Subaru accelerates U.S. electric plans with local production and 8-model EV lineup

TOKYO – Electric-vehicle latecomer Subaru is dramatically stepping up the pace in the global electrification race with plans to build EVs in the U.S. from around 2027 and to sell some 400,000 battery-powered cars in the U.S. by 2028 – a volume amounting to nearly half its current U.S. sales.

New CEO Atsushi Osaki, in announcing the plan Wednesday with quarterly financial results, said the Japanese automaker also wants to get half its global volume – an estimated 600,000 units – from full-electric models in 2030. Osaki envisions worldwide sales of 1.2 million vehicles that year.

Subaru will also expand its EV lineup to eight models, from an earlier envisioned four.

The new EV goals are a step up from Subaru’s previous electrification plan.

As recently as May, Subaru targeted global sales of 400,000 EVs a year starting in 2028 by adding a second line in Japan. It wanted 40 percent of its global sales from EVs and hybrids in 2030.

But Osaki said the shift in demand for EVs has been faster than Subaru expected, especially over the last year. Subaru customers in the U.S., he noted, are environmentally conscious and increasingly receptive to EVs. A sizable number of Subaru drivers also own Teslas, he said.

“The U.S. market is shifting to electrification at a rapid clip, and the situation has changed considerably in just the past few months,” said Osaki, who took charge at Subaru in June from former CEO Tomomi Nakamura. “In light of the speed of the EV shift in the U.S., we think it is the time to decide on BEV production in the U.S.”

Another reason, he added, is to establish domestic U.S. final assembly and battery sourcing to qualify for the full $7,500 federal tax credit for EVs under the Inflation Reduction Act.

U.S. acceleration

The company plans to start in-house EV production in Japan from 2025, on a line with capacity for about 200,000 vehicles a year. Subaru will add another line dedicated to EV production in Japan around 2027 with an additional capacity of 200,000 vehicles.

Meanwhile in the U.S., its biggest and most profitable market, Subaru plans to start localized EV production with an eye toward more aggressive EV sales there.

Osaki said U.S. production of EVs would begin in 2027 or 2028.

Subaru was still considering the production site, while taking into account battery procurement and EV supply chain logistics, he said. In the U.S., Subaru is considering its Indiana assembly site, but it is also looking at other options, including partnerships, Osaki said.

For batteries, Subaru will lean on Panasonic, at least in Japan at first.

Subaru was still considering the production site, while taking into account battery procurement and EV supply chain logistics, he said.

On July 31, Subaru and Japanese battery giant Panasonic Corp., a key supplier to EV front-runner Tesla, said they are in talks to create a mid- to long-term partnership to supply Subaru with EV batteries.

Subaru would procure Panasonic’s next-generation cylindrical lithium ion batteries in the latter half of this decade.

A wider lineup of EV models will help propel the sales, Subaru said.

Subaru said in May it would roll out four full-electric crossovers by the end of 2026, including the existing Solterra that is a cross-badged stablemate of the Toyota bZ4X electric crossover.

Now, Subaru will add four more EVs by the end of 2028.

Osaki declined to identify the upcoming EVs. But because Subaru already unveiled plans for all-electric crossovers, he suggested the new offerings might include more diverse body types.

Osaki also declined to say to what extent Subaru’s future EVs would continue to be co-engineered or manufactured with longtime partner Toyota Motor Corp.

Toyota is expected to build a new three-row electric crossover in 2025 in Kentucky for Subaru shortly after it starts building its own version, which is tentatively called the bZ5X, said people with knowledge of the plans.

Osaki said Subaru was still considering its approach.

“As a matter of course, we have been collaborating with Toyota on BEVs for a long time,” Osaki said. “So, we will make use of that know-how in producing BEVs. We have yet to consider whether the two companies will jointly manufacture BEVs in the U.S.”

EV expansion

To eke better margins on the pricey next-generation technology, Subaru plans to achieve a 50 percent reduction in product development and lead time as well as production process and manufacturing time by around 2028. The shift will be key to ensuring profitable EV output.

“It will all come down to how simply we can produce BEVs,” Osaki said. “As part of simple manufacturing measures, giga casting is one possibility or we would proceed with modularization. There are various ways, and we are currently studying what would be best.”

Subaru said last year that it wants to derive 40 percent of its global sales from battery electrics and hybrids by 2030 and apply electrification to all models in the early 2030s.

The only electric vehicle Subaru sells in the U.S. and Europe is the Solterra, which is assembled by Toyota. Toyota has a 20 percent stake in Subaru.

Subaru's in-house production of EVs will be centered at its Gunma manufacturing complex north of Tokyo. That will begin around 2026 at Gunma’s Yajima plant on a mixed production line with internal combustion vehicles.

And from about 2027, it will churn out EVs from a dedicated line being planned for the Oizumi plant in Gunma, which makes engines and transmissions.

Subaru also plans a next-generation hybrid vehicle setup around 2025.

Those upcoming hybrids will use Toyota’s hybrid system and be made at Subaru’s Gunma complex. The site manufactures the Forester, Crosstrek, WRX, BRZ, Legacy, Outback and Impreza, giving an idea of what nameplates might be in line for electrification.

Profits soar

Osaki unveiled his new EV vision as the automaker announced soaring profits in the fiscal first quarter ended June 30.

Operating profit more than doubled to 84.5 billion yen ($584.5 million) in the three-month period, from 37.0 billion yen ($255.9 million) a year earlier. Net income also more than doubled to 73.2 billion yen ($506.4 million), from 27.2 billion yen (188.2 million) the year before. Global revenue climbed 30 percent to 1.08 trillion yen ($7.47 billion) in the quarter.

Worldwide wholesale deliveries jumped 20 percent to 236,000 vehicles in the period.

Subaru’s quarterly profit zoomed ahead on higher sales and a better mix of higher-margin vehicles. Favorable foreign exchange rates on a weaker Japanese yen also helped.

Looking ahead, Subaru kept its full fiscal-year forecasts unchanged.

It expects global wholesale volume to climb 19 percent to 1.01 million vehicles in the current fiscal year ending March 31 on better supply.

Operating profit is seen increasing 12 percent to 300.0 billion yen ($2.08 billion) in the current fiscal year. Net income is forecast to expand 4.8 percent to 210.0 billion yen ($1.45 billion).