Toyota has announced plans to establish a wholly-owned electric vehicle (EV) plant in Shanghai, following a similar strategy by Tesla. The new facility, aimed at producing Lexus-branded battery electric vehicles (BEVs) and batteries, will be located in the Jinshan district of southwest Shanghai.
In a statement, Toyota China confirmed that it has reached an agreement with the Shanghai municipal government to form a carbon-neutral partnership for the new venture. The plant is expected to produce the first Lexus BEV model by 2027. The company highlighted that Shanghai’s mature industrial ecosystem, logistics network, and talent pool would play a key role in developing and manufacturing these vehicles.
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The factory will have an initial annual production capacity of around 100,000 units, with the creation of approximately 1,000 new jobs during its startup phase, according to a statement from Toyota. This move marks a significant step in the company’s commitment to expanding its presence in China, which remains a key market despite recent challenges in maintaining its market share.
“Since the Toyota Crown entered China in 1964, we have worked with partners like China FAW and GAC Group to provide quality products to Chinese consumers,” Toyota said in its statement. “This new project is a continuation of that commitment to the Chinese market and will play a crucial role in Toyota’s electrification strategy.”
Toyota’s decision comes after China eased restrictions on foreign companies operating wholly-owned car manufacturing plants in 2018, with further relaxation in 2022. Tesla’s Shanghai factory, which began production in late 2019, became the first wholly foreign-owned automobile manufacturing project in China and has since grown into Tesla’s largest production facility globally.
Toyota’s move is in response to its declining market share in China, where it faces growing competition from both local and international electric vehicle manufacturers. The company will seek to regain momentum in the world’s largest car market, where it is currently the third-largest market after the US and Japan.
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Toyota’s plans for the new plant were first reported in 2024, confirming rumors from previous months. Local media had speculated that the plant would initially focus on producing the Lexus UX hybrid and a new BEV model.