Toyota invests $1.3 billion in the US for EV production and expects record profits

Toyota Motor Corp. said Tuesday it will invest $1.3 billion in its Kentucky factory in the United States. The investment is part of the preparation to begin producing its first electric vehicles in the country in 2025. Meanwhile, the world’s number-one car manufacturer expects record net profit even as quality scandals bite.

The new investment will add a battery pack assembly line to the plant, slated to produce three-row electric sport utility vehicles. The automaker said that Toyota’s new battery plant in North Carolina will supply the batteries.

Flagship plant

The move comes as the Japanese company announced last year it will make the Kentucky plant, one of its flagship factories in the United States, the company’s first location for producing all-electric vehicles in the country. The plant, which employs over 9,000 people, currently produces the Camry sedan and the RAV4 hybrid SUV.
Japanese automakers are ramping up their production capacity in the United States so that their EVs are eligible for tax breaks offered under the administration of President Joe Biden and the IRA or Inflation Reduction Act, which requires vehicles to be built in North America.
 Kentucky Governor Andy Beshear said, “We are grateful that they continue to invest in our commonwealth and set a standard for high-quality, well-paying jobs for our citizens. “
Kerry Creech, the president of Toyota Kentucky, said, “Today’s announcement reflects our commitment to vehicle electrification and further reinvesting in our US operations.”
Toyota wants to build a three-row electric SUV in its Kentucky plant /Toyota

In October 2023, Toyota announced it would invest an additional $8 billion in its North Carolina EV battery plant, which it first announced in December 2021, to make batteries for its EVs and PHEVs. The plant is expected to be ready next year.

Record profit

On Tuesday, Toyota lifted its net profit forecast for the fiscal year ending in March to a record 4,5 trillion yen ($30,3 billion) from an earlier projection of 3,95 trillion yen due to robust post-pandemic demand. Still, it also lowered the group car sales outlook following a series of quality scandals.

The latest fiscal 2023 figure represents an 83.6% rise from the previous year. The upward revisions came even as the Toyota group cut its annual sales volume forecast to 11.23 million units from 11.38 million, affected by recent quality scandals involving group firms Daihatsu Motor Co. and Toyota Industries Corp.
The group firms were found to have rigged data for safety and engine output tests, resulting in a shipment halt of some Toyota cars. Auto analysts have said workers at those companies were under pressure to keep up with Toyota’s high pace of production.

Long-distance race

“It’s been a short-distant sprint, and some suppliers were feeling strained,” Toyota Executive Vice President Yoichi Miyazaki told reporters. “We hope to review our cruising speed to run a long-distance race.”
For 2023, the Toyota group sold a record 11.23 million vehicles, topping the global auto sales ranking for the fourth consecutive year by beating Volkswagen AG of Germany, which sold 9.24 million cars.
“Sales of hybrid cars are on the rise in all the regional segments,” Miyazaki explained. “Our customers continue to ride them as the optimized solution” to environmental issues.
The company’s sales of gasoline-electric hybrid cars increased by 37.9% to 2.65 million units for the first nine months of the fiscal year 2023-2024, despite a slowing global sales trend for all-electric vehicles.
Despite the upbeat outlooks, the company is still uncertain as it does not know how long production and shipment halts will last at its group firms. “The number of vehicles affected by the scandals at Daihatsu and Toyota Industries will remain uncertain,” Miyazaki said. “After reviewing the current operations, we will consider the pace of our production for the next fiscal year.”

Comments

Ready to join the conversation?

You must be an active subscriber to leave a comment.

Subscribe Today

You Might Also Like