The Japanese automaker is boosting hybrid and EV output in the U.S., while streamlining Lexus production in response to shifting demand and steep tariffs.
Toyota Motor will produce two new three-row battery electric SUVs at its Kentucky plant as part of a strategy to streamline U.S. operations.
The move includes a production reshuffle between Toyota’s Kentucky and Indiana facilities, with Indiana continuing to assemble the Grand Highlander at its west plant and adding output at its east plant, Reuters reported, citing an emailed statement from the company.
The EVs planned for Kentucky will reportedly be based on the RAV4 and Land Cruiser. At the same time, Toyota will apparently end production of the Lexus ES sedan in Kentucky after completing current orders, shifting the next-generation model due next year to Japan, a plan first announced in 2021.
Toyota currently builds Lexus ES sedans in Kentucky and Lexus TX SUVs in Indiana.
The Nikkei noted that Toyota will consolidate its two Lexus plants in the U.S. into one to address high tariffs imposed under the Trump administration. After the consolidation, Indiana will become the automaker’s sole Lexus site in the U.S., while two Lexus models will continue to be produced in Canada.
Toyota’s U.S. subsidiary said it selects production sites “in accordance with price ranges.”
According to the report, Toyota aims to reinforce hybrid production in the U.S., where Camry and RAV4 hybrids remain strong sellers, while exporting high-end Lexus cars from Japan.
Rising demand for hybrids contrasts with slowing EV adoption in the U.S., and Toyota plans to increase hybrid output at Kentucky once Lexus production ends.
The changes come after the Trump administration in April imposed a 25% tariff on imported cars, later reduced to 15% for Japanese vehicles and parts, which is still far above the previous 2.5% rate.
Expecting tariffs to remain high, Toyota plans to expand its U.S. output but is cautious about building new plants due to higher labor and material costs. The company said that Lexus models can remain profitable even if exported from Japan due to higher unit prices.
Other Japanese automakers are also adjusting to U.S. trade policy. Nissan shifted some Rogue SUV production to the U.S., Mazda raised prices on models such as the CX-5 in September, and Subaru increased prices earlier this year.
On Stocktwits, retail sentiment for Toyota Motor was ‘neutral’ amid ‘high’ message volume.
Toyota’s U.S.-listed stock has risen 3.2% so far in 2025.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<