Toyota to roll out next-generation hybrid batteries in 2027 as it targets 5 million hybrid sales

Toyota will begin rolling out a new generation of hybrid batteries next year, the automaker said during its quarterly earnings call on Tuesday. The company will convert existing battery production lines in Japan with enough capacity for roughly 600,000 vehicles to build the new packs, which it says will deliver better performance at a lower cost.

“We are expanding battery production capacity during 2027 and 2028, and we will continue our efforts to fully capture customer demand,” Takanori Azuma, Toyota’s chief accounting officer, told investors. The company did not specify the chemistry of the new batteries or whether they represent an upgrade to its current lithium-ion cells or a different technology entirely.

The investment makes sense against the backdrop of Toyota’s sales figures. The automaker sold roughly 2,300,000 hybrid vehicles worldwide during the first six months of 2026, accounting for about 86 percent of its total electrified vehicle sales. Electrified models overall, including hybrids, plug-in hybrids, battery-electric vehicles, and fuel-cell vehicles, climbed more than nine percent year on year to 2,700,000 units.

Toyota now expects global hybrid sales to top five million units for the first time by the end of the year. The surge comes even as the company’s total global sales, including Toyota and Lexus models, fell about three percent to roughly five million vehicles during the January-to-June period, marking the first decline in two years.

Several forces are driving the hybrid boom, starting with high fuel prices linked to the war in Iran that have pushed consumers toward more efficient powertrains. In the United States, Toyota’s largest market, the rollback of federal EV tax credits and tighter tariff conditions have reset EV growth and boosted hybrid adoption. Toyota has also made two of its top sellers, the Camry and RAV4, hybrid-only for the 2026 model year.

Battery-electric vehicle sales have grown sharply too, with 193,000 units in the first half representing a 135 percent year-on-year increase. Toyota is pushing ahead with next-generation lithium-ion batteries for those EVs, promising over 1,000 kilometres of range on the WLTP cycle, equivalent to just over 500 miles under the stricter EPA standard, by 2027. Beyond that, the company is developing solid-state batteries capable of charging from 10 to 80 percent in under 10 minutes, with production targeted between 2027 and 2028.

Toyota executives acknowledged on the call that its EVs need to improve to compete with cutting-edge models from China. “We intend to work closely with our local partners, including through joint development, to strengthen our competitiveness,” Azuma said. For now, though, hybrids remain the engine of growth, and the next-generation batteries are designed to keep them there.