With US President Donald Trump's tariffs reshaping the auto industry, Japanese carmakers are taking a low-profile yet strategic approach—expanding investments in the US market. However, tariffs complicate cross-border supply chains, and setting up new manufacturing facilities is a slow-moving solution.
Honda turns to Toyota for hybrid batteries amid tariff uncertainty
Honda is reportedly sourcing hybrid electric vehicle (HEV) batteries from Toyota Battery Manufacturing, North Carolina (TBMNC). The facility, which will house ten production lines, is set to produce batteries for hybrid, plug-in hybrid (PHEV), and fully electric (BEV) vehicles.
Toyota's North Carolina facility will initially produce nickel-metal hydride (NiMH) batteries, a staple in its HEV lineup. Industry experts expect the plant to later expand into lithium iron phosphate (LFP) and solid-state battery production, signaling a potential leap in EV battery technology.
Honda's reported battery deal is seen as a strategy to secure HEV supply for its US sales starting in April while minimizing exposure to Japanese and Chinese battery suppliers, both vulnerable to tariff hikes. Neither Toyota nor Honda have confirmed the agreement or shared supplier details.
Toyota-Honda collaboration deepens as hybrid demand surges
Japanese automakers have historically responded to tariffs with quiet adjustments, but the latest trade policies are drawing Toyota and Honda into closer collaboration. Industry analysts note that Japanese brands remain measured in their electrification strategies. With range anxiety persisting, Western consumers are leaning toward hybrid and plug-in hybrid vehicles—segments where Japanese automakers hold a competitive edge.
Toyota's ability to anticipate market trends is reflected in the growing popularity of hybrid models. While China's government-backed push for new energy vehicles (NEVs) has driven rapid expansion, BEV growth is slowing, with PHEVs now gaining momentum.
Trump's proposed tariffs on Canadian and Mexican imports pose a major financial risk for Japanese automakers, with analysts projecting losses of around JPY3 trillion (approx. US$20.05 billion) for Japan's six largest car manufacturers.
Honda's plans to develop a lithium battery ecosystem in Canada are now in limbo due to shifting trade policies. Meanwhile, reports indicate that the new-generation Honda Civic HEV, originally slated for production in Mexico, may instead be built in Indiana to sidestep tariff-related risks.
Article edited by Jack Wu
