Toyota Motor plans to establish a wholly owned company in Shanghai dedicated to developing and producing electric vehicles (EVs) and batteries for its luxury Lexus brand, Reuters news report said.
This strategic move marks Toyota’s first fully owned EV manufacturing venture in China, a departure from its traditional joint ventures with local partners such as FAW Group and GAC Group. The new facility is slated to commence production in 2027, with an initial annual capacity of approximately 100,000 units and the creation of about 1,000 jobs during the startup phase.
The decision of Toyota aligns with China’s policy changes since 2018, which allow foreign automakers to establish wholly owned manufacturing operations in the country. By setting up this plant, Toyota joins Tesla and Volkswagen as one of the few foreign car manufacturers with fully owned EV factories in China.
This initiative is part of Toyota’s broader strategy to strengthen its presence in the world’s largest automotive market, especially as it faces intense competition from local EV manufacturers like BYD, Chery, and Geely.
In addition to vehicle production, Toyota plans to collaborate with the Shanghai municipal government on carbon-neutral initiatives, contributing to China’s goal of achieving carbon neutrality by 2060. This partnership underscores Toyota’s commitment to environmental sustainability and its recognition of China’s pivotal role in the global automotive industry’s transition to cleaner energy sources.
China’s electric vehicle market has experienced rapid growth, establishing the country as a global leader in EV production and adoption, ft.com reported. As of 2024, approximately 60 percent of the world’s new energy vehicles, including electric and plug-in hybrid cars, are manufactured in China. This surge is driven by strong government support, substantial investments in charging infrastructure, and the emergence of competitive domestic brands.
Companies like BYD have gained significant market share, challenging traditional automakers and prompting them to accelerate their electrification efforts. The Chinese government’s commitment to carbon neutrality by 2060 further bolsters the EV sector, with policies favoring the development and adoption of electric vehicles, govt.chinadaily.com.cn report said.
Toyota’s investment in a wholly owned EV plant in Shanghai reflects its strategic response to these market dynamics, aiming to enhance its competitiveness and cater to the growing demand for premium electric vehicles in China.