Toyota to set up fully owned Lexus factory in China

The goal is to develop a new BEV for the Lexus brand, which is scheduled to go into production in 2027. The initial production capacity is expected to be around 100,000 units per year. It will also create around 1,000 jobs “in the start-up phase,” says Toyota.

The move confirms earlier rumours, first reported on in mid-2024. At the time, Bloomberg reported that the Japanese carmaker was seeking tax breaks, policy support, and land grants also from Shanghai. Now, Toyota says that it has signed a “comprehensive partnership agreement with the Shanghai municipal government in China.” It will help the latter achieve “carbon neutrality by 2060 in fields such as hydrogen energy, automated driving technology, and battery recycling and reuse.”

Wholly-owned foreign automotive plants are rare in China. When Tesla opened the Gigafactory Shanghai in 2019, it was the country’s first wholly owned automotive production facility by a foreign carmaker. In recent decades, foreign companies have always needed a Chinese joint venture partner to build cars in China. Toyota did this in two separate joint ventures with FAW and GAC, which most recently produced the bZ3C and bZ3X electric models. As a result of deregulation, it has only been possible for foreign car manufacturers to operate their own car factories in China for a few years now, as Tesla is already doing.

Toyota faces strong competition from BYD and other home brands in China, and its sales there have declined over the past years. Building a wide range of heavily localised new energy vehicles (PHEVs and BEVs) may help it regain strength. The company wants to make Lexus a BEV-only brand in China by 2030, and even in Western Europe and North America.

US battery plant to start shipping in April

Speaking of North America, Toyota has opened its battery plant in North Carolina. It is the company’s first in-house battery factory outside Japan, the Toyota Battery Manufacturing North Carolina (TBMNC). There, the company will produce batteries for its hybrid, plug-in hybrid, and battery-electric vehicles sold in the region. The first battery packs will be shipped in April.

Toyota first announced plans to invest in developing and producing batteries for hybrid and electric cars in the USA in 2021. At the end of 2023, the manufacturer increased its investment, which now stands at 13.9 billion dollars (around 13.16 billion euros). Also in 2023, Toyota Motor North America signed a deal with LG Chem, securing cathode materials for the North Carolina plant.

In addition to its batteries, Toyota will also source batteries from LGES in the US. The Korean company is expected to supply battery modules worth 20 gigawatt-hours annually from 2025, containing NCMA pouch cells with high nickel content, which Toyota will install in new electric cars made in America. 

The first BEV model in the US was supposed to be a three-row SUV, said to roll off the production line in Kentucky starting this year. However, in October 2024, Toyota postponed its launch until 2026.

global.toyota (China), global.toyota (USA)