Toyota Motor Corporation has announced plans to reduce its electric vehicle (EV) production targets by 30% for 2026 as Japan unveils new subsidies aimed at strengthening its domestic battery supply chain.

According to a report by Nikkei Asia, Toyota has informed its suppliers that it will cut its global EV production forecast for 2026 to 1 million vehicles, down from the previously announced target of 1.5 million. The decision is reportedly driven by a slowdown in the global EV market growth.

Under the revised plan, Toyota aims to produce just over 400,000 EVs in 2025, more than doubling that number in 2026. As a result, this adjustment represents a major scaling back of the company’s previously announced EV rollout plans.

Despite the reduction, the new target still represents substantial growth compared to Toyota’s current EV sales. In 2023, the company sold around 104,018 EVs, and through the first seven months of 2024, it has already sold about 80,000 units.

As Toyota scales back its EV plans, the Japanese government is stepping up its support for the domestic battery industry. According to Reuters, Japan will provide up to 350 billion yen ($2.44 billion) in subsidies for EV battery production and related projects.The subsidies will support 12 projects for storage batteries or their components, materials, and production equipment. 

Ken Saito, Japan’s Minister of Economy, Trade and Industry, stated, “We hope that these efforts will strengthen Japan’s storage battery supply chain and the storage battery industry’s competitiveness.”

Read More: Toyota Reportedly Plans New EV Battery Plant In Fukuoka To Boost Production Capacity

In terms of Toyota’s decision, it mirrors similar moves by other major automakers including Ford, General Motors, Volkswagen, and Volvo, who have also adjusted their EV strategies in response to market conditions.

As the EV industry faces several challenges including cost concerns, buyer demand uncertainties, and infrastructure limitations, the growing competition from Chinese automakers in global markets has also put pressure on established automakers. Nevertheless, the automakers that are adjusting their short-term EV plans still have most of their long-term trajectory toward electrification intact. 

As the EV industry navigates these challenges, government support, like Japan’s battery subsidies, may play a vital role in shaping the future of EV production and adoption. In the coming years, the EV industry will likely see continued adjustments in strategy as automakers balance ambitious electrification goals with market realities.

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