Toyota, the world’s leading automaker, is setting its sights on expanding its electric vehicle (EV) presence in the Chinese market with the announcement of a new Lexus factory in Shanghai. Slated to commence operations in 2027, this plant marks a significant milestone in Toyota’s strategy to double its production capacity in China by the decade’s end. The factory will exclusively produce next-generation Lexus EVs, cementing the brand’s commitment to sustainability and its ambitions to dominate the world’s largest car market.
A Solo Venture in the Chinese Market
Unlike its existing joint ventures—FAW Toyota and GAC Toyota—this facility will be wholly owned by Toyota, a groundbreaking move for the Japanese automaker. The decision underscores Toyota’s confidence in China as a pivotal growth market. By stepping away from traditional partnerships, Toyota becomes the first Japanese carmaker to establish a standalone plant in China since foreign automakers were allowed to operate independently in 2018.
This shift allows Toyota to fully control its manufacturing processes, benefiting from China’s cost-effective, skilled workforce and efficient production capabilities.
Driving Lexus EV Ambitions
The Shanghai plant will play a key role in Lexus’ global electrification goals. The luxury brand has committed to achieving 100% EV sales globally by 2035 and aims to sell 1 million EVs annually by 2030. China, already Lexus’ second-largest market, will be integral to meeting these targets.
In 2023, Lexus sold approximately 180,000 vehicles in China, an impressive 3% increase over the previous year despite challenges faced by other Western automakers in the region. These promising numbers underscore the importance of the Chinese market in Lexus’ growth trajectory.
Next-Gen EVs on the Horizon
Although specific details about the factory’s production lineup remain under wraps, industry insiders speculate that it will manufacture the highly anticipated Lexus LF-ZC and LF-ZL models. These vehicles, based on an innovative EV architecture, feature modular gigacasted front, center, and rear sections that enable seamless integration of upgraded batteries.
This architecture ensures that Lexus remains at the forefront of EV technology, offering customers cutting-edge performance and efficiency. The launch of these new models, initially planned for 2026, has been rescheduled to align with the factory’s opening in 2027.
Toyota’s Long-Term Vision in China
Toyota has ambitious plans to expand its footprint in China, aiming to produce up to 3 million vehicles annually by 2030. The Shanghai plant is a cornerstone of this vision, enabling the automaker to ramp up EV production and cater to the surging demand for electric vehicles in China.
By 2027, China’s EV market is expected to have grown significantly, driven by government incentives and a rapidly evolving consumer base. For Toyota, establishing local production ensures it remains competitive against domestic automakers and global EV leaders like Tesla and BYD.
The Road Ahead
Toyota’s decision to invest heavily in a standalone Lexus EV factory in Shanghai signals its determination to lead the EV race in China and beyond. By combining cutting-edge technology, a skilled local workforce, and a growing product lineup, Toyota is positioning itself to meet the increasing demand for sustainable luxury vehicles.
As the automotive industry shifts gears towards electrification, this new factory marks the dawn of an exciting chapter for Toyota and its Lexus brand in the world’s most dynamic car market.
