Toyota pours US$1bn into US plants for EV, hybrid growth

Toyota has announced a US$1bn investment across its vehicle assembly plants in Kentucky and Indiana as part of a previously announced plan to invest up to US$10bn in its US operations through 2030. The Kentucky plant will receive US$800m to prepare for a second battery-electric model, while Indiana is allocated US$200m to expand output of the Grand Highlander hybrid SUV.

The planned model for Kentucky, as yet unrevealed, is a large three-row SUV due to begin production in 2028. Kentucky will also see increased hybrid capacity for the Camry and RAV4. The announcement follows a first phase of US$912m directed at hybrid powertrain and engine production across five states, announced in November 2025 alongside the headline US$10bn commitment. 

Toyota’s North Carolina battery plant, which began full-scale production in late 2025, supplies lithium-ion cells for the broader electrification programme and represents the company’s first battery manufacturing facility outside Japan. The plant represents some US$13.9bn in capital investments to date.

The automaker has framed the investment announcement around its multi-pathway decarbonisation strategy for the US. This approach sees it maintain parallel development of hybrids, plug-in hybrids, and battery-electric vehicles, in addition to traditional internal combustion engines, rather than committing exclusively to one powertrain. 

In a statement, Chief Operating Officer Mark Templin said: “Toyota’s investment in the US is for the long-term, tied to our philosophy of building where we sell and buying where we build.” This is a position that aligns tactically with the Trump administration’s domestic manufacturing priorities but also a strategic necessity. Toyota has estimated that US tariffs on imported vehicles will cost JP¥1.4tr (US$8.8bn) in the current fiscal year.

The investment is also tied to a trade arrangement reached late in 2025, under which Toyota agreed to export US-produced vehicles—including the Camry, Highlander, and Tundra—to Japan following changes to local import rules. This arrangement involves converting left-hand-drive US factory output to right-hand drive for the Japanese market. President Donald Trump has frequently called for Japan to reduce its US trade deficit, although his focus has centred primarily on the Ford F-150 which is widely considered too large for many Japanese roads.

Despite the scale of the commitment, demand conditions in the US EV market remain uncertain. Electrified vehicle sales have slowed considerably following the removal of the US$7,500 federal tax credit in September 2025, and the Iran conflict has introduced fresh volatility into both consumer sentiment and supply chain planning. Toyota, for its part, has cut Japanese production of Middle East-bound units by around 40,000 in the wake of the conflict.