Why is the Novonix share price tumbling 6% today?

Tesla is trying to spur on more cathode innovation. Could it erode the moat Novonix is trying to build?

| More on:
Disappointed man with his head on his hand looking at a falling share price his a laptop.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Novonix shares are swapping hands at $1.49 apiece, down 6.3% from yesterday
  • The move follows Tesla's investor day, where it discussed lithium and cathode supply
  • Tesla plans to share any improvements from its own cathode facility with its suppliers

The Novonix Ltd (ASX: NVX) share price has found itself on the back foot today. Today's move comes amid a handful of recent developments that could be acting as an anchor on investor sentiment.

As we head into the afternoon, shares in the battery technology company are down 6.3% to $1.49. This negative turn places Novonix's shares marginally above the 52-week low of $1.39. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is only a touch lower than yesterday.

Let's wade through what could be invoking the woeful performance today.

Pressure on to scale faster or lose tech moat

Tesla held its 2023 Investor Day this morning, providing insights into how the electric vehicle (EV) maker plans to procure the materials necessary to deliver on its ambitious goal of selling 20 million vehicles by 2030.

In the eyes of many, the shift to an electrified future has manifested concerns about a shortfall in the supply of lithium and other green metals. Yet, in Tesla's presentation, it was suggested there are ample estimated resources to meet the accumulative demand through to 2050, as pictured below.

Source: Tesla 2023 Investor Day

Tesla Inc (NASDAQ: TSLA) CEO Elon Musk discussed the real crux of material constraints for the company, stating:

There also seems to be quite a bit of confusion about lithium — lithium is extremely common. It's one of the most common elements on Earth. There's no country that has a monopoly on lithium, or even close to it. There's enough lithium ore in the United States to electrify all of Earth. If the United States was the only place producing lithium, there's enough domestic material to electrify Earth.

The limiting factor is the refining of the lithium into battery-grade lithium hydroxide or lithium carbonate. That's the actual limiting factor.

However, Novonix isn't exactly a 'lithium share', as the company seeks to produce cathodes and anodes from synthetic graphite for use in lithium-ion batteries. Though, this area of the battery supply chain was also discussed during the presentation.

Musk discussed how Tesla is in the process of building its own cathode refining facility, stating:

We are obviously building a cathode processing facility just adjacent to this building […] that's for cathode refining. We'd really prefer it if others did that. We're doing it because we have to, not because we want to.

Furthermore, senior vice president of powertrain and energy engineering, Don Baglino, added:

There just really isn't any large-scale cathode production in the United States and it needed to be done.

This may highlight that Novonix is dragging its feet when it comes to spinning up production at scale. Adding to the issue, Baglino said they would share any process improvements with their supply partners.

Perhaps Novonix shareholders are concerned that Tesla could discover advancements that would minimise the company's competitive advantage.

What else is hitting the Novonix share price?

Novonix released its results for the six months ending 31 December 2022 on Tuesday. The statements showed a continued lack of meaningful revenues, at US$2.7 million for the period. For context, the company brought in US$6.1 million for the 12 months ending 30 June 2022.

The ASX-listed company also reported a US$27.86 million loss. That means Novonix's cash balance was widdled away even further during the half.

Following the result, Morgans moved Novonix shares to a hold with a $1.44 price target.

Should you invest $1,000 in Novonix right now?

Before you buy Novonix shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Novonix wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Mitchell Lawler has positions in Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

Man on his laptop standing next to data centres.
AI Stocks

3 reasons to buy this $9 billion ASX 200 AI stock today

A leading expert forecasts this $9 billion ASX 200 AI stock will deliver “meaningful earnings upside”.

Read more »

Business people discussing project on digital tablet.
Technology Shares

After its result, what does Macquarie think Xero shares are worth?

Here's what the leading broker is saying about this tech stock.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Technology Shares

Gentrack share price down 5% on half-year results

Let's unpack what was reported.

Read more »

Man with rocket wings which have flames coming out of them.
Technology Shares

Which ASX All Ords stock is jumping 14% on big counter-drone news

Investors are responding positively to news of a big contract win.

Read more »

Two plants grow in jars filled with coins.
Technology Shares

2 ASX growth shares I'd buy with $5,000 right now

I’m bullish about these two stocks with compelling growth potential.

Read more »

A woman on a green background points a finger at graphic images of molecules, a rocket, light bulbs and scientific symbols as she smiles.
Technology Shares

Growth investors should put these 2 top ASX tech shares on the watchlist

I think growth stocks from the tech sector could be exciting options.

Read more »

One girl leapfrogs over her friend's back.
Technology Shares

This ASX 200 tech stock would have doubled your money in a year. Is it too late to buy now?

After more than doubling in a year, here’s what Macquarie expects next for this soaring ASX 200 tech stock.

Read more »

Two brokers analysing stocks.
Technology Shares

What are top brokers saying about Xero shares?

Is now the time to buy this popular share? Let's see what brokers are saying.

Read more »