Has Toyota now become a battery supplier? That’s certainly the plan, as it’s set to supply fellow Japanese automaker Honda with batteries to power up around 400,000 of its hybrid vehicles sold in the U.S.
Toyota to Provide Batteries for Honda Hybrids in the U.S.
Toyota, which has a new $14 billion battery plant in North Carolina, will begin shipping batteries next month, and it looks like Honda will be its first customer. A recent Nikkei report reveals that beginning in fiscal 2025, Toyota will supply batteries for approximately 400,000 Honda hybrids sold in the U.S.
Currently, Honda uses batteries manufactured in China and Japan for the vehicles it sells in the U.S. However, like more companies, it’s preparing for changes under Trump.
In 2024, EVs and hybrids accounted for over a quarter of Honda’s electrified vehicle sales in the U.S. To be more precise, the Japanese automaker sold more than 308,500 hybrids and 40,400 EVs in the U.S. in 2024.
Automakers Brace for Further Tariff Rises
A 10 percent tariff on imports from China took effect in the U.S. earlier this month, on top of the 10 percent imposed in February. Tariffs are expected to rise even further, and with a 25 percent increase in vehicles imported from Japan, automakers are being forced to tighten up their supply chains.
A 25% tariff on Japanese vehicles, increased from the current 2.5%, is expected to cost the six major Japanese automakers around $20 billion in the U.S. Tariffs on imports from Mexico and Canada could result in an estimated $4.7 billion loss for Honda.
Partnering with Toyota to use its batteries for hybrids is a key part of Japan’s broader strategy to reduce reliance on China and other countries for batteries and emerging technologies. Toyota’s batteries will likely be used in the CR-V and other Honda hybrid models.
Toyota’s New U.S. Battery Plant Boosts Production Amid Tariff Challenges
The new Toyota Battery Manufacturing North Carolina (TBMC) plant spans over seven million square feet, roughly the size of 121 football fields. As Toyota’s first in-house battery factory outside of Japan, it could play a crucial role as Trump’s tariffs take effect.
Partnering with Honda as a buyer will help Toyota reduce costs as it increases production. Toyota aims to boost electrified vehicle (EV, PHEV, and hybrid) sales in North America from approximately 40 percent last year to 80 percent by 2030.
How-To Geek’s Take
Trump’s tariffs are already creating chaos, with nearly every automaker warning that they will push the U.S. further behind. It’s not just overseas automakers feeling the pressure, though.
The “Big Three”—GM, Ford, and Jeep maker Stellantis—all manufacture vehicles in Canada and Mexico. In January, GM reduced production at its Mexican plant, where the electric Chevy Equinox, Blazer, and Honda Prologue are built. Last month, Stellantis paused operations at its Brampton Assembly Plant in Canada, where the Jeep Compass EV production was slated to begin.
Toyota’s $14 billion investment in U.S. battery production seems to be paying off. Now, the focus shifts to introducing more EVs. After unveiling three new electric SUVs in Europe last week, including an updated bZ4X, Toyota hinted that more models are coming to the U.S. soon.
Sources: Electrek, Nikkei Asia
