TOKYO – Electric vehicle laggard Toyota says it will plow about $5.6 billion into making more EV batteries in the U.S. and Japan, including increased capacity at a recently-announced plant in North Carolina, as the automaker plays catch up on all-electric offerings.
A little more than half of the outlay will be invested in a battery plant in the western Japanese city of Himeji as well as other Toyota sites around Japan.
The balance, about $2.5 billion, will boost capacity at the North Carolina site.
Toyota Motor North America announced an initial $1.3 billion investment in the Liberty, North Carolina battery plant in December, saying it would eventually produce enough lithium ion batteries to power up to 1.2 million vehicles per year. Production is expected to begin in 2025.
The new investment will augment output at the plant, Toyota said.
The U.S. plant is a joint venture between Toyota Motor North America and Toyota Tsusho. The Japan plant is operated by Prime Planet Energy & Solutions, a partnership with Panasonic.
Toyota’s multi-billion-dollar investment bolsters its strategy to sell 3.5 million electric vehicles a year by 2030 across the Toyota and Lexus brands. Lexus will transform into an electric-only brand in Europe, the U.S. and China in 2030, when it plans to be prepared to sell 1 million EVs annually.
Following that, Lexus will offer nothing but full-electric vehicles worldwide by 2035.
Toyota’s move comes just days after Japanese competitor Honda and South Korean battery maker LG Energy Solution said they would invest $4.4 billion to build lithium ion batteries in the U.S. for Honda and Acura brand electric vehicles.
North American production of batteries is especially critical to comply with the requirements set forth for EV incentives in the recently enacted Inflation Reduction Act. EVs qualifying for up to $7,500 in tax credits must source their battery materials from countries the U.S. has a free trade agreement with, and a certain percentage of the battery must be made in North America.
“Toyota intends to continue its efforts to build a supply system that can steadily meet the growing demand for BEVs in various regions, including the supply of automotive batteries from its partners,” Toyota said in the statement. “Toyota will continue to make every effort to flexibly meet the needs of its various customers in all countries and regions by offering multiple powertrains and providing as many options as possible.”
Toyota has been slow to jump into pure electric vehicles as it continues to pursue gasoline-electric hybrids as an effective bridge technology toward a carbon neutral future.
The company has offered to buy back the vehicles as part of customer recompense.