Toyota Motor Corp. has signed an agreement to invest 14.6 billion yuan ($2 billion) in a new electric vehicle (EV) manufacturing and research facility in Shanghai, signaling a major expansion of its footprint in China’s competitive automotive market.
The wholly owned plant, located in Jinshan District, will focus on developing and producing Lexus-brand EVs and advanced batteries, with construction set to begin in June and production slated to start by 2027.
The project, formalized through a partnership with the Shanghai municipal government, underscores Toyota’s strategic pivot toward electrification as global automakers vie for dominance in China’s rapidly growing new energy vehicle (NEV) sector. Tatsuro Ueda, Toyota’s chief executive for China, emphasized plans to integrate cutting-edge technologies aimed at establishing a “leading carbon neutrality model” with global influence. The company also aims to collaborate with local suppliers to showcase China’s NEV supply chain strengths, Ueda added.
Shanghai officials highlighted the deal as a milestone in the city’s push to build a world-class NEV industrial cluster, following Tesla’s landmark Gigafactory launched in 2019. Toyota has secured 112.8 hectares of land for the first phase, which is expected to create approximately 1,000 jobs initially, with an annual production capacity targeting 100,000 vehicles. Local partner Peng Xijun of Shanghai Xinjinshan Industrial Investment Development Co. noted the plant will enhance regional automotive supply chains and benefit manufacturers across the Yangtze River Delta.
The investment arrives as China’s NEV sector continues to surge, with sales jumping 47.1% year-on-year to 3.08 million units in the first quarter of 2024, according to the China Association of Automobile Manufacturers. The government’s sustained focus on green energy policies and technological innovation has solidified the country’s position as the largest EV market, attracting renewed commitments from foreign automakers.
Toyota’s move mirrors recent expansions by rivals such as Tesla, which inaugurated a Shanghai Megafactory for energy-storage batteries in February, and Volkswagen, which plans to roll out 11 new NEV models in China by 2026. German automaker BMW also partnered with Huawei in March to develop in-car digital systems tailored for Chinese consumers.
Bai Ming, a researcher at the Chinese Academy of International Trade and Economic Cooperation, described Toyota’s investment as emblematic of multinational firms deepening their stakes in China despite global economic headwinds. Official data shows foreign enterprises established 12,603 new ventures in China from January to March 2025, a 4.3% annual increase, reflecting sustained confidence in the market.
As global automakers navigate shifting trade policies and supply chain challenges, Toyota’s Shanghai plant underscores the strategic imperative to localize production and innovation within China’s EV ecosystem.
The project not only reinforces Shanghai’s role as a hub for high-tech manufacturing but also highlights the delicate balance companies must strike between leveraging China’s market scale and adapting to its stringent regulatory and competitive landscape. With the NEV sector poised to drive the next phase of automotive growth, Toyota’s bet on Shanghai may well set the tone for the industry’s future in an era defined by sustainability and geopolitical recalibration.
