Toyota Revamps its EV Strategy as it Opens Plants in India

Toyota appears to be radically reshaping its approach to BEVs. In its yearly report, Toyota recorded a 168.4% increase in its BEV sales, representing 145,000 units in the financial year ending in 2026

The data comes as Financial Times reporting suggests Toyota is revising its cautious approach to BEVs with the company appearing to acknowledge the threat from Chinese brands who have captured market share with lower-cost electric models.

Simultaneously, Toyota is expanding its manufacturing footprint in India with three new assembly plants that will triple production capacity to one million units by 2030. 

Toyota's electric vehicle strategy

Toyota doubled EV sales in the first three months of 2026 to a record 79,002 compared with the same period last year, according to the Financial Times. The introduction of seven new models lifted its line-up of electric cars to 19.

This marks a departure from the company's focus on hybrid technology and fuel cell development. Toyota has been working on hydrogen fuel cell electric vehicles since 1992.

Chairman Akio Toyoda previously defended the environmental credentials of hybrid models over BEVs. In an interview with Automotive News in 2025, Toyoda claims: “We have sold some 27 million hybrids. Those hybrids have had the same impact as nine million BEVs on the road.”

The shift in strategy could be a response to Chinese manufacturers who are dominating global EV sales. 

US BEV production

Toyota has been ramping up its EV manufacturing capacity in the US as other companies like Stellantis and Ford have recorded writedowns. In March 2026 Toyota announced that it had invested US$800m in a Kentucky plant to "prepare for production of battery electric vehicles."

The investment was part of a larger US$1bn commitment to US manufacturing at Kentucky and Indiana plants. This could indicate Toyota is preparing for increased electric vehicle demand in North America.

According to its annual report covering the financial year 2025, Toyota reported that sales revenues in Central and South America, Oceania, Africa and the Middle East increased by ¥131.4bn (US$841m), or 3%, to ¥4,521.2bn (US$28.95bn) in 2025 compared with 2024.

Toyota's operating income in 2025 in those areas increased by ¥54.2bn (US$347.1m), or 27.4%, to ¥252.6bn (US$1.62bn) compared with 2024. The company attributed the increase in operating income mainly due to marketing efforts.

India as a Toyota hub

India has now surpassed Japan to become the third largest automobile market globally, according to information from the Indian Ministry of Road Transport and Highways. 

According to Nikkei, the two new plants will be built in the western state of Maharashtra. The first operations will begin in 2029, with the other two scheduled to start in the 2030s. Total investment is estimated at around ¥300bn (US$1.9bn).

Toyota already operates plants in Bidadi producing models like the Corolla and Camry for regional distribution.

The report from Nikkei adds that the new plants in Maharashtra will serve as export hubs. Vehicles will be supplied to both the Indian market and those in the Middle East and Africa.

Toyota Kirloskar Motor, a Toyota led joint venture with the Indian conglomerate Kirloskar Group, recorded its strongest year sales in 2025. Total sales were 388,801 units in 2025, a growth of 19% compared to the 326,329 units sold in 2024.

The expansion will triple Toyota's production capacity in the country to one million units by the 2030s according to Nikkei. 

Suzuki Motor currently manufactures a BEV for Toyota at Suzuki Motor Gujarat in India. 

Competition with Chinese manufacturers

Chinese brands such as BYD partnered with Toyota on EV research and development and battery technology in partnerships that highlight how far Chinese manufacturers have advanced in electric vehicle production.

BYD overtook Tesla earlier this year to become the world's top EV seller.

BYD's success in overtaking established carmakers could mean traditional manufacturers need to accelerate their electric vehicle programs.

Toyota's pivot towards EVs could be seen as an attempt to counter China's position in the sector.