Toyota ups the ante in battery arms race

Toyota is investing an additional $2.5 billion in its U.S.-based battery production facility.

Why it matters: Domestic battery production is shaping up to become a billion-dollar gold rush on the heels of the Inflation Reduction Act.

What's happening: Toyota's $2.5 billion will go to its newest battery production facility in North Carolina, and it has allocated $5.6 billion to battery production investments going forward.

• The North Carolina facility is expected to begin production on EV and hybrid batteries in 2025.
• It had initially invested $1.29 billion in the facility in 2021.

Zoom out: The battery production arms race is on in the U.S., with the recently passed IRA adding renewed urgency throughout the industry.

• Honda and Korea's LG Energy Solution said Monday they're investing $4.4 billion in a new U.S. EV battery plant likely located in Ohio, per Axios Generate.
• Ford is building two factories in Kentucky, which will be able to produce 86 gigawatt hours' worth of batteries annually.
• The IRA includes provisions for domestic battery production, including a tax credit of $35 per kWh for each U.S.-produced battery cell and $10 per kWh for U.S.-produced battery modules.
• That represents 35% of today's average cost of producing a battery cell and 33% of the cost of assembling an EV battery pack, respectively.

Yes, and: U.S.-produced critical materials and minerals also get a 10% tax credit, and the EV rebate for consumers is limited to those with U.S.-produced components.

The bottom line: Auto manufacturers are rising to meet demand as quickly as possible with a billion-dollar rapid buildout of manufacturing facilities across the country.