Toyota Poised To Set up Lexus EV Plant in China

Toyota is reportedly set to establish a new electric vehicle (EV) factory in Shanghai, China and produce models for its Lexus luxury brand.  This is reportedly part of its strategy to regain market share from dominant Chinese EV makers like BYD.

This move marks a significant step for Toyota, which has traditionally relied on joint ventures in China, particularly with GAC Group and FAW Group. The new factory however will operate independently.

Additionally, Toyota is said to be in negotiation with the Chinese government for similar terms to Tesla in gaining tax breaks, land grants, and policy support. If granted, this would enable Toyota to directly own and control the plant without requiring a local joint venture partner - a rare privilege for foreign automakers in the Chinese market.

The Shanghai factory is expected to begin operations in 2027. Japanese automakers of late have been losing ground in China thanks to Chinese brands' early dominance in the EV sector.

In Nov, Toyota announced its ambitious target to produce at least 2.5 million vehicles annually in China by 2030 in a bid to reclaim its market share in a region. As part of this strategy, Toyota recently launched pre-orders for the Toyota bZ3X electric SUV in China, priced competitively at RMB100,000 (RM62,000).

China’s rise as the world’s largest vehicle exporter, overtaking Japan last year, underscores the growing strength of the Chinese domestic EV market. Recognising this, Toyota’s new factory and increased focus on EVs will reflect the company’s urgent need to adapt to this rapidly evolving Chinese market.