Toyota Soars on Strong Earnings and China Expansion
Toyota Motor Corporation (NYSE: TM) shares surged after the automaker released upbeat guidance and announced plans to establish a wholly-owned EV unit in China.
Strong Q3 Results
For its fiscal third quarter, Toyota reported revenue of 12.39 trillion yen ($80.95 billion), a 2.9% increase despite lower vehicle sales. Net profit soared by 62% to 2.19 trillion yen ($14.21 billion), exceeding analyst estimates of 1.17 trillion yen.
Bullish Guidance
Toyota raised its full-year fiscal 2025 profit forecast to 4.7 trillion yen ($31 billion), up from its previous outlook of 4.3 trillion yen. The revision reflects strengthening earnings power and product competitiveness.
China Expansion
In a significant move, Toyota announced plans to establish a wholly-owned company in Shanghai for the development and production of Lexus EVs and batteries. Production is scheduled to commence in 2027, with an annual capacity of 100,000 EVs.
US Battery Plant
Toyota also confirmed the opening of its $14 billion battery plant in North Carolina, its first in-house battery factory outside Japan. The plant will produce batteries for hybrid and electric vehicles sold in the US and create 5,000 new jobs.
Trade Mitigation
Toyota's localization efforts in China and the US aim to reduce trade-related risks and lower production costs. However, the question remains whether demand for EVs in the US will remain strong if tax incentives are scaled back.