Toyota doubles down on hybrids with fresh $8 billion US investment

Nov. 1, 2023

World’s no 1 automaker adding six hybrid assembly lines in North Carolina as BEV strategy takes back seat 

Toyota Motor said it is more than doubling its investment in a battery plant in the US state of North Carolina to an eye-popping $14 billion and will now devote 10 of 14 assembly lines to plug-in (PHEV) and conventional hybrid (HEV) models. 

The latest $8 billion investment in the 1,000-acre site in Liberty, NC increases the number of PHEV and HEV lines from four previously, providing the world’s biggest car company with flexibility to switch between different types of EVs depending on market demand.  

Toyota, which produces more than 10 million vehicles each year, is betting its experience in Japan can be equally applied to the US market for electrified vehicles – during the first eight months of 2023, Japanese EV buyers chose HEVs 9 out of 10 times.  

Full electric passenger vehicles (BEV) have captured just 6% of the market in Japan where just over 1 million EVs of all types have found new owners year-to-end-August. In the US, BEVs make up 46% of the EV market, in line with global proportions.  

In contrast, China, which so far this year sold more BEVs than the next 20 countries combined, full electrics are 61% of the market.  In Germany, which like Japan Inc is trying to catch up in the global EV race, the BEV share is similar to China’s. 

PHEVs’ share in Europe so far this year is below 20% while in the Americas the proportion of PHEVs in the EV sales mix is only 12%. Toyota doubles down on hybrids with fresh $8 billion US investment

From no 1 to no 27

After all but abandoning the push for fuel-cell vehicles (a total of just 2,604 Mirai were bought in the US this year), in June, it appeared the message of institutional investors got through to 1 Toyota-Cho, when it announced a complete overhaul of its EV strategy, including plans for solid state lithium-ion batteries, which it says will help it leapfrog competitors.  

Designs for the Liberty plant where battery production is scheduled to begin in 2025, suggest otherwise. Comments made ahead of the opening of the Japan Mobility Show last week by ex-CEO  Akio Toyoda also hinted that the strategy he pursued during his 14 years at the helm has not been pivoted. 

With sales of 1.6m passenger EVs through August this year, Toyota ranks second globally just behind BYD and a good 400,000 units ahead of Tesla. When it comes to BEVs, however, the picture is vastly different.  

While even at home Toyota (including Lexus) is only ranked at no. 5 when it comes to full electric cars, on the global BEV stage, astonishingly, Toyota is ranked as the 27th biggest carmaker.  

By this measure, the 86-year-old Japanese industrial giant lags behind Chinese start-ups Xpeng (first vehicle produced November 2018), Nio (June 2018) and Zeekr (October 2021).    

In terms of battery capacity deployed, in many ways a stronger indicator of market potential than EV unit sales alone, the Adamas Intelligence EV Battery Capacity and Battery Metals Tracker shows globally, BEVs are responsible for 87% of the power-hours hitting roads this year.  

Toyota’s BEV share? That would be 1.04%.

Adamas take: 

With efficient and convenient charging infrastructure still sorely lacking, particularly in the US, a hybrid strategy may yet turn out to be prescient. Global PHEV sales are running well ahead of overall market growth. Even in highly electrified China, plug-ins now own 30% of the EV market. Indeed, China’s best-selling EV in 2023 is a PHEV – the BYD Song Plus DM-i.


[RELATED ARTICLE: Electric cars. Not big in Japan]



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