Subaru, a latecomer in the electric vehicle (EV) industry, is making rapid strides in global electrification. The company plans to start building EVs in the U.S. by 2027, with the goal of selling 400,000 battery-powered cars in the U.S. by 2028, accounting for nearly half of its current U.S. sales.
The newly appointed CEO, Atsushi Osaki, announced the plan along with the quarterly financial results. He also revealed that Subaru aims to have half of its global sales, estimated at 600,000 units, coming from full-electric models by 2030. Osaki envisions a total global sales volume of 1.2 million vehicles in that year.
In addition to increasing its EV production, Subaru plans to expand its EV lineup to eight models, up from the initial plan of four.
These new EV goals show a significant improvement from Subaru’s previous electrification plan. Initially, the company aimed to achieve global sales of 400,000 EVs annually starting in 2028 by adding a second production line in Japan. They also targeted 40 percent of global sales from EVs and hybrids by 2030.
However, Osaki stated that the demand for EVs has grown faster than anticipated, particularly over the past year. He noted that Subaru customers in the U.S. are increasingly interested in EVs, with a substantial number of Subaru drivers also owning Teslas. Osaki emphasized the need for Subaru to seize the opportunity presented by the accelerating shift towards electrification in the U.S.
In addition to meeting customer demand, another reason for Subaru’s decision to establish EV production in the U.S. is to qualify for the full $7,500 federal tax credit for EVs under the Inflation Reduction Act. This requires domestic U.S. final assembly and battery sourcing.
Subaru plans to commence in-house EV production in Japan from 2025, with a production line capable of manufacturing around 200,000 units per year. Another dedicated EV production line in Japan, with an additional capacity of 200,000 units, is planned for around 2027. In the U.S., Subaru intends to start localized EV production targeting the 2027-2028 timeframe.
The location for U.S. production is still under consideration, taking into account battery procurement and the EV supply chain logistics. Subaru is exploring the possibility of using its Indiana assembly site but is also open to other options, including potential partnerships. Panasonic is expected to be the primary battery supplier, at least initially in Japan.
Subaru’s plans for EV expansion include launching four full-electric crossovers by the end of 2026, alongside the existing Solterra model. An additional four EV models will be introduced by the end of 2028. While Osaki did not disclose specific details about the upcoming models, he hinted at the possibility of diverse body types beyond crossovers.
Regarding collaboration with Toyota, Subaru’s long-time partner, Osaki did not provide specific information about co-engineering or joint manufacturing of future EVs. Toyota is projected to produce a new three-row electric crossover in Kentucky in 2025 for Subaru soon after starting production of its own version. Osaki mentioned that Subaru is currently evaluating its approach and will likely leverage the existing collaboration with Toyota in EV manufacturing.
To ensure profitable EV output, Subaru aims to achieve a 50 percent reduction in product development and lead time, as well as production process and manufacturing time, by around 2028. Simplifying the manufacturing process through methods such as gigacasting or modularization is among the strategies being considered.
In their financial update, Subaru reported impressive profits for the first fiscal quarter ended June 30. Operating profit more than doubled, while net income more than doubled as well. Favorable foreign exchange rates and a better mix of higher-margin vehicles contributed to the strong performance. Subaru’s full fiscal-year forecasts remain unchanged, with expected increases in wholesale volume, operating profit, and net income.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
