It’s official. More than 20 years after the Japanese auto manufacturer invested $1.3 billion to build its first factory, Toyota is investing $3.6 billion to bring another vehicle assembly line to the South Side of San Antonio.
The decision comes after more than a month of local officials wooing Toyota. The state of Texas, Bexar County and City of San Antonio are putting an incentive package worth at least $303 million on the table — a combination of property tax incentives, related infrastructure promises and various grants — to get Toyota to expand in San Antonio.
Toyota announced Monday that it would move production of its Tacoma pickup truck from its Baja California plant in Mexico back to San Antonio over a four year period.
The car manufacturer had moved Tacoma production from San Antonio to Mexico in 2021. Toyota plans to double the size of its Southside plant by 2030, adding 2.5 million square feet of factory space and 2,000 new jobs.
“By expanding our San Antonio plant, we are deepening our commitment to American manufacturing, creating meaningful and sustainable jobs, while advancing our mission to deliver high-quality vehicles that meet the changing needs of customers today and into the future,” said Ted Ogawa, Toyota’s North American president and CEO, in a statement.
What kind of factory is San Antonio getting?
Toyota already makes the Tundra and Sequoia models in San Antonio and will start producing rear axles for vehicles later this year.
The massive incentive package offered to Toyota to bring the Tacoma back to town comes with strings attached. The car manufacturer must pay workers at least $32.46 an hour — the county’s average annual wage — as part of its agreement with the city.
The city will use bonuses, overtime and shift differentials to calculate the total cash value of Toyota’s pay to workers.
Toyota also has to use 10% of the money it saves on the city’s tax abatement for worker training, transportation or child care.
The new assembly line would generate 2,000 jobs, with 320 workers hired in 2028, 1,440 hired in 2029 and 240 hired in 2030, according to filings with the State Comptroller’s Office. Construction is expected to begin this year and would be completed by 2030.
Was there competition from other cities?
Toyota’s San Antonio investment falls in line with a $10 billion commitment to U.S. manufacturing that the company announced last year. Toyota has said other sites were considered for its additional vehicle assembly line, but did not disclose where those were.
“After a highly competitive process, this expansion highlights Toyota’s commitment to Texas as a vital hub for automotive innovation and manufacturing excellence,” Toyota officials said in a press release.
Throughout the process, public and company officials have not disclosed information about which sites were also in the running for what was called Project Orca. In its application to a state incentive program, Toyota officials said they had sent confidential information about competitor sites to state officials.
“Discussions with other communities are highly confidential and our ability to publicly disclose the extent of those discussions is limited. We note, however, that we have shared a separate confidential package containing additional information about Project Orca and the overall profile of competing sites with the Texas Comptroller’s Office,” read one of Toyota’s filings.
Bexar County officials have requested that State Attorney General Ken Paxton block records requests about negotiations with Toyota, citing state laws protecting business development negotiations.
Breaking down the incentive package
The city’s incentive package — a combination of grants, infrastructure funding plus an $88 million, 10-year tax abatement — total to $102 million. The San Antonio Water System and CPS Energy are adding $63.2 million in infrastructure support, incentive programs and savings on energy and fees.
Bexar County is throwing in $55.5 million in grants and tax abatements and the state could add in another $42.7 million in tax abatements and refunds. Bexar County and the City of San Antonio could also toss in a combined $40 to $60 million to assist with a four-lane roadway that would connect Toyota’s campus to U.S. Highway 281.
Those bits and pieces add up to an estimated value of $303 million to expand Toyota in San Antonio. Over the 10-year course of its tax abatement, city, state and county incentives could shell out more than $150,000 per job created for Toyota’s second assembly line.
Of the mammoth incentive package, $186 million is from tax abatements. Those agreements exempt Toyota from paying taxes for 10 years. It’s not money that governments are giving to Toyota, but rather money they choose not to collect. If Toyota didn’t build its new assembly line, there would be less taxes to collect. After the abatements end, that money will flow into city, county and school districts in full force.
It’s not the first time Toyota has received incentives from local governments. Toyota received incentive packages worth $30 million for its $531 million rear axle plant, which will be completed this year. Other packages were offered during plant expansions in 2010 and 2019 and when it planned its initial plant in 2003.
Toyota estimated that its total investment in San Antonio will reach $8.3 billion after its newest vehicle assembly line is built.
Other manufacturers that have come to the South Side have also received incentive packages, but amounts to far less. JCB and Navistar got incentives valued around at least $30 million each, respectively.
Outside of San Antonio, Toyota began production at a $13.9 billion battery plant in North Carolina in 2025. It’s also invested $800 million to start RAV4 Hybrid production in Kentucky and $200 million to expand Grand Highlander production in Indiana, as well as almost $1 billion to expand hybrid vehicle production across five facilities.
