Toyota begins construction on first Lexus EV plant in China, to compete with local electric car giants

Toyota is making a major move in the world’s largest electric vehicle (EV) market — China with a Lexus EV plant.

The Japanese automaker has officially broken ground on its first fully-owned Lexus EV plant in Shanghai.

Lexus cars will be competitively
priced in China -- Photo: Electrik.com. 

This marks a big step for Toyota as it races to compete with top EV players like Tesla, BYD, and NIO in the fast-growing Chinese EV industry.

First independent Lexus EV plant outside Japan

Announced earlier this year, the new plant will focus on building new energy vehicles (NEVs) for Toyota’s luxury brand, Lexus. 

It will be Toyota’s first fully-owned car factory in China and only the second foreign car plant in Shanghai after Tesla’s Gigafactory.

Located in the Shanghai Bay Area Hi-Tech Zone, the new facility covers around 1.13 million square metres. Construction is moving fast and is expected to be completed by August 2026.

The first Lexus electric vehicle is scheduled to roll off the line in 2027. Once operational, the plant will be able to produce up to 100,000 EVs per year from this first Lexus plant outside Japan.

Local government support boosts speed and scale

The Jinshan district government is supporting the project with incentives and services to speed up development. 

For instance, the district created an “order-based” business model to quickly meet Toyota’s setup needs.

The company also introduced a “two-line collaboration” approach, which enables round-the-clock work to keep the project on schedule — something local media is calling “Lexus speed.”

EVs designed for Chinese consumers

Toyota is not just building cars in China — it’s designing them for Chinese buyers. The company aims to use the new plant not only to boost Lexus EV output but also to create vehicles that better match local tastes and needs. 

This is a key strategy to compete with local EV leaders.

Strong start for Toyota’s new EVs in China

Toyota is already seeing early success with its new EV models in China. In March, the company launched the bZ3X, a budget-friendly electric SUV priced at just 109,800 yuan (around $15,000).

It quickly became the best-selling foreign EV player in China in April, beating competitors like the Volkswagen ID.3, ID.4 Crozz, and BMW i3.

Earlier this month, Toyota also introduced the bZ5, a larger SUV similar in size to the Tesla Model Y, but with a much lower price tag starting at 129,800 yuan (about $18,000).

These models come packed with modern features like smart driving tech, large touchscreens, and even a built-in refrigerator.

Toyota gaining ground

To stay ahead, Toyota’s Chinese joint venture, GAC Toyota, is partnering major local tech companies like Huawei, Xiaomi, and autonomous driving startup Momenta.

Despite stiff competition, Toyota’s strategy seems to be paying off. In April, Toyota’s vehicle sales in China jumped 20 per cent year-on-year (Y-o-Y) to 142,754 units. 

Through May, total sales touched 530,000 units, up 7.7 per cent compared to last year.

READ ALSO | Chinese firm Nio’s $108,000 EV, with impressive range, could pip Porsche, Mercedes in sales

E-Vroooom’s views

With fast construction, strong local support, and new EV models gaining popularity, Toyota is positioned to be a major player in the Chinese electric vehicle race with its Lexus plan and is ready to take on local and global rivals in China.