Toyota will begin rolling out a new generation of high-voltage batteries for hybrid vehicles next year, promising improved performance and lower costs. The company will convert existing battery production lines in Japan to manufacture these packs, with production capacity sufficient for approximately 600,000 vehicles.
Takanori Azuma, Toyota’s chief accounting officer, said during a call with investors that the company is expanding battery production capacity during 2027 and 2028 and continuing its efforts to fully respond to customer demand. Toyota has not yet disclosed the chemistry of the new batteries, so it remains unclear whether they will use an upgraded version of the current lithium-ion batteries or a different technology.
Hybrids Lead Electrified Vehicle Sales
Toyota has long relied on nickel-metal hydride batteries in its hybrid vehicles, a technology that has demonstrated high reliability over the years. However, the company has begun transitioning to lithium-ion batteries in newer models, including the sixth-generation RAV4, as advances in lithium-ion cells have enabled performance more suited to mass-market applications.
The move comes as Toyota is making a strong push toward hybrid vehicles. Sales of its electrified vehicles, including hybrids, plug-in hybrids, fully electric vehicles, and fuel-cell vehicles, rose 9.1% year over year to 2.7 million units during the first half of 2026.
Hybrid vehicles accounted for most of this growth, with Toyota selling approximately 2.3 million hybrids worldwide during the first six months of the year, equivalent to nearly 86% of its total electrified vehicle sales. The company expects global hybrid vehicle sales to exceed five million units for the first time by the end of 2026.
This coincided with a 3% decline in total global Toyota and Lexus sales to approximately five million vehicles from January through June, the first decline recorded by the company in two years. According to the source, higher fuel prices linked to the war in Iran contributed to increased global demand for electrified vehicles, while the reduction in federal tax incentives and fuel-economy standards in the United States reshaped electric vehicle growth and supported hybrid adoption. Toyota has also made the Camry and RAV4, two of its best-selling models, available only in hybrid versions.
Parallel Investments in Electric Vehicle Batteries
Toyota has not abandoned the development of electric vehicle batteries. Its global sales of fully electric vehicles rose to 193,000 units during the first half of the year, an annual increase of 135%. The company is working on next-generation lithium-ion batteries scheduled for introduction in 2027, and says they could provide a range of up to 621 miles, or 1,000 kilometers, under the optimistic WLTP testing cycle, equivalent to slightly more than 500 miles under the stricter EPA standard.
Toyota is also developing solid-state batteries that it says could enable charging the battery from 10% to 80% in less than ten minutes. These batteries are expected to arrive between 2027 and 2028, provided a production breakthrough is achieved before then.
Toyota executives acknowledged during the earnings call that its electric vehicles need to improve their competitiveness to keep pace with advanced models coming from China. Azuma said the company intends to strengthen the competitiveness of conventional vehicles and fully electric vehicles, and to work closely with local partners, including through joint development.