President Joe Biden, the self-proclaimed “car guy,” made the development of electric vehicle infrastructure a cornerstone of his economic plan.
Now, two years after his election, Biden’s push is starting to pay off as more automakers opt to manufacture their EVs in the U.S., where companies have been offered favorable tax breaks and incentives at the federal and state levels.
The latest is Japan’s Toyota Motor, which said it will produce EVs in its Kentucky factory beginning in 2025, Nikkei Asia reported Tuesday.
As part of its economic plan, the Biden administration set aside $7.5 billion to build an extensive national network of EV chargers and also made investments in EV manufacturing by providing tax credits for those purchasing certain American-made EVs and boosting local chipmaking capacity to aid the EV industry.
This led to heightened interest from American consumers, who can receive as much as $7,500 in tax credit for purchasing an EV assembled in the U.S.
Toyota will use batteries it makes in North Carolina to manufacture EVs in the Kentucky plant, keeping the process in the U.S. from end to end. The company hopes to produce about 10,000 electric SUVs a month by the end of 2025, and 200,000 EVs annually in the U.S. starting in 2026, according to Nikkei.
The factory in Kentucky will aim to boost Toyota’s role in EVs, where it has been a laggard. It is the world’s top automaker, but it produced just 24,000 EVs worldwide in 2022, compared with the 1.31 million Tesla delivered.
Not just Toyota
Toyota isn’t alone in its ambition to increase its EV footprint in the U.S. Ford was among the earliest companies to announce billions of dollars of investment in EV and battery production in Kentucky and Tennessee in 2021. The company expects to receive $7 billion in tax breaks between 2023 and 2026 from its EV operations.
More recently, EV pioneer Tesla is scaling back its battery-making operations in Germany to move “some production steps” to the U.S., Reuters reported Tuesday. The Austin-based company had initially planned to make entire batteries in Brandenburg, Germany, but has since decided to refocus on the U.S.
“The company has prioritized further production steps in the USA because tax incentives make business conditions more favorable there,” Brandenburg’s economy ministry said in a statement, according to Reuters.
While America strengthens its position as an EV manufacturing hub, some of its counterparts elsewhere aren’t warming up to the mission. South Korea last year called the U.S.’s push for domestically manufactured EVs a “betrayal” that could hurt its brands like Kia and Hyundai, which do not make such vehicles in the U.S.
The expansion has also ruffled feathers in China, where there is a massive appetite for EVs. Chinese carmaker BYD delivered 1.86 million cars in 2022, making it among the top car brands selling EVs. When Ford announced its partnership with Chinese battery maker Contemporary Amperex Technology, Chinese authorities quickly scrutinized it to ensure there was no misuse of core technologies powering the vehicles.
Toyota and Tesla did not immediately return Fortune’s request for comment made outside regular operating hours.
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