added, noting that the LPO received an additional $40 billion in loan authority from the Inflation Reduction Act to support the program.

If NOVONIX wants to get its hands on some of that new loan money, it better act fast. January 21 is just around the corner.

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Photo (cropped): Stellantis is the latest US electric vehicle stakeholder to firm up its domestic EV supply chain with synthetic graphite produced in Tennessee (Fiat 550e electric car courtesy of Stellantis).