Toyota to Build $1.29B Battery Factory in U.S. That Will Employ 1,750 People

Japanese car manufacturer Toyota announced plans Monday to funnel $1.29 billion into building a factory in the U.S. to produce batteries for hybrid and electric vehicles, the Associated Press reported.

While the company didn't indicate where the factory would be located, it said it will ultimately employ 1,750 people and start battery production in 2025, with plans to expand through 2031.

The $1.29 billion to be used for the new battery plant is part of $3.4 billion that Toyota plans to spend in the U.S. on vehicle batteries over the next decade. Toyota didn't say how the remaining funds would be used, but at least some of the $2.1 billion will likely be funneled into another battery factory, AP reported.

Toyota is one of a handful of companies that announced plans Monday to build new factories or raise funds as they anticipate a transition from gas-powered vehicles to electric ones.

"All of us are trying to get a fix on how customers will accept electric vehicles," Chris Reynolds, chief administrative officer for Toyota in North America, told AP. "We don't know for sure, but we have to be ready."

For more reporting from the Associated Press, see below.

Battery Installation at Toyota Factory
Japanese car manufacturer Toyota announced plans Monday to funnel $1.29 billion into building a factory in the U.S. to produce batteries for hybrid and electric vehicles. Above, a worker installs a battery into fourth-generation Toyota Prius cars on the production line at the company's Tsutsumi assembly plant in Toyota City, Aichi prefecture, Japan, on December 8, 2017. Toshifumi Kitamura/AFP via Getty Images

The moves come on top of previous plans from Ford and General Motors to build five U.S. battery factories in anticipation of the shift to electric power.

At present, only about 4.8 percent of the roughly 80 million new vehicles sold globally run solely on electricity, according to LMC Automotive.

But the consulting firm Alix Partners predicts that will rise to 11 percent in 2025 and 24 percent in 2030. If plug-in gas-electric hybrids, which can travel short distances solely on electricity, are included, that figure rises to 28 percent in 10 years.

Simultaneously, Alix Partners predicts that global sales of gas- and diesel-powered vehicles will fall from the current 89 percent to around 39 percent by 2030. Gas-electric hybrids, which run on gasoline and electricity at the same time, rise from 7 percent currently to 33 percent in 2030.

Stellantis, formerly Fiat Chrysler, and LG Energy Solution said Monday that they plan to build a battery manufacturing facility to help the automaker get 40 percent of its U.S. sales from vehicles that run at least partly on electricity by 2030. They didn't say where the plant would be.

Also Monday, the Taiwanese company that makes smartphones for Apple and others, Foxconn Technology Group, said it would produce electric cars and buses for auto brands in China, North America, Europe and other markets.

Volvo Cars on Monday unveiled more details of its initial public offering that will fund its ambitious plan to transform into an all-electric vehicle company by 2030. The Swedish auto brand, owned by Chinese carmaker Geely, said the IPO would value the company at 163-200 billion kronor ($18.8-$23 billion) when shares start trading October 28.

And Ford Motor Co. announced that it will turn a transmission factory in northwest England into a plant that will make electric power units for cars and trucks sold throughout Europe.

Most of the announcements lacked specifics such as locations, and some didn't say how many jobs would be created.

Jeff Schuster, senior vice president of forecasting for LMC Automotive, said that's because it's "in vogue" for automakers to make such announcements, which are well-received by investors. But he said the plants will be necessary, especially in the U.S., where battery manufacturing capacity was lagging Europe and China.

"Behind the scenes this has been building as we look at moving to electric vehicle technology globally," he said. "This is the foundation. You need the batteries before you can get there."

The moves come just after Ford and General Motors recently announced large investments in U.S. battery factories. GM plans to build battery plants in Ohio and Tennessee, while Ford has plans for plants in Tennessee and Kentucky.

Toyota will form a new company to run its new U.S. battery plant with Toyota Tsusho, a subsidiary that now makes an array of parts for the automaker. The company also will help Toyota expand its U.S. supply chain, as well as increase its knowledge of lithium-ion auto batteries, Toyota said Monday.

The new plant would likely be near one of the company's U.S. assembly plants in Missouri, Kentucky, Indiana, Alabama or Texas.

Toyota plans to sell 2 million zero emission hydrogen and battery electric vehicles worldwide per year by 2030. In the U.S., Toyota plans to sell 1.5 million to 1.8 million vehicles by 2030 in the U.S. that are at least partially electrified.

Reynolds said no one can predict exactly how fast the shift to battery power will happen, but he said a transition to gas-electric hybrids happened faster than Toyota anticipated when it introduced the Prius in the late 1990s. He sees hybrid and plug-in hybrids as a bridge between full internal combustion engines and battery-electric vehicles.

Now in the U.S., Toyota offers hydrogen vehicles, hybrids and plug-in hybrid powertrains. Toyota said vehicles that operate at least partially on electricity now account for about one-quarter of its U.S. sales, and it plans for that to rise to nearly 70 percent by 2030.

The company said it will have 15 battery electric vehicles for sale globally by 2025.

New Toyota Factory Announced
Toyota plans to build a $1.29 billion factory in the U.S. to manufacture batteries for gas-electric hybrid and fully electric vehicles. Charles Krupa/AP Photo