Toyota will invest an additional $8bn in its battery plant in North Carolina. This is the largest investment made by a foreign automaker since the US passed their Inflation Reduction Act 2022.
By 2030, the newly announced funding will bring the Japanese group’s investment in this plant – one of the largest outside Japan – to $13.9bn. The company will also create 3,000 new jobs at the plant, which it describes as the “epicentre for lithium-ion batteries in North America”. This brings the total number of employees to over 5,000.
The -IRA, promoted by the Biden Administration, included $370bn of subsidies for building a US supply network for green industries, such as electric vehicle manufacturing and battery manufacture, and quickly decarbonising the US economy.
Toyota’s investment is also comparable to those of domestic automakers; Ford announced in 2021 an investment of $11.4bn in EVs in Tennessee and Kentucky.
In a press release, Sean Suggs said that the announcement today “confirms Toyota’s commitment” to electrification, carbon reduction and future economic growth in the region.
North Carolina provided incentives worth $900mn for the Toyota factory, one of the biggest projects in state history. The relationship between Alabama and Toyota began in 2017, when Toyota was looking for a location to build a plant that would produce internal combustion engines.
Rahm Emanuel is the US ambassador in Japan. He said, “Toyota has today made a huge investment that establishes North Carolina a leader for the future in the EV Race.”
The IRA is already causing a spending spree among Japanese manufacturers. Panasonic, Toyota Honda, Bridgestone, and others have announced additional plans to spend in the US.
According to an analysis, Japanese manufacturers invested nearly $20bn into clean tech manufacturing the year following the IRA’s passage. Toyota’s announcement is part of a larger trend where car companies are turning to the southern US states as they electrify their vehicles.
Toyota, the largest automaker in the world by sales, announced on Tuesday that it would invest an additional $8 million to add eight new production lines for batteries for plug-in hybrids and fully electric vehicles. This will bring the total of 10 lines up to 10.
Toyota announced that production would increase in phases, with new lines planned to be launched until 2030, to reach an annual total of 30GWh.
Christopher Chung is the chief executive of North Carolina’s Economic Development arm. He said, “This is a transformative opportunity which will change the economic trajectory of North Carolina, not only for the community and the region but also for the next several decades.”
Toyota’s announcement comes hours after the United Auto Workers suspended an historic six week strike that cost Detroit’s Big Three automakers billions of dollars in earnings. This marked a turning point in unionisation in US EV factories, which are located disproportionately in states where it is difficult to organise.
Can foreign multinationals find opportunities in the US?
In the US, there is also a decline in demand for EVs due to high interest rates. Ford, General Motors, and Tesla are among the big carmakers that have stopped plans to increase EV production.
Toyota invests heavily in battery technologies as it attempts to gain ground on its competitors. It wants electrified versions of every Toyota and Lexus vehicle available globally by 2025.
The company is also investing in next-generation batteries. Toyota claimed earlier this month that it is close to being able manufacture solid-state battery at the same rate existing batteries for EVs. This marks a milestone in global race to commercialise technology.
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