Toyota announced Wednesday that it will invest $5.6 billion to create electric vehicle batteries in Japan, the United States, and Japan. Toyota, however, said that it is still not sure that EVs are the best way forward. This contrasts with other automakers which have already invested in EVs.
Toyota (TM), the world’s largest automaker by vehicle sales, has been slow to develop fully-battery powered EVs despite being a pioneer in hybrid gas/electric vehicles for more than 20 years. Rivals like Volkswagen (VLKAF), General Motors GM (GM), and Ford (F), have more pure battery-powered EV options, as well as a substantial number of EVs in development.
Toyota has invested more than any other automaker in developing electric vehicles that use onboard hydrogen fuel cells instead of rechargeable batteries. The only emission from fuel cells would be water vapor, which complies with stricter environmental regulations, such as those announced by California last week, that will ban gas-powered internal combustion engine cars by 2035.
Toyota’s statement regarding the new investment in a battery plant suggested that it is still exploring ways to meet stricter emission standards without relying solely on battery-powered electric vehicles.
Toyota believes there are many options for carbon neutrality. In its statement, Toyota stated that it believes there are many ways to reduce CO2 emissions. However, the methods used to protect the livelihoods of customers will vary depending on where they live. Toyota will continue to offer multiple powertrains and as many options as it can to meet the diverse needs of customers across all countries and regions.
Fuel-cell-powered EVs cannot be charged at home or increasing numbers of public charging stations. They require a new fueling infrastructure to allow them to be filled up with hydrogen. Even outside of California, the options for filling are limited.
The BZ4X SUV from Toyota, the only pure-battery-powered electric vehicle offered in North America, went on sale earlier this summer. Toyota had to warn its early buyers that the wheels could fall off and they would not be able to drive them. Toyota has not been able to find a solution to the problem and has offered to purchase the cars back from buyers.
Toyota claims that half of the money it will spend on EV battery production will be used to expand a Liberty, NC plant that is currently under construction. The plant’s price will rise from $1.3 billion up to $3.8 billion due to the investment.
This cash flow will increase the number of 2100 jobs at the plant which is expected to begin production in 2025. Toyota stated that the plant will produce batteries for pure battery-powered EVs, as well as plug-in hybrid vehicles with both internal combustion engines and electric motors.
Toyota should increase the capacity of some of its US-made electric vehicle batteries. Recent legislation that increased tax credits for EV buyers included limits based on where the batteries were made. This requirement requires that 50% of the battery components must be made or assembled in North America by 2023, and 60% by 2024 and 2025 respectively to qualify for the tax credit. This number will increase gradually to 100% by 2029. Shipping batteries from Asia to the US could result in thousands of dollars worth of tax credits for potential car buyers.
The boom in EV batteries
In recent months, automakers have been rushing to announce plans for EV battery plants with multiple partners. Honda (HMC), announced this week a $4.4 billion joint venture with LG to build a new US battery facility.
Hyundai also announced in May that it is building a Georgia battery plant. Ford announced last year that it would partner with LG rival SK Innovations to build three battery plants and an EV assembly line.
In Alabama, Mercedes-Benz opened a new battery plant earlier in the year. Stellaris was created by the merger between Fiat Chrysler, and French automaker PSA Group, and Stellantis announced plans to build a battery plant with LG last year.
GM and LG built plants in Ohio and Tennessee for a combined $7.2 billion. They are now looking to build a fourth plant here in Indiana. While the Tennessee and Michigan plants remain under construction, the Ohio plant has just started production.