novonix (ASX:NVX) Novonics has signed a binding agreement with Powerco SE, a subsidiary of Volkswagen, to supply a minimum of 32,000 tonnes of high-performance synthetic graphite from 2027 to 2031. The deal strengthens Novonix’s influence in the North American battery supply chain and follows a similar agreement with Stellantis earlier this month. The target amount will be a minimum of 86,250 tons and a maximum of 115,000 tons. graphite.

Novonix develops and produces materials and technologies for lithium-ion batteries, with a focus on synthetic graphite anodes, battery cell testing equipment, and zero-waste cathode synthesis. The company operates manufacturing facilities in North America.

PowerCo, founded by Volkswagen in 2022, oversees the auto giant’s battery cell production. The company operates Gigafactories in Germany, Spain and Canada, with a combined capacity target of up to 200 GWh per year. The agreement with Novonix builds on a test and development agreement signed earlier this year.

Novonix’s Riverside facility in Tennessee is scheduled to begin production in 2025 and will supply synthetic graphite. The facility is expected to initially expand to 20,000 tons per year, with additional capacity planned through a second facility in the southeastern United States. Total production is expected to reach 150,000 tonnes per year to meet growing demand from the electric vehicle and energy storage sectors.

The agreement is contingent on Novonix achieving production milestones, securing financing and meeting compliance standards. If these conditions are not met, PowerCo retains the option to terminate the agreement.

Previously, Novonix received a US$100 million grant and US$103 million in tax credits from the U.S. Department of Energy to support its operations, highlighting the company’s role in advancing the clean energy transition .

Novonix shares are trading 14.86% higher at 85 cents.