Toyota is gearing up for a significant expansion of next-generation electric vehicles as it prepares to scale up the production of next-generation electric vehicles in Japan for global distribution. The company is acquiring full ownership of their 28-year-old battery-making joint venture, Primearth EV Energy Co., by buying out its longtime partner, Panasonic.

Toyota’s move is part of a drive to focus on in-house management of crucial component manufacturing, providing greater flexibility in determining output levels, costs, and battery technology. Panasonic Holdings Corp. has previously concentrated solely on producing power packs for standard and plug-in hybrids.

Starting in 2026, Toyota will expand its operations to manufacture batteries for electric vehicles (EVs) at a new factory located in its Kosai battery hub in Shizuoka prefecture. The new Arai battery plant, the company’s fourth facility, will open this year. Initially, it will focus on producing hybrid batteries and subsequently incorporate the production of plug-in hybrid and EV batteries.

Toyota currently sources its EV batteries from Prime Planet Energy, China’s CATL and BYD, and South Korea’s LG. Toyota announced that its acquisition of Panasonic’s stake in Primearth should be completed by late March.

Toyota’s sales of standard hybrids roase by 31 percent to 3.4 million vehicles in 2023, accounting for 33 percent of worldwide deliveries, up from 27 percent in 2022. Toyota sold 104,018 EVs worldwide last year, a notable increase from a mere 24,466 in 2022. In the U.S., where Toyota offers only two EV nameplates, full-electric sales amounted to 14,715. In contrast, Tesla delivered 1.8 million vehicles globally last year.

Toyota is gearing up to sell 1.5 million EVs globally in 2026, and to scale to 3.5 million a year by 2030. Initially, Toyota’s new line of EVs will be manufactured at plants in Japan for export, however, Toyota has not ruled out overseas production.