Toyota joins race to build batteries in the U.S.

·4 min read

Toyota will invest $1.3 billion to build an electric vehicle battery “megasite” near Greensboro, North Carolina, a facility that is set to employ 1,750 workers when it opens in 2025, the automaker announced Monday.

Automakers, initially dependent upon overseas suppliers, are shifting their strategy, ramping up production of electric vehicles and localizing battery production. The shift means U.S. capacity could grow enough to power 10 million vehicles or more by 2030.

While the move reflects a measure of political pressure, manufacturers also want to sidestep the logistical nightmare they have faced this year with shortages of mostly foreign-made semiconductors.

“The future of mobility is electrification, and the Greensboro-Randolph megasite is the ideal location to make that future a reality,” Ted Ogawa, the CEO of Toyota Motor North America, said Monday, hailing the area’s infrastructure and skilled workforce.

The factory will launch with four lines, each producing enough lithium-ion batteries to power 200,000 electrified vehicles, Toyota said. There will be room to add two lines later, bringing total capacity up to 1.2 million vehicles a year.

Exactly what that means wasn’t revealed, however. While some competitors, including General Motors and Volkswagen, are shifting entirely to battery-electric vehicles, Toyota plans a mixed approach.

By 2030, battery-electric vehicles are forecast to make up 15 percent of its sales — about the same as traditional gas models. The Japanese giant was a pioneer in developing electrification, and it expects traditional and plug-in hybrids to make up about two-thirds of its volume. Hydrogen fuel-cell units would make up the rest.

Long-range electric vehicles like the coming Toyota bZ4X require 60 to more than 100 kilowatt-hours of batteries. Conventional hybrids, like the Toyota Prius, get by on just a couple of kWh. Plug-in hybrids come in somewhere in between.

Toyota is by no means the only automaker adding battery production. In September, Ford said it will erect three lithium-ion battery plants: two in Kentucky and a third near Memphis, Tennessee, part of the new Blue Oval City, a 6-square-mile complex where it will build the next-generation F-150 Lightning electric pickup. Altogether, they will have 129 gigawatt-hours of annual capacity — enough for 1 million electric trucks, CEO Jim Farley said.

General Motors, meanwhile, just opened its first battery plant in Lordstown, Ohio, to supply batteries for the new GMC Hummer pickup. Three other North American battery plants will follow.

GM plans to have 30 battery-electric vehicles on sale by 2025. By comparison, only 15 of the 70 electrified vehicles Toyota plans to sell by 2025 will be pure battery-electric vehicles. The rest will be hybrids of one form or another.

Tesla, which operates the massive Gigafactory in Reno, Nevada, is adding capacity at a new assembly plant in Texas.

Stellantis and Mercedes-Benz are among other manufacturers signaling plans to add battery plants in North America. Battery suppliers like South Korea’s LG Chem are staking out a presence. Some analysts say total capacity could top a terawatt-hour, or 1,000 gigawatt-hours, by 2030 — enough for 10 million battery-electric vehicles.

Until now, most automotive batteries have come from Asia, primarily China and South Korea.

“What we have seen over the last 24 months is automakers getting much more proactive about building their own batteries as expectations for EV” sales grow, said Stephanie Brinley, the principal auto analyst for IHS Markit.

Automakers want to move production as close as possible to their assembly plants, Brinley said, “because the supply chain has become a real problem,” as the ongoing shortages of semiconductor chips has demonstrated.

“Building things close to where you need them makes a lot of sense,” she said. “You really don’t want to rely on a supply chain where all your batteries are shipped.”

There’s also a political angle. President Joe Biden has said he wants to reduce U.S. dependence on China, and Congress is considering revising sales incentives for electric vehicles, including an extra $500 in tax credits for those with U.S.-made batteries.

But automakers face challenges getting into the battery business. Among other things, they’re racing to tie down supplies of key raw materials that also may come from abroad, such as lithium, nickel and cobalt.

Over the longer term, manufacturers need to ensure that their new plants have the flexibility to switch over to next-generation batteries like solid-state cells. That technology promises to deliver longer range, shorter charging times and lower costs.

Ford officials say they believe they will be able to convert their new battery plants once solid-state technology is ready for mass production, and Toyota, GM and other manufacturers are also designing their plants to switch over.

Nissan said last month that it aims to start producing solid-state batteries in 2026, and most of its competitors hope to follow before the end of the decade.

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