Toyota is set to make a bold move in the Chinese market by establishing its first independently operated plant in the country to produce Lexus electric vehicles (EVs) according to ThomasNet. Unlike its previous ventures, which relied on partnerships with local manufacturers such as GAC and FAW, this new facility will operate without any local collaborators.
Production Timeline
The factory is expected to start operations in 2027. While Toyota and Lexus have yet to make an official announcement, the move signals the company’s intent to solidify its presence in China’s rapidly growing EV market.
Lexus Goes Local
Currently, Lexus vehicles are manufactured in Japan and imported to China. The new plant will allow local production of Lexus EVs, eliminating import requirements and potentially reducing costs. This aligns with Toyota’s larger goal of transitioning all Lexus models to EVs by 2035, making the brand more competitive in an increasingly EV-focused landscape.
The Challenge for Japanese Automakers
China dominates the EV industry, producing 60% of the world’s EVs, according to the China Passenger Car Association. Meanwhile, Japanese automakers, including Toyota, have been slower to integrate clean energy technologies like EVs, plug-ins, and hybrids into their lineups compared to their Chinese and European counterparts.
Toyota’s sales in China have also faced challenges. From January to October 2024, sales dropped by 9.3% to approximately 1.41 million units, reflecting the competitive pressure from local manufacturers offering advanced and affordable EV options.
Strategic Response
Producing Lexus EVs locally could give Toyota an edge in China, where local manufacturers dominate the market with innovative and competitively priced models. This strategy also aligns with broader efforts by Japanese carmakers to adapt to the global shift toward electrification. For instance, Honda and Nissan are exploring potential mergers to strengthen their EV game, with a joint holding company expected by 2026.
Toyota’s decision to independently establish this plant underscores the importance of the Chinese market in its global EV strategy. By bringing Lexus production closer to consumers, Toyota aims to regain momentum and better compete in one of the world’s most dynamic automotive markets.
Photo: Reuters
