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VivoPower International PLC (NASDAQ: VVPR), the Nasdaq-listed decarbonization business, has signed a five-year exclusive manufacturing deal with Toyota to convert the iconic diesel-powered Land Cruiser to a fully electric vehicle.

The agreement stands as a Letter of Intent, which is not the final contract, but it is binding. The end agreement should lock out VivoPower competitors from working with Toyota Australia to electrify Land Cruisers. The deal is expected to be signed as a Master Services Agreement in two months’ time.

The deal follows two years of testing fully electric Land Cruisers under extreme conditions, including being trialled at BHP’s Nickel West mining site. The drivetrains, made by VivoPower subsidiary Tembo e-LV, first appeared on the market in 2016 in the Land Cruiser and Hilux series, and are now being used in the mining and construction industries as fully electric, multi-purpose vehicles. The deal also signals what could be the start of widespread electrification of all utility vehicles, and spur the mining industry itself towards the decarbonisation goals it will have to adopt.

VivoPower prepares to scale up

International equity research house Edison has declared the five-year exclusive deal ‘a major milestone’ and ‘a strong endorsement’ that supported revenues and dialled down risk, as VivoPower prepares to scale up for sale to the broader market.

Edison analyst David Larkham said: “Toyota is the largest car company in the world. This is a position it has gained through technology, quality and manufacturing excellence. Hence, we see this agreement as providing strong endorsement.”

VivoPower and Toyota will be working together not to replace the diesel engine but to assemble new Land Cruisers with integrated Tembo electric drivetrains, lowering conversion costs. Larkham says: “It is a real step change for VivoPower to move from re-kitting existing vehicles to being an integrated part of the manufacturing process,”

“It is a real step change for VivoPower to move from re-kitting existing vehicles to being an integrated part of the manufacturing process.”

Building a global distribution network

Since last year, VivoPower has been building a global distribution network and has signed three agreements, spanning major mining markets including Australia, Canada and the Nordics. Together, the deals, announced ahead of the Toyota news, envisage VivoPower delivering at least 4,475 kits to those regions in the next five and a half years, with a total revenue of €268.5m.

Larkham previously valued VivoPower at $19 a share on the basis that it will sell and deliver 5,000 Land Cruiser conversion kits per year in 2025.

Toyota sells c.400,000 Land Cruisers a year worldwide, with more than 25,000 sold in Australia last year and more than 10 million sold since launch in 1951.

In July 2011, Tesla announced a $100m agreement with Toyota to supply electric powertrain equipment for the RAV4 sports-utility vehicle.

VivoPower’s executive chairman and CEO Kevin Chin on 23 June increased his shareholding in the Company by 328,888 shares, representing approximately 1.8% of the issued shares of the company.

VivoPower is focused on battery storage, electric solutions for customized and ruggedized fleet applications, solar and critical power technology and services. The company’s core purpose is to provide its customers with turnkey decarbonization solutions that enable them to move toward net zero carbon status. VivoPower has operations in Australia, Canada, the Netherlands, the United Kingdom and the United States.


Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

James Norris

James Norris

James is a highly experienced writer and editor, gained from more than 20 years in the financial services industry, in particular wealth management and asset management.

He initially worked as a financial journalist for a number of leading media brands, including the FT Group, Financial News, Euromoney and Incisive Media, covering most aspects of the asset management industry. More recently, James switched to work as an in-house content specialist for fund management and wealth management groups, including JP Morgan Asset Management, Quilter Cheviot Investment Management, AXA Investment Managers and Invesco Perpetual.

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