Toyota announced that it will begin manufacturing next-generation hybrid batteries in 2027, aiming to meet growing demand for hybrid vehicles. The company predicts that hybrid vehicle sales will exceed 5 million units worldwide this year, underscoring the importance of this investment. The next-generation hybrid batteries are expected to offer improved performance and lower costs, making hybrid vehicles more attractive to consumers.
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Toyota will convert existing battery production lines in Japan, with enough capacity for about 600,000 vehicles, to manufacture the new battery packs. The move is strategic as the company seeks to maintain its leadership in the hybrid vehicle market. Takanori Azuma, Toyota’s chief accountant, said the company will expand its production capacity during 2027 and 2028, aiming to fully meet customer demand.
Although Toyota has yet to reveal the chemistry of the new batteries, the investment makes sense in the context of the company’s sales. In the first half of 2026, Toyota sold about 2.3 million hybrid vehicles worldwide, accounting for about 86% of its total electrified vehicle sales. Sales of electrified models, including hybrids, plug-in hybrids, battery electric vehicles and fuel cell vehicles, rose more than 9% year-on-year to 2.7 million units.
The surge in hybrid vehicle sales comes as Toyota's total global sales, including its Toyota and Lexus, fell about 3% to about 5 million vehicles in the January-June period, marking the first decline in two years. However, hybrid batteries remain the engine of growth, and the new batteries are designed to maintain that momentum.
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Several factors are contributing to the boom in hybrid vehicles. High fuel prices, linked to the war in Iran, have pushed consumers toward more efficient powertrains. In the United States, Toyota's largest market, the rollback of federal tax credits for electric vehicles and tighter tariff conditions have revived electric vehicle growth and boosted hybrid adoption.
Additionally, Toyota has made two of its top models, the Camry and RAV4, hybrid-only for the 2026 model year.
Sales of battery electric vehicles have also risen sharply, with 193,000 units sold in the first half representing a 135% increase year-on-year. Toyota is pushing ahead with next-generation lithium-ion batteries for these electric vehicles, promising more than 1,000 kilometers of range on the WLTP cycle, equivalent to just over 500 miles under the stricter EPA standard, by 2027.
Beyond that, the company is developing solid-state batteries capable of charging from 10 to 80% in less than 10 minutes, with production targeted between 2027 and 2028.
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Toyota executives have acknowledged that its electric vehicles need improvement to compete with advanced models from China. “We intend to work closely with our local partners, including through joint development, to strengthen our competitiveness,” Azuma said. Despite the challenges, hybrid vehicles remain the company’s main source of growth, and new-generation hybrid batteries are key to maintaining that market position.
