Toyota began production Wednesday at its $13.9 billion North Carolina battery plant and announced an additional $10 billion investment over five years—a massive bet on hybrid vehicles timed perfectly with the Trump administration’s rollback of EV mandates. The facility in Liberty, North Carolina, marks the world’s largest automaker’s first battery plant outside Japan and validates the company’s cautious “multi-pathway” electrification approach while competitors scramble to add hybrids after betting heavily on pure EVs.

The timing couldn’t be more strategic. Just six weeks after federal EV tax credits expired on September 30, Toyota is doubling down on the hybrid technology it never abandoned, even as U.S. EV sales collapsed 24% and traditional automakers laid off thousands of workers.

$60 Billion Total U.S. Investment Anchors Manufacturing Strategy

The 1,850-acre (749-hectare) facility will produce 30 gigawatt-hours of batteries annually at full capacity, supporting 14 production lines for hybrid electric vehicles, plug-in hybrids, and battery electric vehicles. Toyota announced the plant will create 5,100 jobs and currently employs 2,500 workers, with full buildout expected by 2030.

“Over the next five years, we are planning an additional investment of $10 billion in the U.S. to further grow our manufacturing capabilities, bringing our total investment in this country to over $60 billion,” said Ted Ogawa, president and CEO of Toyota Motor North America.

The plant, first announced in December 2021 during the Biden administration’s push to onshore battery production, will supply hybrid batteries for the Camry, Corolla Cross, and RAV4, plus a yet-to-be-announced all-electric three-row SUV. Batteries currently ship to Toyota’s Kentucky factory and the Mazda-Toyota joint venture in Alabama.

Multi-Pathway Approach Gains Political Validation

U.S. Transportation Secretary Sean Duffy attended Wednesday’s opening ceremony, praising Toyota’s strategy and signaling the administration’s support for hybrids over pure EV mandates.

“American people want hybrids and electrics, and Toyota is doing that with what the consumer wants as opposed to politics,” Duffy told attendees, according to local news reports.

Duffy also announced plans to ease fuel economy standards previously implemented under the Biden administration, which had aimed to drastically reduce fuel consumption for the 2022-2031 model years.

“We know there is no single path to progress,” Ogawa said. “That’s why we remain committed to our multi-pathway approach, offering fuel-efficient gas engines, hybrids, plug-in hybrids, battery electronics and fuel cell electronics.”

The statement reflects Toyota’s long-standing resistance to abandoning internal combustion technology entirely—a position that looked questionable when competitors raced toward all-electric futures but now appears strategically sound as policy winds shift.

Industry Rivals Pivot Back to Hybrids Post-Tax Credit Expiration

Toyota’s hybrid focus stands in sharp contrast to competitors now reversing course. Volkswagen secured a $426 million Brazilian loan for hybrid development after years of betting on pure EVs, while VW admitted its Rivian partnership technology could power internal combustion vehicles.

Other automakers like Volkswagen have signaled they will add more hybrids as the Trump administration has rescinded EV tax credits and eliminated penalties that incentivized EV sales. Ford halted F-150 Lightning production with no restart timeline, while General Motors laid off more than 3,300 EV workers and idled multiple battery plants.

Toyota has been one of the slowest automakers to move to full EVs but rapidly converted its best-selling vehicles to hybrids. In September 2024, the company reduced its 2026 EV production targets from 1.5 million to 1 million vehicles annually—a decision that now appears prescient given market conditions.

Post-Tax Credit Market Validates Cautious Strategy

The elimination of the $7,500 federal EV tax credit through President Trump’s “Big Beautiful Bill” triggered an immediate market correction. After the September 30 deadline, October EV sales plummeted from 98,289 units in September to just 74,897—a 24% collapse in a single month that validated warnings about subsidy-dependent adoption models.

Light vehicle sales overall decreased 6.5% to a seasonally adjusted annualized rate of 15.3 million units in October, marking the lowest sales pace in 15 months. The drop extended beyond EVs, with overall unadjusted light vehicle sales declining 4.5% year-over-year as economic uncertainty, labor market concerns, and the loss of tax incentives converged to suppress demand.

Toyota’s North Carolina plant opening comes as the International Energy Agency reversed its stance on peak oil demand, projecting continued petroleum consumption growth through 2050 as EV adoption slows without sustained policy support. The IEA essentially admitted that removing both purchase incentives and emissions penalties means EVs won’t displace petroleum fast enough to meet climate commitments.

Facility Details and Economic Impact

The state-of-the-art plant spans 7 million square feet across the 1,850-acre site in Randolph County, about 20 miles (32 kilometers) southeast of Greensboro. The facility operates 24/7 and will eventually house 14 battery production lines producing batteries that are approximately 80% complete when they leave North Carolina for final assembly at vehicle plants.

Beyond manufacturing, Toyota designed the facility as a “vibrant community” featuring on-site childcare, a pharmacy, medical clinic, and fitness center for employees. North Carolina Governor Josh Stein noted the state is home to more than 100,000 clean energy jobs, with Toyota’s investment strengthening the automotive supply chain.

President Trump mentioned Toyota’s $10 billion investment commitment during his trip to Japan last month, praising the company’s decision to “build where we sell.” The investment follows a broader deal between Japan and the Trump administration promising manufacturing investments in exchange for lower tariffs.

EVXL’s Take

Toyota’s North Carolina battery plant opening represents the culmination of a strategy we’ve been tracking for over a year—one that looked questionable when announced but now appears brilliantly timed.

Back in August 2024, we reported Toyota was considering converting most Toyota and Lexus models to hybrid-only versions, with hybrid sales skyrocketing from 9% of total sales in 2018 to 37% by mid-2023. While competitors rushed toward pure EV futures, Toyota methodically expanded hybrid options across its lineup—a decision that drew criticism from EV advocates but positioned the company perfectly for the post-tax credit market.

The contrast with competitors is stark. Volkswagen struggled with a 38% profit plunge even as EV deliveries rose, then pivoted to secure hundreds of millions for hybrid development after years of all-in EV bets. Meanwhile, Toyota was already manufacturing the hybrid batteries that customers actually want to buy without subsidy support.

When Trump’s “Big Beautiful Bill” eliminated the $7,500 EV tax credit effective September 30, we warned about the demand cliff that would follow. Then in October, we reported U.S. vehicle sales cratered as EV demand collapsed 24% in a single month. That’s not a market correction—that’s policy-induced destruction of consumer confidence in pure EV value propositions.

Toyota’s multi-pathway approach now looks like the only rational strategy for an industry facing regulatory whiplash. Hybrids provide meaningful emissions reductions without the range anxiety, charging infrastructure dependency, or price premium that deterred mainstream buyers even with $7,500 subsidies. Remove the subsidies, and the value proposition for many pure EVs simply evaporates.

The $10 billion additional investment signals Toyota isn’t just defending existing hybrid production—they’re expanding capacity precisely when competitors retreat. While Nissan bleeds billions betting on solid-state batteries it may not survive to commercialize, and Toyota makes promises about 40-year solid-state batteries with a decade-long history of missed targets, the North Carolina plant is producing real batteries for real vehicles customers are actually buying today.

The question facing other automakers: how much market share will they cede to Toyota while they scramble to add the hybrid technology they dismissed as “transitional” just two years ago?

What do you think? Share your thoughts in the comments below.