Toyota invests $5.6 billion for battery production in U.S., Japan

Yahoo Finance Video
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Yahoo Finance's Pras Subramanian explains Toyota's latest investment in battery manufacturing.

Video Transcript

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BRIAN CHEUNG: The world's biggest car seller Toyota upping it's global investment to go carbon neutral by 2035. The automaker now pumping $5.6 billion into plans, which will include funds to build a plant near Greensboro, North Carolina. Yahoo Finance's Pras Subramanian, here on set to discuss. How much money is going into there? And what's the plan for Toyota?

PRAS SUBRAMANIAN: So, you know, its just sort of they're in the middle of their big investment cycle into going to full EVs here. I think it's $2.5 billion for the plant in North Carolina, which is in addition to the $1.9 they already earmarked for this plant. You know, it's sort of this thing where you're seeing a lot-- like, we see in this map here. It's not just Toyota, it's Honda. Earlier this week, they made a big deal with LG for a plan in the US among other automakers. So it's just sort of, you know, opening the spigot of this investment cycle into a lot of these battery plants in the US.

AKIKO FUJITA: So it's interesting to me this move, because, number one, Toyota, for many years, has resisted the idea of going all EVs. They've said hybrids are the better bet here, because it's a transition. And then they wanted to do fuel cell cars on the back end of it. Not only are they doubling down on EVs, they're also building their own batteries, which is a bit of a different approach from what the other carmakers have done.

PRAS SUBRAMANIAN: Yeah. They have a, you know, a subsidiary they're working with to do that and most other automakers are with Siemens, or LG, or Samsung. But there's a big part-- a big part of it here is the incentives that the IRA is providing, $35 per kilowatt hour and tax credits, like, just-- that's a pure profit that they can just take. So if this plant makes, let's say, enough batteries for 500,000 cars, that's around $1.75 billion in tax rate just added to the bottom line. So it does make sense as to why they want to do that in this country at least right now.

BRIAN CHEUNG: Yahoo Finance's Pras Subramanian, thanks so much. Appreciate it.