SUBARU plans to invest around 250 billion yen (S$2.7 billion) on electric-vehicle (EV) battery capacity over the next 5 years and will add an EV production line to its main factory in Gunma prefecture in Japan that should begin producing cars from 2027, the automaker said Thursday (May 12).

The new line will involve an investment of around 100 billion yen, the Nikkei reported earlier.

Japanese automakers have lagged behind global peers in rolling out electric cars and the country's EV penetration rate is barely 1 per cent. Now a catch up game of sorts is underway with Honda Motor planning to spend 5 trillion yen over the next decade to make cleaner cars and Toyota Motor investing US$624 million to make electric vehicle components in India.

Subaru, which makes almost 70 per cent of its sales in the US, aims to have 40 per cent of new global car sales be electric by 2030.

Subaru also reported full-year results on Thursday and forecast operating income for the current fiscal year that will end in March 2023 of 200 billion yen, slightly better than analyst estimates of 196 billion yen.

The automaker has started receiving orders for its Solterra model, its first all-electric SUV developed with Toyota. Subaru chief executive officer Tomomi Nakamura said last year that the company plans to "use the alliance to build up technology and know-how".

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Subaru shares jumped as much as 9.6 per cent, their biggest intraday gain in 15 months. BLOOMBERG