THE return of American automotive manufacturing has begun with a big move from the world’s largest mass manufacturer.
And it’ll result in two domestically produced models being able to skirt tariff-related cost increases.
Akio Toyoda, Chairman and Master Driver of Toyota Motor Corporation[/caption]
The Kentucky plant will see a surge of new jobs thanks to the manufacturing of these models[/caption]
Toyota’s move comes as its luxury brand Lexus prepares to move models to Japanese manufacturing plants from the Kentucky factory[/caption]
Toyota announced it will begin production of two new electric vehicles in the continental United States.
The two cars will both be electric vehicles, based on the best-selling RAV4 and Land Cruiser models.
Each electric SUV will have three rows of seating, taking the original platform’s family-trip philosophy and giving it a green twist.
The two new vehicles will be manufactured at the brand’s plant in Georgetown, Kentucky.
The automaker added that it is “strategically transitioning” production across its Kentucky and Indiana plants, suggesting more vehicles may be announced for stateside production in the future.
The move also brings more jobs back to the Kentucky plant in the wake of the next-gen Lexus ES’ manufacturing return to Japanese plants, a move announced in 2021.
This decision is part of the brand’s efforts to shift manufacturing to the United States whenever possible in an effort to avoid tariff-related cost increases, with President Donald Trump imposing a 25% tax on all foreign-made cars and their parts in March.
President Trump’s aim was to force carmakers to hire more American factory workers and bring manufacturing back to the states overall.
Many brands, including Toyota, have taken that approach in response. GM announced a nearly $1 billion plan to convert a Western New York battery plant into a V8 truck plant.
Foreign manufacturers also responded similarly, with Honda promising to build several cars in its Ohio factory and BMW actively manufacturing more models stateside.
Unfortunately, those who haven’t been as aggressive in relocating production have instead passed the cost of tariffs onto prospective purchasers.
Ford added $2,000 onto the sticker for cars made in its Mexican plants, while Volkswagen and Subaru each issued significant percentage-based price hikes in response to the tariffs, which customers have to pay.
This has had a snowball effect on the used car market, which is still recovering from a multiyear semiconductor shortage lasting from 2020 to 2023.
The shortage both increased the prices of used cars, and led to a decrease in the number of used cars currently available by nature of decreased manufacturing and purchasing of new vehicles during the shortage.
In addition to the compounding effect on the used car market, the impact of tariffs has also trickled down into the repair market, which saw an 8.5% year-over-year increase in September per YCharts.
“Tariffs are going to drive up auto costs,” car insurance analyst Michael DeLong of the Consumer Federation of America told the Daily Mail in March.
“It’s not going to be helpful to consumers. It would make auto costs increase for everyone,” he furthered at the time.
CONSUMERS HIT WITH COSTS
As the effects of President Trump’s tariffs continue to play out, a constant theme has been seen so far: consumers, not manufacturers, are paying the price in the automotive industry, even if they’re importing their own car.
An Arizona man was forced to foot a $6,000 bill simply for shipping home a vehicle he already owned and drove stateside after bringing it out of the country with him for work.
Car insurance costs are also expected to increase at least 8% nationwide by the end of 2025, with some states seeing premiums swell to as high as 13% of what they once were.
