First China plant to open in 2027, with 100,000-unit annual capacity.
Lexus is making its biggest move yet in China, spending 1.85 billion US dollars to build its first electric vehicle (EV) factory in Shanghai. The plant, set to open in 2027, will be fully owned by the Japanese automaker and marks a major shift from its import-only strategy over the past two decades.
The premium Toyota brand acquired a 1.13 million sq m plot in the city’s Jinshan district for 1.35 billion yuan (US$187 million), filings from the Shanghai Land Exchange show. The site is zoned for EV and battery manufacturing, with a minimum fixed investment of 14.24 billion yuan (US$1.85 billion).
Operated by Lexus (Shanghai) New Energy, a wholly owned unit set up in February 2025, the plant will initially produce 100,000 vehicles a year, with long-term plans to scale up to 500,000 units.
The move follows Toyota’s February deal with the Shanghai government to establish an R&D and production base for Lexus EVs and batteries. The company plans to tap into the Yangtze River Delta’s dense supply chain, logistics and talent pool to better localise for the Chinese market.
Lexus will run the factory directly, with more than 95% local parts sourcing. It becomes only the second foreign carmaker after Tesla to build a wholly owned plant in Shanghai.
Currently, only one of Lexus’s 12 models in China—the RZ—is fully electric. Its core lineup, including the ES sedan, is still gasoline-powered. While Lexus sales topped 200,000 in 2019, making China its largest market, growth has since slowed. Sales slipped in 2022 and barely rose in 2024, up just 0.3% year-on-year to over 180,000 units.
With slow product updates and a late start in electrification, the brand has lost ground in China’s fiercely competitive EV market. Lexus now says it wants to meet “Chinese expectations at China speed.”
Still, its three-year construction timeline contrasts with Tesla’s faster rollout—just 18 months from land purchase to first Model 3 delivery. That said, the 2027 launch aligns with Lexus’s next-generation EV roadmap, hinting at a full reset for the brand’s China ambitions.
