Toyota Motor Corp. plans to break from its decades-old joint venture strategy in China by building its first independent factory in Shanghai, focusing on electric Lexus vehicles as other Japanese automakers retreat from the world’s largest auto market, Nikkei reported.
The plant, set to open around 2027, marks a strategic shift for Toyota in China, where it currently operates through partnerships with FAW Group and GAC Group. The decision comes as the luxury Lexus brand showed resilience in 2023, posting a 3% sales increase to 180,000 vehicles while Toyota’s overall China sales dipped 2% to 1.9 million units.
The move follows China’s 2018 regulatory changes allowing foreign automakers to fully own electric vehicle operations. While Honda and Nissan saw their Chinese sales plunge more than 10% last year amid fierce competition from local manufacturers like BYD, Toyota sees an opportunity in the premium EV segment.
The Japanese automaker’s investment aligns with Lexus’s ambitious electrification targets, including plans for all-electric lineups in China, North America, and Europe by 2030. The brand aims to achieve global EV-only sales by 2035, targeting 1 million electric vehicles annually by 2030.
Until now, Toyota has exported most Lexus vehicles to China from Japan. The new factory will leverage China’s established EV supply chain to produce luxury vehicles locally.
