VivoPower International today announced an “exclusive manufacturing collaboration” with Toyota.

Toyota Australia intends to integrate VivoPower’s conversion kits to electrify Land Cruiser vehicles during the build process – turning chassis originally destined to be diesels into EVs with VivoPower batteries and electric motors.

In an update note issued after the news broke, international equity research house Edison declared the five-year exclusive deal “a major milestone” and “a strong endorsement”, supporting revenues and dialling down risk as VivoPower prepares to hyperscale.

According to lead Edison analyst David Larkham: ‘Toyota is the largest car company in the world, having delivered 9.5m units in 2020. This is a position it has gained through technology, quality and manufacturing excellence. Hence, we see this agreement as providing strong endorsement.

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

The deal follows two years of collaboration and field trials in the harsh environment of the Australian mining sector. Whilst the letter of intent is not the final contract, it is binding and the end agreement is expected to lock out VivoPower competitors from working with Toyota Australia to electrify Land Cruisers.

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

Since last year, the business 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 year with a total revenue of EUR268.5m.

Toyota sells around 400,000 Land Cruisers a year worldwide, with over 25,000 sold in Australia in 2020 and more than 10m since launch in 1951.

In July 2011 Tesla announced a $100m agreement with Toyota to supply electric powertrain equipment for the RAV4 SUV.