Toyota invests $5.6 billion in electric vehicle batteries, despite its own doubts

Toyota said in a statement about investing in a new battery plant that it is still looking for ways to meet tougher emissions regulations without relying solely on battery-powered electric vehicles.

“Toyota believes there are several options for achieving carbon neutrality. The company also believes that the means to reduce CO2 emissions as quickly as possible while preserving the livelihoods of its customers vary greatly by country and region. Toyota said in a statement. “With this in mind, Toyota will continue to make every effort to flexibly meet the needs of its various customers in all countries and regions by offering multiple powertrains and providing as many options as possible.”

Unlike battery-powered electric vehicles, which can be charged at home or at an increasing number of public charging stations, fuel cell vehicles need an entirely new refueling infrastructure that would allow them to be refueled with hydrogen. And those filling options are still very limited, especially outside of California.
Toyota’s only battery-powered electric vehicle offered in North America is the BZ4X SUV, which went on sale earlier this year. But Toyota recently had to advise its first customers not to drive because of the risk of falling wheels. The company hadn’t figured out a way to fix the problem yet, so it was forced to offer to buy the cars back from buyers.

About half of the money Toyota plans to spend on making batteries for electric vehicles will go to expanding the plant in Liberty, North Carolina, which is already under construction. The investment will raise the plant’s value from $1.3 billion to $3.8 billion.

The influx of cash will also increase the number of jobs at the plant, which is due to start production in 2025, by as much as 2,100 people. Toyota said the plant will produce batteries for both battery-powered electric vehicles and plug-in hybrid vehicles, which will have both electric motors and internal combustion engines.

It is important that Toyota increase some of the capacity of its American electric vehicle batteries. The recently passed law to increase tax credits for buyers of electric vehicles includes limits depending on where the batteries are made. This requirement requires that 50% of battery components be made or assembled in North America starting in 2023 and 60% in 2024 and 2025 in order for the vehicle to be eligible for the tax credit. This number will gradually rise to 100% in 2029. So shipping batteries from Asia to US assembly plants could deprive potential car buyers of thousands of dollars in tax breaks.

electric car battery

Automakers have been rushing to announce EV battery plans in recent months, often with different partners. Only this week Honda (HMC) announced a $4.4 billion joint investment with LG in a new battery manufacturing plant in the United States.
Besides, Hyundai said in May that he is building a battery plant in Georgia. Last year, Ford said it would invest $11.4 billion in LG SK Innovations to build three battery factories and an electric vehicle assembly plant.
Mercedes Benz opened battery plant in Alabama earlier this year. Stellantis, which was formed from the merger between Fiat Chrysler and French automaker PSA, announced last year plans for a battery plant with LG.

And GM and LG have built plants in Ohio, Tennessee and Michigan totaling $7.2 billion and are considering building a fourth plant in Indiana. Plants in Tennessee and Michigan are under construction, and the Ohio plant has recently started production.

— Matt McFarland of CNN Business and Peter Valdez-Dapena contributed to this report.

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