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Toyota Expands Lineup of ‘Tesla Killer’ EVs in US Car Market
Competitors Scale Back or Abandon Electric Vehicles
Toyota Motor Corp. is betting more Americans are ready for all-electric cars at a time when many of its rivals are hitting the brakes on battery-powered models.
The world’s largest carmaker currently offers four imported EVs, and will add a fifth this month. Production of a new U.S.-made EV will begin at its Kentucky plant later this year, followed by another model in 2027; that will bring its total battery-electric lineup in the U.S. to seven models.
Demand for EVs dropped sharply following the Trump administration’s withdrawal of tax credit and other subsidies last year, but Toyota sees sales gradually rebounding as more buyers warm to the idea of plug-in models, while the Iran conflict’s impact on fuel costs are driving more people toconsider EVs. The strategy also reflects the company’s effort to turn its dominance inhybrid gas-electricsinto a solid foothold in the EV market as it recalibrates.
“We’re coming into the marketplace with multiple options for our customers at a time when people are looking for new options,” said Mark Templin, executive vice president and chief operating officer of Toyota’s North American operations. “If we get 15% of the overall market, we should be able to get 15% of the BEV market.”
The move topress aheadwith a full lineup of electric models comes even as Toyota struggles to keep up with strong demand for its hybrids, and as many rival automakers scale back or abandon their EV ambitions. Most recently, Honda Motor Co. canceled plans for a trio of U.S.-made all-electrics andwarnedof a 2.5 trillion-yen loss on its EV business.
General Motors Co. and Ford Motor Co. have reined in their plans for the segment and even Tesla Inc. is shrinking its vehicle offerings, ending production of the Model X SUV and Model S sedan. But as others retreat, Toyota sees opportunity.
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“We’ll probably see what I call boomerang customers, people who loved Prius for being the greenest car in the industry that maybe went to a Tesla — and then we get those people back,” Templin said in an interview. “Two weeks ago in Japan, I drove three of our future battery-electric cars. They’re fantastic. And I think they’re going to be Tesla killers.”
It remains unclear whether demand will be strong enough to support the full lineup of electric models. After peaking at 10.5% of U.S. new car sales in the third quarter of last year, EVs made up only 5.8% of the market as of the end of 2025,according toCox Automotive.
Toyota’s first attempt at a mass-market EV didn’t go smoothly: The first-generation bZ4X faced an embarrassingrecallin 2022 after its wheels kept falling off. Even after sales were restarted, the car gathered dust in American showrooms while more popular hybrid models flew off dealership lots. But the latest version, renamed the bZ last year, is starting to find a groove among buyers.
Sales of the bZ and its sister Lexus model, the RZ, more than doubled last month and the bZ has outsold the Prius for the first three months of the year.
Toyota’s dealers have taken notice of the uptick in demand, and expect that momentum to continue as the company’s line-up of EVs grows.
“We used to lose money on every one of those, but this year we’re finally making some money on them,” said Steve Gates, owner of an auto group that includes Toyota and Lexus dealerships in three states. “Not a lot, but going from a loss to a profit is a big deal.”
Long criticized for its slower embrace of EVs as part of a so-called “multipathway approach,” Toyota is ramping up. In addition to the bZ and RZ compact battery-electric crossovers, Toyota sells the C-HR subcompact EV, an all-terrain fully electric SUV called the bZ Woodland and, starting this month, the electric-powered Lexus ES midsize sedan.
For its first U.S.-made EV, Toyota took the nameplate of a vehicle that was sold as a gasoline or hybrid model — the Highlander — andreimaginedit as an EV. That three-row, seven-seat SUV will be built starting later this year at an existing factory in Georgetown, Ky., alongside other non-EV models. Its powertrain will be supplied by Toyota’s new $14 billion lithium-ion battery plant in North Carolina. A second, as-yet-unnamed all-electric SUV, will be added from 2027.
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While the Japanese carmaker projects growing demand for those cars, its highest-margin and best-selling vehicles are gasoline-electric powertrains. Overall sales of electrified models — the bulk of which are hybrids — accounted for 55% of Toyota’s March sales in the U.S., up from 49% a year ago. The percentage might have been even higher, were it not for limits on the numbers of vehicles it can supply its dealers. Buyers of some of its most popular hybrids have faced months-longwaiting lists.
“We could probably take twice as many hybrids and sell them,” Templin said. “We’re running all of our plants in North America at full capacity.”
Toyota, which has been among the automakershit hardestby U.S. tariffs on imported cars and parts, haspledgedto spend some $10 billion on its U.S. manufacturing operations over the next five years. As part of that effort, it’s beendoling outbillion-dollar investments to expand several of its production facilities in the U.S. — including the factory in Kentucky, itslargestplant globally.
