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Toyota invests in N. America, expects hybrid domination

Keywords: Tags  Toyota Motor Sales USA, Jim Lentz, North American manufacturing capacity expansion, hybrid vehicles, electric vehicles, Corinna Petry

CHICAGO — Toyota Motor Corp. has expanded its North American manufacturing footprint over the past year to boost capacity and increase exports, and an executive said it is preparing to dominate the hybrid market.

The automaker is spending $1.5 billion to open new manufacturing plants and expand existing ones, Toyota Motor Sales USA Inc. president and chief executive officer James E. Lentz said at Bank of America Merrill Lynch & Co. Inc.’s 2013 New York Auto Summit.

Toyota operates 14 plants in North America, producing 70 percent of the company’s vehicles sold here.

"Our manufacturing plants are nearing capacity. Some of the expansions help accommodate the increase in our North American-built exports, which jumped nearly 45 percent last year. We expect (export) numbers to increase again this year," Lentz told industry analysts, noting that Toyota ships U.S.-assembled vehicles to 21 countries.

"With this boost in manufacturing plants and shift needs, we added 3,500 jobs in the past 13 months," he said.

The Toyota City, Japan-based automaker has 11 Toyota and Lexus hybrid vehicles on the market. While only 3 to 3.5 percent of the global industry’s vehicle output consists of hybrid models, Toyota’s proportion is closer to 14 to 15 percent.

"We’re taking a portfolio approach, offering a variety of alternative-fuel choices, including plug-in hybrids, electric vehicles and, in 2015, our first fuel-cell hybrid," Lentz said. "We strongly believe hybrids will remain the core technology because our hybrid system can easily be adapted to other powertrains."

Toyota and Lexus sold more than 1 million hybrids worldwide last year, three years ahead of schedule. "We’re just getting started," Lentz said. "We plan on launching 20 new or redesigned hybrids globally by the end of 2015."

As corporate average fuel economy standards mandate 54.5 miles per gallon by 2025, "hybrids are going to be more accepted by the public than electric vehicles (EVs) may be today," Lentz predicted. "EVs will play a role, but until there’s a significant change in the technology of batteries, it’s not going to be major."

Lentz said he drives a Prius plug-in, averaging 74 miles per gallon. "At some point, you have to ask, ‘Why would I even consider switching to another alternative-type vehicle like an electric when I can get 74 miles per gallon (and) 700-plus miles of range?’ As more and more consumers realize that, demand is going to continue to build on hybrid," he said.

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