Last year was undoubtedly a traumatic year for holders of Novonix Ltd (ASX: NVX) shares. The share price of the battery technology company was slashed by 84% in 2022 as investors turned their backs on cash furnaces en masse.
This year is shaping up to be another capital-intensive 12 months for Novonix. However, there are still a few developments that could put a fire under Novonix shares in 2023.
1. Electric vehicle adoption continues
Most will know of the cataclysmic descent that Tesla Inc (NASDAQ: TSLA) shares have experienced lately. One of the pressures contributing to the fall has been the concern of a central bank-induced recession in 2023.
The prevailing view is that electric vehicle (EV) sales will decrease as consumer spending weakens. However, a number of analysts still expect EV adoption to rise throughout 2023 and the proceeding years.
J.D. Power, a United States consumer research firm, is forecasting EV market share to grow from 7% to 12% this year. In a similarly bullish tone, global professional services firm Ernst & Young expects electric vehicle sales in the US, China, and Europe to surpass all other engines by 2030.
If EVs continue to make use of lithium-ion batteries, there's a possibility that Novonix shares could benefit from the increased cathode and anode demand.
2. Inflation Reduction Act could boost Novonix shares
The Inflation Reduction Act (IRA) was introduced by the White House in August last year. Around $370 billion is aimed at funding clean energy and securing a robust supply chain for green materials in the US.
Furthermore, part of the IRA entails a $7,500 consumer tax credit on EVs using IRA-compliant materials. In other words, car manufacturers are incentivised to partner with critical mineral producers in the US.
Novonix is strategically constructing its facilities within the US and could catch a tailwind from this government legislation.
It is worth noting that Tesla recently filed to construct a 1.4 million square feet expansion to its Giga Texas facility — which includes a US$216 million cathode production building.
3. Potential for more China tariffs
The third and final catalyst that could give Novonix shares a boost in 2023 involves China and tariffs. Section 301 tariffs on imports from China into the United States are under review, as stated in the company's recent annual general meeting presentation.
A previously enforced 25% tariff on artificial graphite from China could soon be removed. This temporary waiver was set to expire at the end of 2022. If removed, the supply of graphite from Novonix could look economically more appealing to suppliers.
If any change in tariffs bolsters the company's future demand for offtakes, the Novonix share price could benefit.
