Toyota will spend another $2.1 billion building a new battery plant in North Carolina, the latest sign the automaker is trying to catch up in an industry that has embraced the switch to electric vehicles.
The Japanese automaker also announced Wednesday that it will build its first U.S.-made electric SUV at its Kentucky plant starting in 2025. The three-row car will use batteries supplied by Toyota’s North Carolina plant.
At first, the news suggests that Toyota is strengthening its commitment to EVs. Historically, the company has lagged other automakers in announcing new EV models, supporting hydrogen-powered vehicles instead. But earlier this year, Toyota said it plans to introduce 10 new battery powered vehicleswith a goal of 1.5 million electric vehicles sold per year by 2026.
The North Carolina battery plant is part of the company’s renewed commitment to electrification, though it’s not just all-electric vehicles. Of the six production lines that will go live when production begins in 2025, only two will be dedicated to all-electric EVs. The other four are for hybrid EVs.
Toyota has not yet shared its plant’s projected gigawatt-hour capacity. In the past, the company has said it could produce enough batteries for 1.2 million vehicles a year.
The increased capital expenditure at a U.S. battery plant indicates that government incentives to boost battery production nationally are working. The Inflation Reduction Act, signed in August 2022, includes incentives to manufacture batteries in the US. The result is a slew of commitments from domestic and international automakers – from Ford and General Motors to BMW and Hyundai – to get production up and running on US soil in the coming years.
Toyota initially announced its commitment to build a factory in the US in 2021. At the time, the Japanese automaker allocated $1.8 billion for a plant near Greensboro. Last September, Toyota tripled that investment to $3.8 billion. The latest capital injection brings Toyota’s total stake to $5.9 billion.