Japanese auto giant Toyota is set to follow in Tesla’s footsteps by building a wholly-owned electric vehicle (EV) plant in Shanghai to produce models from its premium Lexus brand. This move comes as part of an agreement between Toyota and the Shanghai municipal government to establish a new carbon-neutral partnership in Jinshan district in southwest Shanghai.
The newly formed company will focus on developing and producing Lexus EVs and batteries, with plans to introduce a Lexus-branded battery electric vehicle (BEV) model into production by 2027. The plant is expected to have an initial capacity of around 100,000 units per year and will create approximately 1,000 new jobs during the start-up phase.
This development marks a significant milestone for Toyota, as it will become the second foreign automaker after Tesla to have a wholly-owned factory in China. The decision to establish a presence in Shanghai is strategic, as the city offers a mature industrial chain, logistics network, talent system, and market scale that will facilitate the company’s growth in the region.
China has been easing restrictions in the BEV sector since 2018, allowing foreign companies to operate wholly-owned operations. This move has encouraged companies like Toyota to invest in building plants in China independently. The Tesla Shanghai factory, which began operations in 2019, set the precedent for foreign-owned automobile manufacturing projects in the country.
Toyota’s decision to build a wholly-owned EV plant in Shanghai aligns with its long-standing presence in the Chinese market. The company has been providing reliable products and services to Chinese consumers since the introduction of the Toyota Crown model in 1964. By establishing a local manufacturing facility, Toyota aims to strengthen its position in China, which is currently the company’s third-largest market globally.
The announcement of the new plant in Shanghai confirms rumors that have been circulating since last June. Reports indicated that Toyota was seeking to establish a wholly-owned EV plant in Shanghai to produce the Lexus UX hybrid and a new BEV model. The company’s expansion into the Chinese market reflects its commitment to sustainability and innovation in the rapidly evolving EV sector.
Overall, Toyota’s decision to build a wholly-owned EV plant in Shanghai underscores its commitment to expanding its presence in the Chinese market and further solidifying its position as a leading automaker in the global EV industry. With plans to introduce new Lexus EV models and leverage the local resources and infrastructure in Shanghai, Toyota is poised to make significant strides in the EV market in the coming years.
