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Toyota Bolsters Battery Manufacturing Plant in North Carolina With $8bn Investment
Toyota is making a substantial $8bn investment in its battery manufacturing plant in North Carolina. This move marks the largest investment of its kind by a foreign carmaker since the US passed the Inflation Reduction Act in 2022.
With this newly announced funding, the Japanese group’s investment in the plant, which is one of its largest outside of Japan, will reach approximately $13.9bn by 2030. Additionally, it will create around 3,000 jobs at the site, making it the epicentre of lithium-ion battery production in North America. The total workforce will exceed 5,000.
The Inflation Reduction Act (IRA), championed by the Biden administration, includes $370bn in subsidies to develop a US supply chain for green industries, including electric vehicle and battery manufacturing. Its overarching goal is to rapidly decarbonise the US economy.
Toyota’s investment also rivals those made by domestic car companies. In 2021, Ford announced an $11.4bn investment in electric vehicles (EVs) and batteries in Tennessee and Kentucky.
Sean Suggs, president of Toyota North Carolina, stated, “Today’s announcement reinforces Toyota’s commitment to electrification and carbon reduction, bringing jobs and future economic growth to the region.”
North Carolina provided at least $900mn in incentives for the Toyota plant, making it one of the largest projects in the state’s history. This partnership between North Carolina and Toyota began in 2017 when the Japanese carmaker was searching for a location to build an internal combustion engine plant, ultimately opting for Alabama.
The US ambassador to Japan, Rahm Emanuel, commented, “Toyota today has made a big investment that establishes North Carolina as a leader in the EV race for the future.”
The IRA has already prompted a wave of investments by Japanese manufacturers, with Panasonic, Toyota, Honda, Bridgestone, and others announcing additional spending plans in the US.
According to an FT analysis, Japanese manufacturers had committed nearly $20bn to clean tech manufacturing within the first year of the IRA being signed into law. Toyota’s recent announcement aligns with the broader trend of car companies turning towards southern US states for their electrification plans.
Toyota, the world’s largest carmaker by sales, revealed that this investment will facilitate the establishment of eight more battery production lines for fully electric vehicles and plug-in hybrids. This will bring the total number of lines to 10.
Toyota plans to increase production incrementally, with several line launches scheduled up to 2030, aiming for a total annual production of over 30GWh.
Christopher Chung, CEO of North Carolina’s economic development arm, commented, “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.”
Toyota’s announcement coincided with the suspension of a historic six-week strike by the United Auto Workers union against Detroit’s Big Three carmakers. The strike had significant financial ramifications, and it marked a turning point for unionisation at US EV plants, which are predominantly situated in states that pose challenges for organisation.
The US car sector is currently experiencing a slowdown in EV demand, as high interest rates and macroeconomic pressures dampen consumer interest. Major car manufacturers such as Ford, General Motors, and Tesla have recently halted plans to expand EV production.
To catch up with its competitors, Toyota is heavily investing in battery technology. The company aims to offer electrified options across the entire Toyota and Lexus model lineup globally by 2025. Moreover, they have outlined plans to sell 3.5 million battery-powered vehicles annually starting from 2030.
Furthermore, Toyota is allocating significant resources to next-generation battery technology. Recently, the FT reported Toyota’s claim that they are close to manufacturing solid-state batteries at the same rate as existing EV batteries, demonstrating a significant milestone in the global race to commercialise this technology.
In summary, Toyota’s $8bn investment in its battery manufacturing plant in North Carolina exemplifies the company’s commitment to the electrification of vehicles and carbon reduction. This substantial investment will not only boost job creation but also position North Carolina as a leader in the EV industry. The growing trend of Japanese manufacturers investing in the US highlights the impact of the Inflation Reduction Act in encouraging green industry growth, fostering economic development, and solidifying the southern US states as key players in the electrification race.