US economy

Toyota to invest $8bn in North Carolina battery plant

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Toyota is pouring a further $8bn into its battery manufacturing plant in North Carolina, in the largest such investment by a foreign carmaker since the US passed the Inflation Reduction Act in 2022.

The newly announced funding would take the Japanese group’s investment in the plant — one of its largest outside Japan — to about $13.9bn by 2030. It would also add about 3,000 jobs to the site it calls the “epicentre of lithium-ion battery production in North America”, bringing the total to more than 5,000.

The IRA, championed by the Biden administration, included $370bn in subsidies to build a US supply chain for green industries such as electric vehicle and battery manufacturing and swiftly decarbonise the US economy.

Toyota’s investment also rivals those made by domestic car companies; in 2021, Ford announced an $11.4bn investment in EVs and batteries in Tennessee and Kentucky.

“Today’s announcement reinforces Toyota’s commitment to electrification and carbon reduction, bringing jobs and future economic growth to the region,” Sean Suggs, president of Toyota North Carolina, said in a statement.

North Carolina offered at least $900mn in incentives for the Toyota plant, which ranks among the largest projects in the state’s history. Its relationship with Toyota began in 2017 when the Japanese carmaker was looking to build an internal combustion engine plant and ultimately chose Alabama.

“Toyota today has made a big investment that establishes North Carolina as a leader in the EV race for the future,” Rahm Emanuel, the US ambassador to Japan, told the Financial Times.

The IRA has already prompted an investment spree by Japanese manufacturers with Panasonic, Toyota, Honda, Bridgestone and others announcing additional spending plans in the US.

Japanese manufacturers had committed nearly $20bn in clean tech manufacturing in the first year after the IRA was signed into law, according to an FT analysis. Toyota’s announcement reflects the larger trend of car companies turning towards southern US states for their electrification plans.

Toyota, the world’s largest carmaker by sales, said on Tuesday that the investment would allow for an additional eight production lines making batteries for fully electric vehicles and plug-in hybrids, bringing the total number of lines to 10.

Production would be increased in a phased approach, Toyota said, with line launches planned through to 2030 to reach a total production of more than 30GWh a year.

“It’s a huge transformative opportunity that is really going to change the economic trajectory, not just of the community and region, but really of North Carolina for decades to come,” said Christopher Chung, chief executive officer of the state’s economic development arm.

Toyota’s announcement came hours after the United Auto Workers union suspended a historic six-week strike against Detroit’s Big Three carmakers that cost billions in earnings and marked an inflection point for unionisation at US EV plants, which are disproportionately located in states that are difficult to organise.

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The US car sector is also experiencing a slowdown in demand for EVs as high interest rates and macroeconomic pressures bruise consumer interest. Big carmakers including Ford, General Motors and Tesla have paused plans to expand EV production in recent weeks.

Toyota is investing heavily in battery technology as it tries to make up ground on its rivals. ​​It wants to have electrified options available for every Toyota and Lexus model globally by 2025 and has laid out plans to sell 3.5mn battery-powered vehicles every year from 2030.

It is also pouring resources into next-generation battery technology. Earlier this month the FT reported Toyota’s claims that it was close to being able to manufacture solid-state batteries at the same rate as existing batteries for EVs, marking a milestone in the global race to commercialise the technology.

Additional reporting by Leo Lewis in Tokyo


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