Japan-based Toyota Motor Corporation (JP:7203) (TM) is reportedly delaying its EV (electric vehicle) production in the U.S. to 2026 due to design modifications and a slowdown in EV sales. The timeline has also been affected by supply disruptions and governance issues.
In separate news, Toyota announced its plans to invest an additional $500 million in Joby Aviation as part of a strategic partnership focused on commercial manufacturing. With this funding, the company will assist with the certification and commercial production of Joby’s electric air taxi.
Toyota shares in Hong Kong gained 2.06% as of writing.
Toyota Faces Production Delays Amid EV Challenges
Nikkei reports that Toyota has informed its suppliers about a six-month delay in the production launch of its first battery-powered EV model at its Kentucky factory. In February 2024, the company invested $1.3 billion in its Kentucky facility for electrification initiatives, including assembling a three-row battery electric SUV for the U.S. market.
Toyota had earlier planned to launch five to seven battery EV models in the U.S. within the next two years. However, production is expected to commence in early 2026 instead of late next year.
Ongoing EV Woes Expose Industry Struggles
The delay underscores the ongoing challenges in the EV sector, marked by fierce competition and weak demand. Recently, French-Italian carmaker Stellantis N.V. (FR:STLAP) reported that it will maintain the suspension of electric Fiat 500 production due to weak EV demand in Europe. The halt has been extended from the original date of October 11 to November 1.
Last week, Toyota reported its monthly numbers for August, revealing a decline in production caused by continued challenges in China and Japan. The company’s global sales dropped 3.7% year-on-year in August, following a 0.7% increase in the prior month.
Are Toyota Shares a Good Buy?
On TipRanks, 7203 stock has received a Moderate Buy rating based on three Buy and three Hold recommendations. The Toyota share price target is ¥3,033.33, which implies 16.8% upside potential on the current levels.
