In February 2025, Toyota Motor Corporation and the Shanghai Municipal Government reached a cooperation intention to establish Lexus (Shanghai) New Energy Co., Ltd., a Lexus pure electric vehicle and battery R&D and production company in Jinshan District, Shanghai, which is scheduled to be officially put into operation in 2027, marking an important step in Toyota's new energy strategy in China and opening a new chapter in the development of the Lexus brand in the Chinese market.
1. Strategic layout: the key to Toyota's electrification transformation
In the context of the global automotive industry's transition to electrification, Toyota Motor Corporation is actively promoting its electrification strategy. The establishment of Lexus Shanghai New Energy Company is an important layout of Toyota's electrification transformation strategy in the Chinese market. According to the official introduction, the new company will rely on the advanced and mature industrial chain foundation, logistics network, talent system and market scale in Shanghai and the Yangtze River Delta region to develop Lexus brand pure electric models, and plans to put into production in 2027, with an initial production capacity of about 100,000 units per year, and plans to add about 1,000 jobs in the start-up stage. This will not only help Toyota further expand its share of the new energy vehicle market in China, but also a key measure for it to cope with the intensification of competition in the global automotive market and achieve sustainable development.
Pictured: Toyota Lexus Shanghai New Energy Co., Ltd. was established and will start production in 2027
2. Industrial advantages: relying on the strong resources of Shanghai and the Yangtze River Delta region
As China's economic center and an important automobile industry town, Shanghai has an advanced and mature industrial chain foundation, logistics network, talent system and market scale. The Yangtze River Delta region has gathered a large number of auto parts suppliers and related enterprises, which can provide strong support for the R&D and production of Lexus Shanghai New Energy Company. For example, in terms of auto parts supply, suppliers in the Yangtze River Delta region can provide high-quality and diversified parts and components to meet Lexus's strict requirements for product quality; In terms of human resources, universities and scientific research institutions in Shanghai and surrounding areas have cultivated a large number of automotive professionals, providing a rich human resource reserve for the new company.
3. Market opportunities: The huge potential of China's new energy vehicle market
China is the world's largest NEV market, with sales reaching 3.4 million units in the first half of 2023, accounting for 55% of the global market share. With the continuous improvement of consumers' awareness and acceptance of new energy vehicles, as well as the continuous introduction of government support policies for new energy vehicles, China's new energy vehicle market has shown an explosive growth trend. The establishment of Lexus Shanghai New Energy Company will enable Toyota to better meet the demand of Chinese consumers for new energy vehicles and further enhance the competitiveness of the Lexus brand in the Chinese market. According to the data, Lexus China's annual sales in 2024 will exceed 180,000 units, becoming the only imported luxury car brand to achieve positive year-on-year growth, which also lays a good market foundation for the launch of its new energy models.
4. Technology and Innovation: Invest in "epoch-making innovative production technology".
Toyota plans to establish a wholly-owned electric vehicle and battery company in Shanghai, and the new company will invest in "groundbreaking and innovative production technologies." , and strive to create a different production line application scenario. This shows that Toyota has high hopes for Lexus Shanghai New Energy's technology investment and innovation capabilities. In the field of new energy vehicles, technological innovation is the key to enhancing product competitiveness. Toyota has rich experience and technology accumulation in the field of automobile manufacturing, and the establishment of a new energy company in Shanghai will help it further integrate global resources, accelerate technological innovation and product development, and improve the performance and quality of Lexus pure electric vehicles.
5. Competitive challenges: the road to breakthrough in the fierce market competition
Although the establishment of Lexus Shanghai New Energy Company has brought many opportunities for Toyota's development in China's new energy vehicle market, it is also facing fierce market competition. China's new energy vehicle market is fiercely competitive, with the strong rise of local brands such as BYD and GAC Aion, as well as the active participation of international brands such as Tesla. BYD's NEV sales in 2023 will reach 3.02 million units, making it one of the leaders in the global NEV market. The successful operation of Tesla's Shanghai factory has enabled it to occupy a significant share of the Chinese market. As a latecomer, Lexus needs to continuously improve its competitiveness in terms of product performance, price, and service in order to stand out in the market.
6. Brand image and market awareness: reshape the brand positioning of imported luxury cars
Lexus has always been selling luxury cars in the Chinese market as an imported luxury car, and its brand positioning and market recognition are relatively high. However, with the advancement of localization, Lexus needs to reshape its brand image and market perception. On the one hand, localization will make Lexus's product prices more competitive, but at the same time, it may also have a certain impact on the brand image of its imported luxury cars. On the other hand, Chinese consumers' brand awareness and selection criteria for new energy vehicles are also changing, and Lexus needs to enhance consumers' awareness and trust in its new energy vehicle products by strengthening brand promotion and marketing.
7. Future prospects: the potential and possibility of leading the new trend of pure electric vehicles
The establishment of Lexus Shanghai New Energy Company has injected new vitality into the development of Toyota's new energy strategy in China. In the future, with the official production in 2027, Lexus is expected to launch a variety of competitive pure electric models to meet the demand of Chinese consumers for new energy vehicles. At the same time, Toyota will also use Lexus Shanghai New Energy Company to further strengthen cooperation with the Chinese market, expand business areas and enhance brand influence. In the fields of hydrogen energy, intelligent autonomous driving, and battery recycling, Toyota and the Shanghai Municipal Government will also cooperate in the application of advanced technologies to jointly promote the development of China's new energy vehicle industry.
In short, the establishment of Toyota Lexus Shanghai New Energy Company is an important measure of Toyota's new energy strategy in China, and it is also a new starting point for the development of the Lexus brand in the Chinese market. In the face of the opportunities and challenges of China's new energy vehicle market, Lexus needs to give full play to its own advantages and continuously improve its product competitiveness and brand influence in order to remain invincible in the fierce market competition and lead the new trend of pure electric vehicles.
