Honda Motor will start sourcing hybrid car batteries from Toyota’s U.S. plant in a strategic shift to guard its provide chain from new tariff insurance policies beneath President Donald Trump’s commerce insurance policies, in keeping with experiences from NikkeAsia.
Beginning in fiscal 2025, Honda will procure batteries from Toyota’s $14 billion North Carolina facility, which is about to start shipments in April. The settlement will present batteries for roughly 400,000 autos yearly—sufficient to energy all of Honda’s hybrid gross sales within the U.S. The transfer comes as Honda braces for potential tariffs that would considerably enhance prices for Japanese automakers exporting to the U.S.
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On March 4, the U.S. imposed an extra 10% tariff on all imports from China, following a earlier 10% tariff in February. President Trump has additionally signaled plans to lift tariffs on auto imports from Japan to 25%- a pointy enhance from the present 2.5%. If enacted, the tariffs might value Japanese automakers working within the U.S. an estimated $20 billion in extra levies, affecting a variety of firms, together with hybrid batteries.
Honda, which has historically sourced batteries from Japan and China, is now restructuring its provide chain to mitigate these dangers. The corporate has already shifted manufacturing of its next-generation Civic hybrid from Mexico to Indiana to keep away from potential tariffs. Extra plans embrace shifting some manufacturing from Canada and Mexico to the States, which might save Honda roughly $4.7 billion yearly in tariff prices.
For Toyota, the partnership with Honda gives vital advantages. Toyota goals to extend the share of electrified fashions—together with hybrids—in its North American gross sales from 40% in 2024 to 80% by 2030. Including Honda as a battery consumer will assist the automaker offset the huge funding in its North Carolina battery plant by rising manufacturing quantity and lowering prices.
Moreover, Hybrid car gross sales within the U.S. are rising as demand for EVs slows. S&P World Mobility initiatives that U.S. hybrid gross sales will attain 4.12 million items by 2030—2.5 instances greater than in 2024—accounting for 25% of all new automotive gross sales. Honda has already seen hybrid gross sales climb, with 308,000 hybrid autos offered in 2024, making up 22% of its U.S. gross sales. The corporate goals to extend international hybrid gross sales, excluding China, by 50% from 2024 ranges to 1.3 million items by 2030.
The broader auto business can also be adjusting provide chains in response to shifting U.S. commerce insurance policies. As an illustration, Normal Motors just lately scaled again EV manufacturing at its northern Mexico plant, whereas Stellantis suspended operations at its Ontario facility and reopened a closed manufacturing unit in Illinois to fabricate midsize pickup vehicles.
As automakers navigate the altering panorama, Honda’s collaboration with Toyota underscores the business’s push to safe home provide chains and reduce monetary dangers amid unsure commerce insurance policies.
