Under heavy tariff pressure, Toyota (TM.US) doubles down against the trend: Throws in billions of US dollars to bet on pure electric and "Made in America".

Toyota (TM.US) is making a strong appearance at the New York International Auto Show. The Japanese carmaker achieved one of its best annual sales in the U.S. market in 2025 and had a solid start in the first quarter of 2026, easily surpassing major competitors such as Ford (F.US) and General Motors Company (GM.US). However, the focus of this year's auto show is on how Toyota will maintain its leading position in the face of rising dealer prices and gasoline prices. Interestingly, just as overall demand for electric vehicles shows signs of cooling off, Toyota is actively expanding its lineup and plans to expand its pure electric vehicle lineup to four models by the end of this year. David Christ, Vice President and General Manager of Toyota Motor Corp. Sponsored ADR North America Group, who actually oversees North American operations, said, "By the end of this year, we will increase our pure electric vehicle lineup from the current 1 model to 4 models." The newly introduced electric products cover multiple niche markets. The compact C-HR has already arrived in stores, which Christ describes as "a fun urban electric vehicle," and initial feedback from dealers and consumers has been very positive. Next up is the bZ Woodland, which is larger in size and has a more rugged style, targeting consumers who enjoy bringing outdoor equipment with them. Later this year, Toyota will also launch a pure electric version of the Highlander a seven-seat SUV that is only available as a pure electric version and will be produced in the U.S., becoming a representative of "made in America." This localization production strategy will cover multiple models, but it also comes at a high cost. Christ mentioned that Toyota is investing $13.9 billion to build a battery factory in North Carolina, and has recently announced an additional $10 billion investment in the U.S. market. Last week, they specifically allocated $1 billion to expand capacity in Kentucky and Indiana. "Our philosophy is integrated production and sales, as well as local manufacturing, so we will continue to increase our investment in the U.S. market and local manufacturing," explained Christ. Currently, about 85% of Toyota's sales in the U.S. market are produced in North America, with 55% being made in the U.S. This layout allows Toyota to better deal with tariff environments than some competitors. However, models such as the GR Corolla and the new Tacoma still rely on imports, and the cost pressure from tariffs is significant. The impact on the Tacoma produced in Mexico is particularly evident the Trump administration levies a 25% tariff on all Mexican imports of cars, and even with the use of U.S. domestic components, the cost pressure is still significant. Toyota expects its tariff costs for the fiscal year ending in March this year to reach $9 billion, ranking first among mainstream car companies operating in the U.S. "The tariff situation is severe and adds extra costs to the whole industry, but we are actively dealing with it," Christ said, also mentioning that Toyota currently has 6 models on sale priced below $35,000. "We are putting a lot of effort into maintaining affordable prices for our models, and will continue to focus on this in the future." Christ pointed out that consumer pressure to buy a car is not just about the vehicle price. "The issue is not just the price of the car, but also includes interest rates, car insurance costs, and gasoline prices, which we are highly sensitive to," therefore, Toyota will continue to offer base configuration versions to allow more consumers to choose their models regardless of the macroeconomic environment. Regarding the supply chain, Christ said that although the blockade in the Strait of Hormuz has had a "serious impact" on Toyota's car sales in the Middle East region, the company is closely monitoring the situation daily, but there have been no major supply chain disruptions as a result. At the auto show, Toyota's core growth driver is intuitively displayed: the all-new iteration of the RAV4 takes center stage, with significant updates to its powertrain, chassis, and safety systems. "The RAV4 is our flagship product," Christ said, "it is the best-selling model in the U.S. market."