Japan's Toyota to Invest Additional 2.75 Trillion KRW in US EV Battery Factory

Strengthening Competitiveness with IRA Benefits
Starting SUV Production from 2025

Japan's Toyota Motor Corporation announced an additional investment of 290 billion yen (2.75 trillion won) in its electric vehicle (EV) battery factory scheduled to operate in the United States in 2025. The plan aims to strengthen competitiveness in the electric vehicle sector, which has struggled so far, by leveraging the Biden administration's Inflation Reduction Act (IRA) that provides subsidies for EVs assembled in North America.

On the 1st, Nihon Keizai Shimbun reported, "This is the second time Toyota has announced additional investment," adding, "The total investment in the (EV battery) factory is expected to reach about 820 billion yen (7.79 trillion won)."

[Image source=Yonhap News]

In this announcement, Toyota also revealed for the first time its plan for an EV production plant in the United States. Toyota plans to start producing a new 3-row seat sport utility vehicle (SUV) at its Kentucky plant in 2025. The vehicle will be equipped with batteries produced at the local battery factory currently under construction.

Nikkei analyzed that the background for Toyota's full-scale entry into the U.S. market lies in the Biden administration's IRA. The Biden administration provides a subsidy of $7,500 (about 9.783 million won) only for electric vehicles using batteries and critical minerals produced in the United States, Canada, or Mexico. Additionally, the U.S. is Toyota's largest market, accounting for one-fifth of its global vehicle sales. Establishing a battery factory in the U.S. inevitably offers an advantage in capturing the local market.

Above all, Toyota has been evaluated as not standing out in the electric vehicle field so far. Last year, it sold about 24,000 electric vehicles worldwide. Toyota aims to increase its global sales to 1.5 million units annually by 2026, using U.S. subsidy support as an opportunity.

Nikkei also stated, "EVs that sell well in the U.S. are priced around $30,000 to $50,000 (40 to 66 million won), and whether subsidies are available directly affects price competitiveness," adding, "This is why automakers compete in investing in EV assembly plants and battery factories."

However, it pointed out that the Japanese auto industry's approach to the U.S. market is already behind schedule. Nikkei noted, "German Volkswagen started EV production last year, and South Korea's Hyundai Motor Group has already begun some production," emphasizing, "The Japanese auto industry is lagging in response. Currently, Nissan Motor is the only company producing EVs in the U.S."

This content was produced with the assistance of AI translation services.