In a context of growing trade tensions, Honda plans to purchase its hybrid batteries from Toyota to bypass U.S. tariffs on battery imports from China and Japan.
According to Japanese media Nikkei, Honda is expected to procure batteries manufactured in the U.S. at the new $13.9 billion USD complex Toyota is building in North Carolina.
This strategy will allow Honda to secure supply for approximately 400,000 hybrid vehicles sold in the U.S. from the beginning of fiscal year 2025, which starts in April.
Toyota: A rapidly expanding battery giant
Toyota's 1,800-acre complex in North Carolina will be one of the largest battery production centres in North America.
- • Production capacity: 30 GWh
- • Planned completion: 2028
- • Number of jobs created: about 5,100
- • Number of buildings: 7, all dedicated to batteries
- • Production lines: 10 lines for all-electric and plug-in hybrid vehicle batteries, 4 lines for conventional hybrid batteries
The first batteries will roll off the lines this spring, with cells of two different sizes: a smartphone size for conventional hybrids, and a VHS cassette size for plug-in hybrids.
A Toyota North America spokesperson did not confirm the agreement with Honda but told Automotive News that “We are constantly evaluating our competitiveness and making decisions to support our North American operations, helping to ensure our promise of long-term employment stability. We do not comment on single transactions and have nothing to announce at this time.”
Honda: A strategic transition to sidestep trade war
Until now, Honda imported its batteries from Japan and China for its vehicles assembled in the U.S. But faced with uncertainty related to the U.S. administration’s trade policies, the manufacturer is taking proactive steps.
In addition to the partnership with Toyota, Honda recently moved production of its next-generation hybrid Civic from Mexico to Indiana, again to avoid potential tariffs.
This decision marks a strategic shift for Honda as it seeks to adapt quickly to the new rules of international trade while ensuring its local battery supply.