Toyota has announced plans to establish an electric vehicle (EV) plant in Shanghai dedicated to its luxury Lexus brand, reinforcing its commitment to China’s growing EV market. This move comes as foreign automakers face increasing challenges in the world’s largest auto market.
The Japanese automotive giant, the world’s top-selling carmaker, revealed the decision while also raising its annual net profit forecast to nearly $30 billion and increasing its revenue projection.
Toyota stated that it will set up a wholly owned company in Shanghai for the development and production of Lexus battery electric vehicles (BEVs) and batteries. Production is expected to commence after 2027, with the facility creating 1,000 new jobs and boasting an annual output capacity of approximately 100,000 vehicles.
Reports about Toyota’s Shanghai expansion first surfaced in December, when the Nikkei Business Daily indicated the company’s plans.
Toyota’s Strategic Shift Amid Global Competition
China surpassed Japan as the world’s largest vehicle exporter last year, largely driven by its dominance in the EV sector. While Japanese manufacturers focused on hybrid technology, Chinese automakers rapidly expanded their EV offerings, gaining significant market share.
Despite weak consumer spending and intensifying global competition, Toyota has continued to thrive by offering a diverse vehicle lineup, particularly hybrids, which have been well-received in key markets like the United States.
Record-High Profit and Sales Projections
Alongside its expansion announcement, Toyota revised its financial outlook upward, forecasting a net profit of ¥4.52 trillion for the current fiscal year, up from an earlier estimate of ¥3.57 trillion.
The automaker also raised its full-year sales forecast to ¥47 trillion from ¥46 trillion.
The company attributed the improved outlook to strong earnings performance and enhanced product competitiveness, particularly due to rising hybrid vehicle sales between April and December.
However, Toyota faced a decline in total vehicle sales in China, dropping from 1.5 million to 1.4 million during the same period.
