• The new plant is scheduled to go into production in 2027, with an initial capacity of around 100,000 units per year.
  • Toyota is set to become the second foreign automaker after to have a wholly-owned factory in China.
(A Toyota bZ3 EV on display at the April 2024 Beijing Auto Show. Image credit: CnEVPost)

Japanese auto giant Toyota will follow in Tesla's footsteps in building a wholly-owned electric vehicle (EV) plant in Shanghai to produce models from its premium Lexus brand.

Toyota and the Shanghai municipal government have reached an agreement on a carbon-neutral partnership to set up a new wholly-owned company in Jinshan district in southwest Shanghai to develop and produce Lexus EVs and batteries, according to a Chinese-language statement from Toyota China.

The new company will leverage the mature industrial chain, logistics network, talent system and market scale of Shanghai and the Yangtze River Delta region to develop a Lexus-branded battery electric vehicle (BEV) model, which is scheduled to go into production in 2027, the statement said.

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Since the Toyota Crown model entered the Chinese market in 1964, Toyota has worked with partners such as China FAW and GAC Group through joint ventures to provide reliable products and services to Chinese consumers, the company said.

Separately, Toyota said in an English-language statement that the new company will have an initial production capacity of about 100,000 units per year and will add about 1,000 new jobs in the the start-up phase.

China eased restrictions in the BEV sector in 2018, with foreign companies being allowed to run wholly-owned operations. Since 2022, China has further lifted foreign share ratio restrictions in passenger car manufacturing, allowing foreign-owned car companies to build plants in China on a wholly-owned basis.

The Tesla Shanghai factory -- located in the Lingang area in east Shanghai -- started construction on January 7, 2019 and went into operation at the end of 2019, making it the first wholly foreign-owned automobile manufacturing project in China.

Tesla Giga Shanghai began delivering Model 3 sedans in January 2020 and Model Y crossovers in January 2021 to local consumers.

The factory is now Tesla's largest in the world, with an annual capacity of about 1 million units, and not only delivers vehicles to Chinese customers, but also serves as an export hub for it.

Toyota is the world's No. 1 automaker by sales, but it is seeing a rapid decline in share in China, as are other Japanese automakers. China is Toyota's third-largest market after the US and Japan.

Today's statement confirms rumors that have been swirling since last June, when multiple reports said Toyota was seeking to build a wholly-owned EV plant in Shanghai.

In a report last July 23, local media outlet 36kr said Toyota wanted to first produce the Lexus UX hybrid and a new BEV model at the wholly-owned plant.

Lexus seeks to build wholly-owned plant in China, starting with production of UX hybrid and 1 BEV, report says