Toyota Is Sending a $383 Million Lifeline To Boost Hybrid Production in the U.S.
Toyota is investing $383 million in its U.S. hybrid production. What’s the strategy here?
Written by Andrew Kidd
Reviewed by Kathleen Flear
Toyota
is ramping up its investment in hybrid powertrains in response to what it says is increased consumer demand for fuel-efficient vehicles.As reported by
Auto Finance News
, Toyota is pumping a $383 million investment to boost production of hybrid vehicles in the U.S. to help meet increased demand for fuel-efficient vehicles.Where is Toyota sending this money?
About $222 million of that investment will go to Toyota’s engine plant in Huntsville, Alabama. The funds will help the company build a new four-cylinder engine production line that can produce both internal combustion and hybrid-electric powertrains.
The facility will also be expanded by about 114,000 square feet. The Toyota Alabama plant has the capacity to produce 900,000 engines per year.
The rest will go to Toyota’s factories in Kentucky, Missouri and Tennessee, which produce four- and six-cylinder combustion engines, cylinder heads and engine blocks.
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Responding to customer demand
It’s a smart move in a time when
fuel prices
have soared and don’t seem to be dropping to more palatable levels anytime soon. The investment, per Toyota, is a response to increased customer demand for more fuel-efficient vehicles in a time when fuel prices have reached historic highs.“Toyota customers want vehicles that are fuel-efficient and electrified,” said Norm Bafunno, Toyota’s senior vice president of Unit Manufacturing and Engineering in a press release. “These investments allow us to meet customer needs and quickly respond to an evolving market. We are committed to investing in the U.S., and our teams are ready to take on this new challenge.”
Bob Carter, executive vice president of Toyota’s North American business, told Auto Finance News that it’s always been the company’s plan to manage a transition to electrified vehicles by producing hybrids and plug-in hybrids until the market is ready for battery-electric vehicles. This investment is a continuation of that plan, he added.
Why hybrids?
As Carter said, Toyota plans to transition from hybrids to EVs when the time is right. But hybrid vehicles require smaller batteries, which means fewer resources to produce. And it’s harder than ever to get a hold of the rare minerals like
cobalt
and lithium for these batteries.Hybrid vehicles have a battery that can be ten times smaller than a pure electric vehicle. Hybrids are designed to improve the efficiency of their internal combustion engine. Plug-in hybrids have bigger batteries that can power their vehicles completely for a short distance.
Transitioning—or biding time?
So is it less of a soft transition for consumers, or a way for Toyota to buy time as it invests in its own in-house battery production? If it’s the latter, then it’s a smart way to get customers in its vehicles while giving itself time to build up its own production capacity to meet increased demand.
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