INDUSTRY BULLETIN: Electric Vehicle Sales Continue to Grow Rapidly The global market for electric vehicles (EVs) powered by lithium ion batteries continues to grow at a rapid rate. Recent sales numbers reveal the growing popularity of EVs in the United States: July 2016 saw 13,432 plug-ins sold, up from 8,951 in July 2015. As of July 2016, total EV sales in the U.S. are 77,834, up 23% year to date. In June, EVs attained a 1% market share of total vehicles sold in the U.S. for the first time. The U.S. market for plug-in EVs appears poised to surpass last year’s total sales of 116,100 vehicles. Deutsche Bank predicts sales in the U.S. will reach 1.5 million by 2025. Demand for lithium is growing along with EV sales, as the supply chain struggles to keep pace. Deutsche Bank further predicts that demand for lithium in rechargeable batteries will more than triple by 2025, to 535,000 tonnes from 160,000 tonnes in 2016. Global automakers are rushing to capture market share in the new EV market, unveiling new models and substantial new investments in their EV businesses, including lithium ion battery production. Recent examples include: Volkswagen AG will partner with a leading battery manufacturer (potentially Panasonic or LG Chem) to build their own “Gigafactory” to support their sales goals of 2 to 3 million EVs by 2025; Mercedes is reportedly set to unveil their fleet of EVs (2 sedans, 2 SUVs), plus a heavy duty truck, via its parent company Daimler AG; Tesla Model 3 sales reached ~373,000, almost quadrupling even the most bullish of analyst expectations from the time of unveiling; Hyundai announced plans to make EVs a significant part of its portfolio, with plans to introduce 26 EV models by 2020. Governments around the globe continue to encourage consumer uptake of EVs through various incentives and policy initiatives, as part of the move towards a low carbon economy. In the U.S., the Obama Administration recently released a set of executive actions to support EV uptake, highlighted by unlocking $4.5 billion in loan guarantees for commercial-scale charging stations. Ontario and Michigan announced a partnership focused on auto industry growth, competitiveness and innovation, laying the foundation for potentially building out the full EV supply chain, including batteries, in the Great Lakes auto industry region. In Europe, the European Commission rolled out its Strategy for Low-Emission Mobility, in which, “Moving towards zero-emission vehicles” is one of the three main elements of the strategy which is supported by a €39bn fund. The increased uptake of EVs around the world will require secure, sustainable and high quality sources of lithium compounds to manufacture the needed rechargeable batteries. Avalon’s Separation Rapids Lithium Project is well-positioned to participate in the rapidly expanding lithium supply chain. For questions or feedback, please email Avalon at [email protected] About Avalon Advanced Materials Inc. Avalon Advanced Materials Inc (TSX: AVL & OTCQX: AVLNF), formerly Avalon Rare Metals Inc., is a Canadian mineral development company specializing in niche market metals and minerals which are in growing demand in new technology. The Company has three advanced stage projects, all 100%-owned, providing investors with exposure to lithium, tin and indium, as well as rare earth elements, tantalum, niobium, and zirconium. Avalon is currently focusing on its Separation Rapids Lithium Project, Kenora, ON and its East Kemptville Tin-Indium Project, Yarmouth, NS. Social responsibility and environmental stewardship are corporate cornerstones. 130 Adelaide St. W, Suite 1901 Toronto, ON M5H 3P5 Tel: (416) 364-4938 Email: ir@AvalonA