Toyota, the parent company of Lexus, has signed a strategic cooperation agreement with the Shanghai Municipal Government. The deal’s centrepiece is a wholly owned Lexus EV factory in the Jinshan District of Shanghai.
This will be the second wholly owned manufacturing facility in China by a foreign-owned entity; the first, of course, is Tesla’s Shanghai Gigafactory.
According to local reports, Toyota will invest $ 2.02 billion USD in the project and has already started the land acquisition process. Toyota is also aiming to exceed 95% domestic component usage in its vehicles, which will reduce the price by 15-20% for the Chinese market compared to vehicles imported into mainland China.
The Lexus facility is to be an all-encompassing factory with sales, manufacturing, research, and development located all in one central hub. The goal of the facility is to produce Lexus vehicles and advanced battery technology, which could be shared with other Toyota brands.
It remains unclear whether Toyota will export vehicles to other markets or if the facility will focus solely on the Chinese market. However, what is clear is that this pivot to China is central to Toyota’s plans to meet its sales target of 1 million EVs annually by 2030, with a global EV lineup of up to 15 models across its brands.
