By Christopher Otts

LIBERTY, N.C. -- Toyota, a longtime hybrid car and truck promoter, is making one of the industry's biggest bets on green transportation and opening a $14 billion battery plant here.

For years, Toyota held out against electric vehicles while rivals retrofitted factories and launched models in preparation for an all-electric future. Now that the EV market in the U.S. is vanishing as tax credits expire and sales disappoint, Toyota is doubling down on its hybrid strategy.

The Japanese automaker's gamble: that American consumers -- many of whom won't touch an EV -- will buy increasing numbers of hybrids, which often get up to 50% better mileage than a standard gas-powered car.

Toyota also said it would invest up to $10 billion in U.S. manufacturing over the next five years in addition to the North Carolina site, where it made the largest investment in a U.S. battery-production site.

The batteries that Toyota has begun making at the sprawling plant, located between the cities of Greensboro and Raleigh, are going into hybrids assembled in Kentucky and Alabama. The complex is designed to make batteries for EVs and hybrids, including those that plug in and travel short distances on just electricity before switching to gas.

"For the longest time, folks were criticizing Toyota that they were so slow to the game in the battery-electric business," said Charlie Chesbrough, senior economist at Cox Automotive. But the strategy worked, he said. "They really did focus on the traditional hybrids, and they are dominating that whole product segment."

Today roughly half of Toyota's U.S. vehicle sales are hybrids or EVs, about double the industry's overall share. Some of the company's most popular models, such as the Camry sedan and Sienna minivan, are now sold exclusively as hybrids.

One risk for Toyota: So many rivals are refocusing on hybrids that it could get harder for its fuel-efficient models to stand out in a crowded field.

Volkswagen is developing hybrids of its bestselling U.S. vehicles, the Tiguan and Atlas, after consumers and dealers demanded them, Kjell Gruner, the German company's American chief, said at an industry conference last month. The automaker once considered hybrids an unnecessary detour on the way to full EVs.

"We thought, we'll kind of leapfrog the hybrids," Gruner said. "We can't."

Toyota has long dabbled in fully electric vehicles, from selling versions of its RAV4 SUV in the late 1990s to the low-volume bZ today. It is also planning to launch a three-row EV in the U.S. made with batteries from the new plant in North Carolina. But the company has largely hung back on full electrics while rivals such as Ford, General Motors and Volkswagen embraced them.

Toyota executives said that EVs were too costly and hard to charge for many consumers. They also argued that hybrids would fight global warming better than EVs, which have high-tech batteries that require large amounts of lithium and often pricey, rare-earth metals.

The North Carolina plant, Toyota's first battery production site outside Japan, will enable the automaker to continue its gas-electric hybrid push in the U.S. while reducing shipping distances and avoiding tariff risk. Toyota says it will supply "hundreds of thousands" of hybrid vehicles.

Next year, the company's bestselling model in the U.S., the RAV4, will shift to 100% hybrid, and Toyota plans to quadruple the number of plug-in hybrid RAV4s it sells in the U.S., to roughly 20% of the vehicle's production.

The plug-in hybrids, however, are currently imported from Japan, despite the 15% tariff, and Toyota hasn't said when it will start making plug-in hybrid batteries in North Carolina.

Write to Christopher Otts at christopher.otts@wsj.com

(END) Dow Jones Newswires

November 12, 2025 10:13 ET (15:13 GMT)

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