Toyota is delaying its U.S. electric vehicle (EV) production timeline by more than a year, shifting plans to build a new electric SUV from Indiana to its Georgetown, Kentucky, plant. Production of this model will begin in 2028, following another three-row EV now set for late 2026. The change frees up capacity to increase the output of the gas-powered and hybrid Grand Highlander SUV, one of Toyota’s fastest-selling models. The decision comes amid softening EV demand and looming uncertainty over federal tax incentives.
Here’s why it matters:
Toyota’s move underscores a shift toward meeting near-term customer demand for hybrids and gas-powered SUVs rather than pushing forward with less predictable EV volume. For dealers, this means focusing on models that are moving quickly off lots, like the Grand Highlander, while preparing for a longer and more measured EV rollout. With federal EV incentives potentially being eliminated, Toyota’s flexible approach may help stabilize dealer profitability and inventory management in a volatile market.
Key takeaways:
- EV production pushed to 2028
Toyota postponed the launch of a new electric SUV in Kentucky to 2028, more than a year later than initially planned, signaling a recalibration of its electrification strategy in the U.S.
- Grand Highlander takes priority
The production shift allows Toyota to boost the output of the Grand Highlander, which ended June with only a three-day supply. It remains Toyota’s fastest-turning vehicle, highlighting strong consumer demand.
- EV shift from Indiana to Kentucky
Originally slated for Toyota’s Princeton, Indiana, plant, the new electric SUV will now be built alongside another delayed three-row EV in Georgetown, Kentucky, enabling production consolidation.
- EV demand remains uneven
Toyota sold fewer than 30,000 all-electric vehicles in the U.S. in 2024. In contrast, sales of hybrid and gas-powered SUVs have surged, prompting Toyota to rebalance its production strategy.
- Policy uncertainty shapes strategy
The Senate’s recent vote to end EV tax credits adds more pressure to consumer affordability. Toyota’s decision reflects growing caution as policy shifts could erode EV competitiveness in the near term.
Toyota’s focus on hybrid and gas models over all-electric vehicles demonstrates a pragmatic, demand-driven approach. Dealers can benefit by concentrating on inventory that aligns with current consumer behavior, especially as incentives for EV buyers face possible expiration.
