According to Nikkei, Honda Motor will procure batteries for its hybrid vehicles from Toyota Motor’s U.S. plant starting in fiscal 2025, a strategic shift triggered by President Donald Trump’s tariff policies.
The deal covers batteries for approximately 400,000 vehicles, enough to supply all of Honda’s hybrid models sold in the U.S. market. Currently, Honda sources these components from Japan and China but is repositioning its supply chain as Trump’s administration implements higher tariffs.
This arrangement represents a broader trend of Japanese automakers collaborating to establish new supply networks within the U.S. Toyota is investing $14 billion in its first overseas battery facility in North Carolina, which will begin operations in April.
The partnership comes as hybrid vehicle demand grows amid headwinds for electric vehicles. S&P Global Mobility projects U.S. hybrid sales will reach 4.12 million units by 2030—2.5 times greater than 2024 levels and representing a quarter of new car sales.
Honda’s U.S. hybrid sales reached 308,000 units in 2024, accounting for 22% of total hybrid vehicles sold in the country. The company aims to increase its global hybrid sales outside China by 50% to 1.3 million units by 2030.
The arrangement benefits Toyota by adding a major customer to help offset costs for its substantial battery plant investment.
