How Toyota's Challenging U.S. Business Could Result in a New Ford Maverick Rival

Toyota (NYSE: TM) doesn't get applauded enough for standing its ground years ago, while other global automakers touted tens of billions of dollars in electric vehicle (EV) investments. Those investments turned out poorly in some cases, including Ford Motor Company (NYSE: F), which took massive write-offs for overestimating the EV market.

Despite Toyota standing strong in support of a multi-pronged approach that shows a lot of love for hybrid vehicles, it still faces tariff challenges in its historically strong profit engines. Toyota has plans, however, and it looks to include a new factory that would help its North America business in a few ways.

Image source: Toyota.

Is Toyota expanding in Texas?

While full details about Toyota's potential upcoming Texas plant are undisclosed, more than a hint of what could be coming has leaked, and investors can discern its importance from what has been reported. Toyota filed for tax incentives in Texas for a $2 billion assembly plant next to its existing San Antonio truck factory. According to the filing, the new factory would add roughly 2,000 jobs and become Toyota's sixth U.S. assembly site, with production slated for 2030.

Toyota's current North America business is challenging. On one hand, the automaker recorded U.S. sales topping 2.5 million vehicles last year for the first time since 2007. On the other hand, in part due to a massive tariff bill, the automaker's North American profit engine flipped to a loss in fiscal 2025.

One challenging aspect of Toyota's business in the U.S. is that it's already operating at record plant efficiency levels. That means there's not much room for additional production capacity, new vehicle lines, or expanding output.

At a time when Toyota is selling well in the U.S., the lack of additional output means lost profits. The Japanese automaker is already feeling the pinch, with Lexus having its best sales year in the U.S. last year, and Toyota having its fourth-best. This made the automaker's retail inventory the tightest in the industry. That forced Toyota to limit fleet sales to 10%-12% in favor of retail sales and enabled it to spend a fraction of the incentives its competitors spent to move vehicles.

What it all means

Toyota does need an additional factory in the U.S., especially considering constrained capacity and the newly implemented tariffs it would prefer to avoid. While we don't have confirmation of what would be produced at this factory a few years down the line, Automotive News and its close relations to dealerships noted that Toyota dealers have been begging for a compact pickup to rival the Ford Maverick, with a design based on Toyota's highly popular RAV4 SUV.

That possibility would do a couple of things overall for Toyota. It would give the company greater production capacity and flexibility to introduce new products, such as a Ford Maverick rival. If that is the course the company takes, it could also take another step in turning its increasing sales into more profits, since trucks carry stronger margins than sedans. This would also enable the company to find a better balance without leaving fleet sales on the table, and to intelligently use incentives to drive sales even higher with additional production capacity.

Toyota's need for a new factory and new products seems clear, and it looks like a smart move for the automaker, which generally makes the right decisions about its global automotive empire.

Daniel Miller has positions in Ford Motor Company. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.