Novonix Ltd (ASX: NVX) shares are starting the week on a positive note.

In morning trade, the ASX 300 battery tech stock is up 11% to 82 cents.

Why is this ASX 300 battery tech stock jumping?

Investors have been snapping up Novonix shares today after the company announced a binding offtake agreement. This is the second agreement of its type it has announced this month. The first was with car giant Stellantis.

Today's agreement is with PowerCo. It was established by auto giant Volkswagen in 2022 and is committed to ramp-up global battery cell production.

PowerCo oversees international factory operations, advances in cell technology, and vertical integration of the battery value chain. It has identified three gigafactory locations – Salzgitter in Germany, Valencia in Spain, and St. Thomas in Canada. These have a combined capacity of up to 200 GWh/year.

Offtake agreement

According to the release, the binding offtake agreement is for a minimum of 32,000 tonnes of high-performance synthetic graphite material. This material will be supplied to PowerCo over a five-year term starting in 2027.

This is subject to the ASX 300 battery tech stock achieving agreed upon milestones regarding final mass production qualification and satisfying certain compliance criteria. It must also secure financing commitments for the production facilities that will supply PowerCo product.

Products will be priced under an undisclosed pricing structure that has been agreed between the parties.

This agreement follows the previously announced signing of a non-exclusive testing and development agreement back in March.

Riverside production plans

The ASX 300 battery tech stock notes that this agreement means that its Riverside facility is poised to become the first large-scale production site dedicated to high-performance synthetic graphite for the battery sector in North America.

It is slated to begin commercial production in 2025, with plans to grow output to 20,000 tonnes per annum (tpa) to meet current customer commitments.

But it won't stop there. The demand outlook is so positive that Novonix is progressing plans to build a second production facility in southeastern United States that will have an initial capacity of 30,000 tpa and plans to expand that facility to 75,000 tpa.

It is in discussions with the U.S. Department of Energy Loan Program Office (LPO) for an Advanced Technology Vehicles Manufacturing Program loan to support the construction of this new production facility.

As things stand, ASX 300 battery tech stock's current plans call for total production to increase to at least 150,000 tpa of synthetic graphite material to accommodate anticipated customer demand.