Toyota's $1.3B Investment Charges Up Kentucky's Electric SUV Production

Feb 07, 2024 12:49 AM EST

GRAY TOYOTA ON THE ROAD — (Photo : PEXELS/ERIK MCLEAN)

Toyota shared the news about its $1.3 billion investment in a Georgetown, Kentucky, manufacturing facility. The goal is to speed up the development of an entirely new three-row electric sport utility vehicle. This newest model in Toyota's portfolio is intended only for the American market.

Toyota's $1.3 Billion Investment

Toyota's electrification ambitions, including the establishment of a plant especially for manufacturing battery cells into packs-which are required to power other electric cars in their portfolio-will be greatly aided by this investment.

According to The Associated Press, despite this significant investment, Toyota clarified that the $1 .3 billion investments would provide additional employment. The facility in Kentucky currently employs close to 9,400 people.

Toyota designates Kentucky site as the hub for the manufacturing of a future three-row battery-electric SUV that would be sold in the US. This proves Toyota's commitment to electrification on Tuesday. The project will need the factory to invest a total of $10 billion.

Toyota declined to provide additional information regarding the new SUV, such as its pricing or anticipated showroom arrival date.

Meanwhile, in October, Toyota announced plans to increase its investment in a hybrid and electric vehicle battery factory under construction in North Carolina to $8 billion, surpassing previous investment levels and anticipated job creation. The company anticipates employing over 5,000 individuals when the plant commences operations near Greensboro in 2025.

Moreover, Toyota's total investment in the facility now stands at approximately $13.9 billion. This factory will serve as a crucial supplier for Toyota's inaugural U.S.-manufactured electric vehicles, to be produced at a Kentucky facility.

Kentucky's Response to this Significant Investment

Reuters reported that the investment will bolster the Japanese carmaker's ongoing efforts in battery electric vehicle production in Kentucky. Additionally, it includes the establishment of a battery pack assembly line, with the batteries sourced from Toyota Battery Manufacturing North Carolina.

Kentucky Governor Andy Beshear expressed gratitude for Toyota's continued investment in the state. The Kentucky facility, a crucial center for the automaker, employs approximately 9,400 workers and manufactures up to 550,000 vehicles annually, including the popular Camry sedan.

Toyota also upgraded its full-year operating profit forecast by almost 9% following better-than-expected third-quarter earnings, attributed to a weaker yen and strong sales of high-margin cars and hybrid vehicles.

Toyota's Slow EV Production

As reported by Fortune, Toyota has historically been less proactive than its rivals in promoting electric vehicles. While the Japanese company has committed to introducing a range of 30 battery-powered EVs by 2030, Volkswagen aims to provide 70 all-electric models by the same year, and BMW intends to raise its share of all-electric vehicle deliveries to 50%. Bloomberg projects that 44% of passenger cars in operation will be EVs by 2040.

Both Toyota and its chairman faced shareholder criticism for the company's sluggish move towards electric vehicles. In January 2023, Toyoda relinquished his role as CEO, passing the baton to the then-Lexus president, Koji Sato, who has shown a greater inclination towards embracing battery technologies.

However, Toyoda's stance may now seem justified as global adoption of electric vehicles remains slow, while sales of the company's hybrid vehicles thrive. Sales of hybrid vehicles for the leading carmaker surged by 30% in the initial 11 months of 2023, reaching a total of 3.1 million units.