Summary

Toyota Motors releases details around their electric vehicle and battery plans globally; China will remain the key focus in the next year.

Chinese government mandates a 10% conversion to new energy vehicles starting in 2019.

In January 2018, Toyota Tsusho acquired a 15% equity stake in Orocobre which will allow the joint venture to increase lithium carbonate production in Argentina.

Orocobre is now playing an increasingly important role in the global supply chain; details around the Japanese lithium hydroxide facility are still pending.

One of the key investment themes that emerged in 2017 was around the electrification of the transportation industry, from passenger vehicles to mopeds to municipal bus fleets. The transition is being driven by both political pressure to reduce emissions within city centers and consumer preferences. In China, the government is forcing automakers that produce more than 30,000 cars a year to switch 10% of their manufacturing base to all-electric drive by 2019, now less than 12 months away. The enforcement of this policy sent the entire lithium supply chain into a flurry throughout 2017. Battery manufacturers have been racing to build and ramp-up capacity while lithium producers move to increase annual output of the white metal and a flood of junior miners have hit the ground in Argentina and Australia with the hopes of becoming the next producer. The automakers have also announced their strategy for the introduction of electric vehicles.

It is in my opinion that Toyota Tsusho’s (OTC:OTCPK:TYHOF) recent investment in Orocobre (OTC:OTCPK:OROCF) coupled with Toyota Motor’s (NYSE:TM) announcements to increase investment in battery and electric vehicle manufacturing signals a clear commitment to the global deployment of electric vehicles. As a shareholder in Orocobre, I view the equity investment as a game changer as it cements Toyota’s commitment to both Orocobre and the need for OEM’s to secure lithium chemicals. More importantly, the underlying theme is that Toyota has made a bold move into the electric vehicle industry at a time that Toyota Tsusho has moved to increase lithium carbonate and hydroxide production. It is becoming clearer to the investment community how Orocobre is directly linked to the automotive business. These series of recent events will certainly allow Orocobre to separate itself from other players in the lithium industry as it is now operational and fully funded with a key long-term sales opportunities directly related to Toyota Motor’s need for lithium batteries. As a long-term shareholder in Orocobre, I feel confident in the company’s ability to continue growing shareholder value in the near and mid-term.

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