Toyota is undertaking a significant strategic pivot in its US manufacturing operations. The Japanese automotive giant will cease production of the Lexus ES sedan at its Kentucky facility, reallocating resources to commence the assembly of two new electric sport utility vehicles: an EV variant of the iconic Land Cruiser and an electric version of the popular RAV4. This strategic realignment underscores Toyota's deepened commitment to electric mobility, particularly within the American market, and aims to address evolving consumer preferences and regulatory landscapes.
Toyota's Strategic Shift to Electric SUV Production in Kentucky
For a decade, the manufacturing hub in Kentucky has been dedicated to the Lexus ES. However, an evolving market, marked by a diminished appetite for sedans and a burgeoning demand for electric vehicles, has prompted Toyota to rethink its production strategy. Anonymous sources, later corroborated by Reuters, have indicated that the Kentucky plant will become the epicenter for producing electric versions of the revered RAV4 and Land Cruiser models. While Toyota's official communication confirmed the production of two new three-row electric SUVs in Kentucky, it refrained from explicitly naming the models. This decision is also influenced by the imperative to manufacture more electric vehicles within the United States to circumvent potential tariffs.
Concurrently, Toyota plans to amplify the production of its gasoline-powered Grand Highlander at another facility in Indiana, responding to robust consumer interest in the three-row SUV segment. The Indiana plant also handles the assembly of the Lexus TX. With the Lexus ES production relocating to Japan, the TX will become the sole Lexus model assembled domestically in the United States, as popular models like the NX and RX crossovers are manufactured in Canada, and other Lexus vehicles are sourced from Japan.
Historically, Toyota adopted a measured approach to electrification, prioritizing the expansion of its hybrid vehicle lineup—a strategy that has yielded considerable success. Nevertheless, the company is now making an assertive foray into the battery-electric vehicle (BEV) market. By 2027, Toyota has ambitious plans to introduce seven new electric models to the US market. The 2026 lineup is expected to feature three such models: the CH-R EV, BZ series, and BZ Woodland, with the Lexus RZ potentially adding a fourth. The CH-R represents Toyota's first instance of repurposing a gasoline-powered vehicle's nameplate for an electric counterpart. Similarly, the forthcoming Lexus ES will mark the debut of a legacy product offered with both internal combustion and electric powertrain options. The transition of models like the RAV4 and Land Cruiser to electric power signifies a monumental step, particularly given the Land Cruiser's legendary status and the RAV4's immense global popularity, even though both models currently offer hybrid versions.
Toyota's latest move reflects a calculated evolution of its global manufacturing and product strategy. By localizing EV production, particularly for its most iconic SUV lines, Toyota is not only responding to the dynamic shifts in automotive demand but also solidifying its position in the competitive electric vehicle market. This decisive action will undoubtedly influence the future landscape of electric SUVs in North America and beyond, showcasing Toyota's adaptability and forward-thinking vision.