24 Jun VivoPower: Making Giant Strides in the EV Industry!
VivoPower International PLC (NASDAQ: VVPR), a Company striving to create sustainable energy solutions, announced that the Company has entered into a binding letter of Intent (“LOI”) for the electrification of Toyota’s Landcruiser vehicles, through its wholly-owned subsidiary Tembo e-LV B.V. The collaboration with Toyota Motor Corporation Australia Limited, will see the incorporation of conversion kits designed and manufactured by Tembo.
The Master Services Agreement is expected to be finalized soon as it is currently under negotiation and upon completion, VivoPower will become the exclusive partner for providing electrification for a period of 5 years, with the potential for another two-year extension. In the meanwhile, the letter of intent will act as a binding agreement between the companies and will help set the terms for the purchase of goods and services for the commencement of work.
Commenting on the agreement, Kevin Chin, Executive Chairman and CEO of VivoPower stated,
“We are extremely pleased to be collaborating with Toyota Motor Corporation Australia, part of the world’s largest original equipment manufacturer (“OEM”) on the electrification of their Landcruiser vehicles with our Tembo conversion kits. The Landcruiser is the vehicle of choice worldwide for mining and other ruggedized industries. This partnership with Toyota Australia is a testament to the outstanding potential of Tembo’s technology to decarbonize transportation in some of the world’s toughest and hardest to decarbonize industries. More importantly, it is a tremendous opportunity for us to work directly with Toyota Australia to optimize the Tembo product and deliver it to more customers around the world, helping them to achieve their net zero carbon objectives in the process.”
The Company had earlier announced a non-binding Heads of Terms with Arctic Trucks Limited, for converting and distributing Tembo electric light vehicles in Norway, Sweden, Iceland and Finland. Arctic Trucks would commit to purchase 800 Tembo e-LV conversion kits for an estimated value of US$58 million through December 2026.
This is VivoPower’s third major distribution deal in 2021 for the Tembo e-LVs, which are powered by the Tembo kits that have transformed the diesel variant of the Toyota Land Cruiser and Hilux vehicles, intended for use in mining, construction and defense.
The Company has also signed a definitive agreement with Acces Industriel Mining Inc, a leading Canadian industrial equipment distributor to purchase 1,675 Tembo e-LV conversion kits through December 2026, for a total value of US$120 million over a period of five and a half years.
VivoPower International PLC (NASDAQ: VVPR)
Market Cap: $135.18M; Current Share Price: 7.98 USD
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Industry
Renewable Energy is derived from naturally replenishing sources such as Hydropower, Geothermal, Solar and Wind Energy. According to the U.S Energy Information Administration, In the year 2019, renewable energy provided 11.5 quadrillion British thermal units (Btu) or 11.4% of total U.S. energy consumption, out of which, 56% was contributed by the electric power sector and 17 percent was from renewable energy sources.
The greatest advantage of renewable energy is their ability to reduce greenhouse gas emissions, by lowering fossil fuel consumption, the largest cause of carbon dioxide emissions. The renewable energy sector has now come under a sharp focus owing to Joe Biden’s administration’s plan to fight climate change with greater emphasis on clean energy and a mission to reach net-zero emissions by 2050.
The government’s position on clean energy was made clear by its recommitting to the Paris Climate accord and its call for moving to clean energy by 2035. The new administration will invest close to $1.7 trillion over the next 10 years in its bid for a “Clean Energy revolution” that aims to establish the US as the clean energy superpower and transform the energy sector by providing economic impetus.
The International Energy Agency predicts that Electric Vehicles, which stand at 3 million today, will grow to 125 million by 2030. The Global Electric Vehicle market is all set to compete with the internal combustion engine (ICE) vehicles in the next five-year, accounting for one out of every five cars sold by 2030, according to Seth Goldstein, an analyst and chair of Morningstar’s electric vehicle committee. The growth of this industry is a result of the initiatives by governments around the world, in the form of tax rebates, grants, and subsidies for adoption of renewable and more environment friendly options for transportation. Unlike conventional vehicles which can only replenish their fuel at specific public locations, Electric vehicles can be charged at home or commercial charging stations.
However, the limitation of sufficient charging capacity to cover long distances discourages the use of these vehicles. There is an increased focus on research and development activities, especially in the passenger car sector, to improve infrastructure and supply equipment and establish EV chargers at easily accessible public places, to allow long distance travel as well. Range anxiety, which acts as the biggest impediment for the market at present, will soon be a thing of the past, with Companies racing to develop connectivity modules.
The demand for electric vehicles will also bolster the demand for ancillary industries such as engine components, electronics for propulsion systems, battery optimization and torque transfer devices. In fact, the demand for lithium, which is a crucial component of energy storage in transportation batteries, is likely to quadruple over the next decade according to Seth Goldstein.
A report by McKinsey estimates that by 2025, there will be more than 350 EV models introduced into the market, with ranges of 200 miles. However, a lack of charging infrastructure could hamper the growth in the market. The report also highlights the fact that besides price and driving range, lack of access to charging stations is the third most serious barrier to EV. However there has been a gradual decline in prices and improvement in driving range and companies are making a concerted effort to provide the requisite charging infrastructure. Furthermore, the total energy demand for electric vehicles in China, the United States and European Union alone will reach 280 billion kilowatt-hours by 2030.
Image Source: Mckinsey
There has been an increasing interest in EV’s owing to environmental concerns, which has prompted leading automobile makers such as BMW, Daimler, Ford, and Volkswagen to announce an investment plan for deployment of 400 charging sites across Europe, in addition to investing approximately $90 billion in electric vehicles, according to a report by Reuters.
Company
VivoPower is a certified B corporation, indicating a business that meets standards of environmental and social performance and follows complete public transparency and accountability while maintaining a balance between its business and purpose. The Company’s operations extend through Australia, Canada, the Netherlands, the United States and the United Kingdom.
The Company’s foray into the electric vehicle market was marked by its acquisition of a majority stake in Tembo e-LV, in October 2020. VivoPower’s energy solutions include electric vehicles, solar systems and battery technology and most importantly critical power solutions. The acquisition of Tembo enables the Company to provide a comprehensive portfolio of Sustainable Energy Solutions (SES) including hardware in the form of electric vehicles, IVMS kits, Fleet charging stations; Software like Telematics, online machine health, fuel and battery optimization and Services such as microgrid design and maintenance, charging installation and maintenance and EV repair, maintenance and training to name a few.
Tembo e-LV is a battery-powered electric vehicle that offers zero emissions and low maintenance and operational costs. The Company has been able to transform Land Cruisers & Hilux into battery powered 100% electric vehicles that are suited for use in mining operations and overcome the challenges of meeting future emission standards. Most importantly it minimizes exposure to toxic emissions and lowers noise and vehicle heat for underground miners, in addition to reducing carbon footprint.
Image Source: Company
The Company offers turnkey solutions encompassing mining light vehicle, load trays, mobile office, people transport and explosive transport solutions.
Vivo Solar provides design and manufacturing solutions for purpose-built solar power, battery storage and microgrids to cater to a wide range of customers including industrial, commercial and municipal organizations. The Company took over management control of its 50/50 U.S solar development venture in June 2020 and has since implemented a turnaround plan to prioritize development of projects offering the most attractive return and in advanced stages of development.
Vivo Solar Australia is collaborating with the Aevitas business units and has developed two utility-scale solar projects in Australia namely the Daisy Hill Solar Farm (5 MW) and Yoogali Solar Farm (15 MW). J.A Martin, business unit of Aevitas, has completed over 150 MW of solar projects since commencing solar operations 3 years ago and has a promising pipeline with more than 300+ MW.
VivoPower also provides reliable and consistent power supply for critical operations by supplying leading-edge services and solutions in electric motors, generators & nondestructive testing under the Kenshaw brand name. The company’s portfolio includes generator sales and services, electric motors and products, workshop and repair solutions and motor management services. The Company’s clients list includes Glencore, Grain Corp, Moly-Cop, Newcastle Coal Infrastructure Group and Ramsay Health Care among others.
The Company also offers specialized industrial electric engineering and power services through the J.A Martin brand, delivering comprehensive solutions starting from design, engineering, project management and installation which can help organizations to bring their electric projects to fruition.
VivoPower’s Australian subsidiary Aevitas Group Limited provides specialized site-specific infrastructure to over 700 active government, commercial and industrial customers including data centers, solar PV, mining and resources to name a few. The Company delivers electrical services and infrastructure to complement the company’s EV and SES offerings such as on batteries and microgrids, EV charging stations, on-site renewable generation among others. Aevitas has been awarded a marquee contract for all electrical works pertaining to the e 39 MW-DC Molong Solar Farm, which aims to power 11,000 homes and reduce carbon emission by 53,000 tons.
Key Takeaways
The Company reported a 28% decrease in year-on-year revenue to $22.7m for the H1 FY2021 owing to the impact of stringent COVID-19 lockdowns in Australia. The pandemic has also caused delays in its work related to the Aevitas business units. However, VivoPower has reported an increase in the gross profit margin to 20 percent year-on-year from 18 percent previously due to improved project execution and labor efficiencies.
VivoPower has landed a contract with Tottenham Hotspur FC (UK) to act as their global battery partner and is expecting other orders from mining sector customers in H2, FY2021. The Company’s key objectives in the second half of 2021 are to win new EV and SES orders from its existing Aevitas Customer base and explore opportunities for strategic acquisition or joint ventures.
The Company is focusing on scaling its business from the Aevitas business unit by leveraging its critical power capabilities and improving sales architecture. The strategy for its US solar projects portfolio involves exploring new strategic development partners for its long-term sites, achieving proactive customer engagement and gaining full economic ownership of its portfolio in the US.
Vivopower wants to accelerate the development of its solar power and battery solutions pipeline in the Australian market, by expanding its capabilities, speedy development of existing projects and acquiring new customers for extending its pipeline.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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