Toyota Motor Corp., Japan’s largest automaker, has finalized plans to build a new plant to produce electric vehicles (EVs) at its first wholly-owned plant in China.
The company plans to secure land in downtown Shanghai and produce vehicles centered on its luxury brand Lexus, aiming for operation around 2027.
The decision comes amid a series of withdrawals by overseas automakers from the Chinese market. It appears to be the result of the interests of the Chinese government, which wants to attract foreign capital, and Toyota, which intends to operate a sole factory.
Toyota has so far carried out production in China through two joint ventures, FAW Toyota and GAC Toyota.
As of 2023, Toyota’s production in China reached 1.75 million units, and Lexus brand vehicles were mainly produced in Japan and exported to China. Lexus sales in China in 2023 were approximately 180,000 units.
This decision to build a new plant represents a major change in Toyota’s strategy for the Chinese market.
In particular, it is interpreted as an intention to increase the luxury brand Lexus’s competitiveness in the Chinese market by producing it locally.
Since 2018, the Chinese government has implemented a deregulation policy that allows foreign companies to enter the new energy vehicle sector with sole capital.
Accordingly, in the same year, US Tesla decided to enter China and independently operated an EV factory there.
China is not only the world’s largest automobile market but also has a well-established automobile parts supply chain, which gives it an advantage in terms of production efficiency. This can be seen as Toyota’s response to China’s policy changes.
The industry focuses on how Toyota’s EV production and sales strategy in China will unfold.
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