Toyota announced this week it is investing $1 billion USD to boost American production at its Kentucky and Indiana plants. The plan is to increase production levels in Kentucky of its top-selling models in the country, the RAV4 SUV and Camry sedan, and do the same on a smaller scale with the Grand Highlander in Indiana. Of the $1B investment, $800,000 will go to Kentucky, the rest to Indiana.
Toyota sold almost 480,000 units of the RAV4 compact SUV in the United States, making it the third-best selling vehicle in that market. If the automaker feels lack of availability might be keeping that impressive total even higher, it’s a no-brainer to invest in increasing production in Kentucky.
The Camry does alright for itself as well, Toyota having sold over 315,000 of them stateside last year. And in its case, ramping up production will also allow the automaker to meet demand for U.S.-made vehicles that it can export to Japan.
Toyota’s broader $10 billion USD American spending plan also includes preparing the Kentucky plant to manufacture all-electric vehicles. Demand for EVs might not be all that dynamic right now, but most automakers are taking that as a short-term phenomenon, and Toyota wants to be prepared in case onerous import tariffs on foreign-built cars stick around.
That said, in the here and now, Toyota’s new announcement has more to do with meeting growing demand for gas-engine and especially hybrid vehicles. The RAV4 lineup, recall, has gone all-hybrid for the 2026 model-year, which could all on its own boost demand that Toyota wants to be ready to meet.
Eggs in several baskets
Toyota has been vocal about pushing a diversified strategy in its transition to electrified and electric vehicles, particularly in Noth America. That earned the automaker some criticism and the charge that it was falling behind other carmakers more aggressive on the electrification front. But with demand stagnating, tariffs wreaking havoc and the U.S. administration declaring open warfare on EVs, Toyota’s strategy is looking wiser and wiser.