Toyota announced Friday that it will invest $360 million in its Georgetown, Kentucky, assembly plant to produce the ES there, starting in 2015.
It will be the first time Toyota has built a Lexus model in the U.S., although it does build Lexus vehicles in Canada. And a big reason for the decision is an incentive package offered by the state of Kentucky, which has been on a drive to keep the companies that have invested in the state.
According to Bloomberg, the company will receive as much as $146.5 million in tax credits, significantly bringing down the overall cost of the investment. Bloomberg reported earlier this week that Toyota would have to invest $531.2 million and add 570 full-time jobs in order to yield the full value of the package.
The company said it would create 750 new jobs to build the Lexus ES, a luxury model that is based on the Toyota Camry, also produced at the Kentucky plant. Toyota said about 50,000 Lexus vehicles a year will be produced at Georgetown, bringing the plant's total annual production capacity to more than 550,000 vehicles. It will be the first time the ES will be assembled outside of Japan.
"This is a great day for Toyota and for the commonwealth of Kentucky," the state's governor, Steve Beshear, said at a Friday news conference.
Georgetown officials have wanted to build a Lexus model for years. The factory, which opened in 1986, is Toyota's largest outside Japan. It employs about 6,600 people, and assembles the Camry, Camry Hybrid, Avalon, Avalon Hybrid and Venza and manufactures 4-cylinder and V6 engines.
In 2012, the plant produced the 25 millionth Toyota vehicle built in North America. Toyota recently said it planned to boost production capacity for the 4-cylinder engine at the plant by more than 100,000 units. The $30 million project will create another 80 new jobs.
The investment by Toyota in Kentucky comes on the heels of its newest assembly plant, in Blue Springs, Mississippi, outside Tupelo. It also joins a series of investments by global auto companies in their American plants, most of which are located in the South.
Toyota faces a stiff challenge from Volkswagen to its title as the world's biggest carmaker, but its North American production network gives it a heads up on the German auto company on this side of the Atlantic.