EV Growth, US Tariffs & Iran War: Toyota's 2026 Results

Toyota has posted record sales of 10,477,000 units across its Toyota and Lexus brands, driven by strong hybrid demand and significant growth in BEV sales.

However, the Japanese carmaker faced substantial financial pressures from US tariffs totalling ¥1.4tn (US$8.9bn) in financial year 2025/26 and a projected negative ¥670bn (US$4.3bn) impact from the Iran war for the current fiscal year.

The world's largest car maker recorded operating income for financial year 2026 of ¥3.8tn (US$24.2bn), down ¥1tn (US$6.4bn) year on year.

Battery electric vehicle growth accelerates

Toyota's BEV sales recorded a 168.4% increase, representing 145,000 units in the financial year ending in 2026.

The group forecasts 243,000 BEV sales this year, suggesting continued momentum in the electric vehicle segment despite the company's historically cautious approach to BEVs.

The company recorded 4,732,000 electrified sales, including hybrid electric vehicles (HEVs), BEVs, hydrogen fuel cell vehicles and plug-in hybrid vehicles, up 106.5%.

Toyota's Accounting Group Chief Officer Takanori Azuma told shareholders that thanks to strong demand from customers, mainly in Japan and the US, vehicle sales increased.​​​​​​

Chinese brands, such as BYD, are dominating the global EV market, with BYD overtaking Tesla earlier this year to become the world's top EV seller.

Toyota, which is also a key developer of hydrogen vehicles, recorded 1,000 units in hydrogen electric vehicle sales.

Strategic shift towards electrification

On 20 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 investment in US manufacturing at Kentucky and Indiana Plants.

As other carmakers are winding up EV investments, Toyota could be positioning itself towards BEVs.

Masahiro Akita, an analyst at Bernstein, told the Financial Times: "We think 2026 is going to be the starting point for Toyota's full electric shift."

Navigating market challenges

With BEV sales growing at 168.4% and substantial manufacturing investments underway, the company appears to be making a strategic pivot towards BEVs while maintaining its leadership position in hybrid technology.

The combination of record unit sales and growing electrified vehicle adoption suggests that despite external financial pressures, customer demand for Toyota's electrified offerings remains robust across key markets.

For the fiscal year ending March 2027, Toyota is forecasting operating income of ¥3tn (US$19.4bn), representing a year-on-year decrease of ¥800bn (US$5.11bn), when taking into account the Middle East impacts and other factors.

The impact of tariffs

Takanori told shareholders that the impact of US tariffs amounted to negative US$8.9bn.

Toyota is not the only car company hit by US President Donald Trump's tariff measures. Reuters reported on 15 May 2026 that Volkswagen's CEO, Oliver Blume, said that tariffs represent a burden of US$5.88bn per year to the German carmaker.

Takanori explained to shareholders negative factors such as foreign exchange fluctuations, higher research and development expenses, increased labour costs and materials cost inflation had affected the company.

The company added this was partially offset by steady demand for hybrids.