Toyota Stock Rises on Positive Q3 Earnings and EV Expansion in China
Toyota (TM) shares surged in trading following strong financial results and the automaker's plans to establish a wholly-owned electric vehicle (EV) subsidiary in China.
Financial Performance
In its fiscal third quarter, Toyota reported revenue of 12.39 trillion yen ($80.95 billion), up 2.9% year-over-year despite lower vehicle sales. Net profit soared 62% to 2.19 trillion yen ($14.21 billion), exceeding analyst estimates of 1.17 trillion yen.
Toyota attributed its strong performance to factors such as "strengthening earnings power" and "product competitiveness." It now projects full-year fiscal 2025 profit of 4.7 trillion yen ($31 billion), up from its previous forecast of 4.3 trillion yen.
EV Expansion in China
Toyota's plans for China center on creating a fully-owned company for developing and producing Lexus EVs and batteries in Shanghai. The production facility, expected to begin operations in 2027, will have an annual capacity of 100,000 EVs.
"Local Chinese members will take the lead in planning and developing BEVs that match the unique needs of Chinese customers," said Toyota CFO Yoichi Miyazaki.
US Battery Plant
Toyota recently opened its $14 billion battery plant in North Carolina, its first in-house battery factory outside Japan. The plant will produce batteries for Toyota's hybrid and electric vehicles sold in the US, employing 5,000 workers.
Insulation from Tariffs
Toyota's localized production of EVs in China and the US helps protect the company from trade-related restrictions, including tariffs. This strategy minimizes production costs and diversifies the automaker's supply chain.