Toyota revealed plans to cut EV production by a third to its suppliers. The new plans include building roughly 500,000 fewer electric cars by 2026 than initially planned.
Toyota tells suppliers it plans to cut global EV production
According to Nikkei, Toyota notified suppliers of the changes on Friday, citing a slowing global EV market.
Japan’s largest automaker is lowering its global EV production goal to 1 million by 2026. The update comes after Toyota announced plans last May to sell 1.5 million EVs by 2026.
The new plans call for building 400,000 electric cars in 2025, doubling that number to 1 million by the following year.
Although Toyota is cutting EV production, it still expects a big jump in sales from the 104,018 electric cars sold in 2023. Through the first seven months of 2024, Toyota has sold about 80,000 EVs.
Toyota is notorious for its focus on hybrids. The Prius was the first mass-produced hybrid, going on sale back in 1997.
The decision mirrors similar announcements from legacy rivals, including Ford, GM, Volkswagen, and, most recently, Volvo. Several automakers now plan to use hybrids as a bridge to their next-gen electric models.
Meanwhile, Japanese rival Honda has stood by its goal of building only all-electric or fuel-cell vehicles by 2040. In May, Honda doubled its EV investments to $65 billion (10 trillion yen) through 2030 to secure a spot as the industry shifts to electric.
Honda’s first electric SUV in the US, the Prologue, just had its best sales month in the US after topping 5,000 units sold.
Electrek’s Take
Despite cutting production plans, Toyota still expects EV sales to climb significantly over the next few years.
Toyota is among several Japanese companies investing up to $7 billion (1 trillion yen) to boost domestic battery production. The move comes as Japan looks to secure a stable EV battery supply chain and move away from China or South Korea.
Toyota is expected to invest around $1.7 billion to ramp up battery output at two subsidiaries. It’s also planning a new EV battery plant in Japan to supply future Lexus electric models. The plant is slated to open by the end of 2028.
Japan’s largest automaker outlined its EV battery roadmap last year, revealing several next-gen batteries due out over the next few years.
With lower production plans, will Toyota push back battery development (again)? Toyota has been promising to launch solid-state EV batteries for years. They were first expected to hit the market in 2021, then 2022, and now it’s looking more like 2030.
As I’ve argued before, legacy automakers delaying major EV initiatives are opening the door for pure EV players like Tesla, Rivian, and Lucid to gain market share.
Even South Korea’s Hyundai and Kia are outpacing legacy rivals with affordable, long-range, fast-charging EVs covering most segments.
With many automakers adjusting their EV plans, it will be interesting to see how the market plays out over the next few years. I wouldn’t bet against those doubling down on EVs and the supporting tech.
Although most have cited a slowing market for the adjustments, EV adoption is still expected to climb rapidly over the next few years.