Toyota Motor ( TM Quick Quote TM - Free Report) recently announced the decision to invest $3.4 billion (380 billion yen) for automotive battery development and production in the United States through 2030. The investment, which comes through Toyota’s North American arm, also involves the plan to establish a new company and build an automotive battery plant in the United States, in collaboration with Toyota Tsusho. The plant, anticipated to enter production in 2025, involves an outlay of $1.29 billion for expansion until 2031, resulting in the creation of 1,750 new jobs. The venture will initially focus on producing batteries for hybrid electric vehicles (EVs). The new company's activities will also include aiding Toyota in enhancing its local supply-chain network and production expertise related to lithium-ion automotive batteries. Specific details of the project, including the location, production capacity and business structure, are yet to be revealed by the automaker. With the aggravating climate-change concerns, automakers across the globe have been revving up their EV efforts in order to roll out more environmental-friendly vehicles on the road. The development of batteries used to power EVs has become crucial in order to decarbonize the global economy. Global automakers have enhanced their investments in battery production as they compete with the EV behemoth Tesla ( TSLA Quick Quote TSLA - Free Report) . General Motors ( GM Quick Quote GM - Free Report) is committed to its goal of providing completely carbon-free transportation, and has pledged to invest $35 billion in EVs and autonomous vehicles by 2025. Last month, Ford ( F Quick Quote F - Free Report) announced plans to spend a whopping $11.4 billion with South Korea’s SK Innovation to build battery and EV plants in Tennessee and Kentucky. Amid this changing scenario, Toyota has also been a pioneer in the mass production of solid-state batteries, revolutionizing the EV space. The latest investment is part of the global total of $13.5 billion (1.5 trillion yen) earmarked by the Japanese auto biggie last month for investment in battery development and production through 2030. Moreover, the latest project is expected to help Toyota advance its climate goals to achieve carbon neutrality in a sustainable manner. Also, the investment is expected to usher an era of more affordable EVs for U.S. consumers. Toyota’s Electrification Push
Toyota has been the king of hybrid vehicles since the introduction of its popular Prius compact vehicle. It has also been investing in fuel-cell vehicles like the Mirai, and sells the UX300e in Europe and China. However, the auto giant has been relatively slower in the adoption of EVs into its line-up, and has no pure-electric offerings at the moment. Nonetheless, the automaker is set to roll out its first all-electric line-up next year in an attempt to quell criticism that it has been slow to shift to electric cars. The automaker plans to build about 70 hybrid or electric models by 2025, of which 15 will be fully electric. Also, Toyota targets to sell 8 million partially or fully electrified vehicles by 2030, of which about 2 million will be battery-powered cars and fuel-cell vehicles, while the other 6 million will be gasoline-electric hybrids or plug-in hybrids.
The auto giant also intends to slash the cost of its batteries by 30% or more. It anticipates to achieve this goal by working on the raw materials used in the production of batteries and the way the battery cells are structured. The automaker also plans to optimize the power consumption of these batteries by 30%, starting with its upcoming compact SUV model — Toyota bZ4X. It aims to set up a total of 70 EV battery lines by 2030, capable of producing 200-gigawatt hours of battery power. Further, to cater to the surging demand for clean energy vehicles in the United States, this Zacks Rank #3 (Hold) company targets EVs to account for nearly 70% of its U.S. sales by 2030, up from almost 25% currently. The company expects it will sell as many as 1.8 million electrified vehicles in the United States by 2030, including the zero-emission models. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.