Toyota Secures Foothold in China's EV Market with New Lexus Factory in Shanghai

Following Tesla's China factory, Shanghai is set to welcome its second wholly foreign-owned automotive plant. According to multiple media reports, on the morning of April 22, Shanghai and Toyota Motor Corporation held a signing ceremony for their cooperation agreement. The two parties formally signed a strategic cooperation agreement, while the Shanghai Jinshan District Government and Toyota China signed a memorandum of cooperation. Additionally, Jinshan New Development Company and Lexus (Shanghai) New Energy Co., Ltd. signed an investment service agreement.

source: Lexus China 

This marks Toyota's official establishment of a wholly-owned factory in China, which will produce Lexus electric vehicles and conduct battery research and development. Through this agreement, Toyota aims to rapidly achieve its electrification and intelligent transformation strategy, introducing more electric vehicle brands better suited to both the Chinese domestic and foreign markets.

Meanwhile, Jinshan District is seizing this opportunity by establishing a special task force to promote key industries, including new energy vehicles. The district will support local enterprises in developing supply chain cooperation and fully promote the development of intelligent connected new energy vehicles, striving to create a globally influential new energy vehicle industrial base.

Why Choose Jinshan?

This decision primarily stems from Jinshan District's unique resource advantages. Shanghai and the Yangtze River Delta region represent one of China's most economically active areas and have the most complete new energy vehicle industry chain. Jinshan District, located at the geographical center of the Yangtze River Delta, is also an important manufacturing hub in Shanghai, with distinct industrial and regional advantages that can provide strong support for the latest technology development and application scenarios for Lexus's new energy projects.

Furthermore, Jinshan District offers significant spatial advantages, with continuous and well-planned industrial land that allows the project to implement its overall planning requirements efficiently and effectively reduce costs—another reason for Toyota's selection of Jinshan.

The rich industrial and regional advantages, business environment "gold card," and land resources complement each other, collectively facilitating the signing and landing of the Lexus new energy project.

Current Status of Lexus

In 2024, Lexus sold 181,906 vehicles in China, representing a 0.3% year-on-year increase. However, its progress in electrification and intelligent features has been relatively slow, which has had some impact on its market performance. The establishment of the Shanghai factory will accelerate Lexus's electric transformation, helping it keep pace with the development of the Chinese market.

According to the plan, the Lexus Shanghai factory will begin production in 2027, with an initial capacity of approximately 100,000 vehicles per year.