TLDRs;
Contents
- Toyota has delayed U.S. EV production to 2028, shifting focus to high-demand hybrid SUVs.
- The Grand Highlander’s popularity prompted the shift in factory plans from Indiana to Kentucky.
- Weak EV demand and unclear tax credit policies influenced Toyota’s cautious approach.
- Toyota’s hybrid dominance allows it to pace EV rollout without compromising sales momentum.
Toyota Motor Corp. has postponed the start of its electric vehicle production in the United States, pushing the timeline to 2028.
Originally slated to begin earlier at the automaker’s Princeton, Indiana, facility, the electric SUV’s production will now be relocated to its Georgetown, Kentucky plant and delayed by over a year.
The decision reflects Toyota’s ongoing strategy to align its production output with consumer demand, which currently favors gas-powered and hybrid SUVs like the Grand Highlander. The company is reallocating manufacturing resources to meet this rising demand, particularly after the Grand Highlander recorded robust sales and held only a three-day supply at dealerships.
Hybrid Momentum Outpaces EV Adoption in U.S.
Toyota’s move highlights the broader slowdown in the U.S. electric vehicle market, which has seen consumer interest taper off despite significant policy support. At the same time, hybrid sales, long Toyota’s stronghold, continue to soar, providing a critical buffer for the company as it paces its transition to full battery-electric models.
Toyota’s history with hybrids, from launching the Prius in 1997 to selling over 11 million electrified vehicles since then, has helped it stay resilient amid fluctuating market conditions. The automaker’s leadership in hybrids has allowed it to delay a full EV push while competitors scramble to meet ambitious electrification goals in the face of uneven demand and changing legislation.
EV Tax Credit Uncertainty Adds to Caution
Part of Toyota’s hesitance to accelerate its EV strategy stems from uncertainty around federal and state incentives. Recent developments suggest possible changes to EV tax credit eligibility, which could impact consumer willingness to switch to fully electric models.
Meanwhile, Toyota is ramping up efforts to increase the share of plug-in hybrid EVs (PHEVs) in its U.S. sales mix, aiming for 20 percent by 2030, up from just 2.4 percent in 2024. The company has enhanced PHEV offerings like the RAV4 Prime, which now delivers up to 50 miles of electric-only range, making it a compelling alternative for consumers wary of limited EV infrastructure or range anxiety.
Strategic Flexibility, Not EV Fanaticism
Toyota’s conservative approach to electrification isn’t new. The automaker has repeatedly demonstrated a market-driven mindset rather than a tech-first strategy. This goes back to the late 1990s, when it launched the first-generation RAV4 EV in response to California’s zero-emission vehicle mandates, but produced only what the market could absorb.
This pragmatic philosophy continues to guide Toyota’s decisions today. While many automakers rushed headlong into electrification, Toyota has chosen to refine its hybrid and PHEV lineup, investing steadily in battery innovation while avoiding overexposure to a segment still in transition.
By prioritizing the high-demand Grand Highlander and rescheduling its EV debut, Toyota is betting on a measured rollout rather than a headline-grabbing surge. This approach has shielded it from some of the growing pains experienced by competitors and positioned it to adapt swiftly when EV demand gains firmer ground.
