Nasdaq-listed corporate decarbonization business VivoPower International PLC (NASDAQ: VVPR) today announced an exclusive manufacturing collaboration with Toyota, the world's largest carmaker. 

Toyota Australia intends to integrate VivoPower's conversion kits to electrify its iconic Land Cruiser vehicles during the build process - turning chassis originally destined to be diesels into emission-friendly 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.

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.

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 €268.5m.                                   

Toyota sells c 400,000 Land Cruisers a year worldwide, with over 25,000 sold in Australia in 2020 and more than 10 million in total sales since its launch in 1951.

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

Watch Edison's Bitesize Briefing on the VivoPower announcement

Read David Larkham's research update in full

VivoPower is a client of Edison Group