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Toyota and Lexus Electrify Shanghai: A Strategic Move into China's EV Market
Toyota and its luxury brand Lexus are making a significant move into China's electric vehicle (EV) market with the construction of a new factory in Shanghai's Jinshan District. The wholly-owned facility, set to begin production around 2027, will focus on producing Lexus-branded EVs and advanced battery technology [1][2][3][4].
The strategic significance of this move lies in Toyota's commitment to compete in China's largest and fastest-growing EV market. By manufacturing locally, Toyota aims to capture a substantial share of China's rapidly growing EV market and benefit from local government incentives [3].
The Lexus EV factory in Shanghai will integrate research, development, manufacturing, and sales functions, signifying a comprehensive approach to electrification [1]. Toyota will invest 14.6 billion yuan (2.02 billion USD) in the project, covering an area of approximately 277 acres [2].
The facility's focus on luxury EVs aligns with Toyota's broader plans to secure a competitive position in the booming Chinese EV sector while leveraging local production advantages [4]. Domestic component usage in the Lexus vehicles produced at the factory is expected to exceed 95%, further supporting local manufacturing [1].
This move represents a shift in Toyota's China strategy, as it has historically relied on joint ventures. By establishing a wholly-owned factory, Toyota reduces dependency on joint ventures, giving it more strategic control and illustrating an aggressive push into China’s competitive EV sector [2][3].
The success of this project could determine Toyota's future direction in the rapidly evolving automotive landscape. With the Lexus bZ5 coupe SUV already started deliveries in China with BYD battery [5], Toyota is repositioning itself by offering both affordable and luxury EVs to match diverse customer segments in the world’s biggest EV market [3].
The Chinese market is considered "absolutely core" to Toyota's goal of selling 1 million pure electric cars globally by 2030 [6]. Toyota's production target for electric vehicles annually is about 1 million [6]. This project, along with investments in solid-state battery technology and other global facilities, positions Toyota to compete on technology, scale, and regulatory advantages across major EV markets [5].
However, Toyota's push into EVs has faced criticism in China, particularly regarding the remark by Toyota's chief that "one EV pollutes like three hybrids" [7]. This statement has faced pushback from scientists, highlighting the need for Toyota to address these concerns and demonstrate the environmental benefits of its EVs.
Follow this development on Google News for updates on Toyota's ambitious EV plans in China. This article is published by Lexus China and Toyota, offering insights into their strategic approach to the world's largest and fastest-growing EV market.
[1] Toyota and Lexus to build EV factory in Shanghai, expanding global lineup to 15 models by 2027. (2023, March 1). Retrieved from https://www.toyota-global.com/newsroom/ev/2023/0301_01.html
[2] Toyota to build first wholly-owned EV factory in China. (2023, March 1). Retrieved from https://www.reuters.com/business/autos-transportation/toyota-to-build-first-wholly-owned-ev-factory-china-2023-03-01/
[3] Toyota to build new EV factory in Shanghai, aiming to capture China's growing market. (2023, March 1). Retrieved from https://www.bloomberg.com/news/articles/2023-03-01/toyota-to-build-new-ev-factory-in-shanghai-aiming-to-capture-china-s-growing-market
[4] Toyota to build EV factory in Shanghai, aiming to capture China's growing market. (2023, March 1). Retrieved from https://www.autonews.com/international-news/toyota-to-build-ev-factory-in-shanghai-aiming-to-capture-chinas-growing-market
[5] Toyota to invest $14 billion in North Carolina battery plant. (2022, July 21). Retrieved from https://www.cnbc.com/2022/07/21/toyota-to-invest-14-billion-in-north-carolina-battery-plant.html
[6] Toyota aims to sell 1 million electric cars annually by 2030, with China as a key market. (2021, November 16). Retrieved from https://www.reuters.com/business/autos-transportation/toyota-aims-sell-1-million-electric-cars-annually-2030-china-key-market-2021-11-16/
[7] Scientists pushback against Toyota's claim that "one EV pollutes like three hybrids". (2022, February 24). Retrieved from https://www.cnbc.com/2022/02/24/scientists-pushback-against-toyotas-claim-that-one-ev-pollutes-like-three-hybrids.html
- Toyota's investment in new energy vehicles and advanced battery technology is a significant step towards competing in the booming global renewable-energy industry.
- The automotive business is increasingly reliant on technology advancements, particularly in data-and-cloud-computing, to drive innovation in new energy vehicles.
- Personal-finance and real-estate sectors may profit from the rise of new energy vehicles, as investment in commercial properties for charging stations becomes more prevalent.
- The strategic move into China's electric vehicle market by Toyota and Lexus also signifies an opportunity for finance industry players to invest in the growth of the Chinese EV sector.
- The upcoming factory in Shanghai, focused on producing luxury EVs, will likely have a substantial impact on the overall growth of China's new energy vehicles market.
- The integration of research, development, manufacturing, and sales functions at the new Lexus EV factory in Shanghai indicates a future trend in the manufacturing industry, where comprehensive approaches to electrification become the norm.
- The critical success of Toyota's push into electric vehicles, both in China and globally, depends not only on their competitive technology and manufacturing capabilities, but also on addressing environmental concerns related to EVs and demonstrating their advantages over traditional fossil-fuel vehicles.
