Toyota to Invest More in US

Last month Toyota made an important announcement for the US market – they plan to spend $749m to expand their business across five States – creating 600 new jobs along the way.

In Alabama, they will expand their engine assembly plant base in Huntsville, adding the majority of jobs there. This, along with extra funding for parts manufacturing in Tennessee and Missouri will be important for them to expand full car production, which is at the core of the plan.

In Kentucky they will add capacity to build the RAV4 and Lexus ES300h models which in turn means more hybrid transaxles need to get manufactured! That means more jobs and safer ones too for the workers thanks to increasing sales. Two things are driving this expansion, the first is that the RAV4 has overtaken the Camry to be the most popular Toyota model in the US market. They have recently redesigned the vehicle and it is a sales winner. Adding the capacity to manufacture them in the US is critical to getting enough out to the dealer network.

Secondly, hybrids are the future for the Toyota group. They do not see fully electric cars as being worthwhile at the moment and even have a marketing campaign in Australia suggesting that their hybrids are more effective and easier to live with than pure plugin electric cars. Range anxiety still plays a part in choosing an electric vehicle and as many companies have reached – or are reaching – a delivery volume that reduces the US tax rebates, many buyers are more focused on a hybrid with a fuel tank.

Certainly when it comes to the RAV4 and other models, Toyota are further down the price list than a Tesla, Jaguar or other European electric vehicle and this suggests that they do not want to sell loss making cars. However selling more hybrids will improve that technology such that when the time is right, they will be able to switch over easily.

The Lexus will be the first vehicle to be added at the Kentucky plant with the RAV4 coming later – tooling will need to be installed first. Hopefully, the RAV4 will still be a winning product by the time that production line comes on stream.