Can we buy Made-in-China Lexus in the future!? Will it be manufactured in Shanghai, China?

AshleyJul 01, 2024, 04:52 PM

News on July 1st, according to media reports, Toyota plans to establish a wholly-owned Lexus factory in Shanghai, China to focus on the production of high-end electric vehicles. In order to obtain tax benefits, policy support, and land subsidies similar to Tesla, Toyota is seeking government favors.

Insiders said that Shanghai hopes to attract large companies like Toyota to settle there, which can attract more foreign investment. But the implementation of the project needs to be approved by the government, and there is still uncertainty in subsequent progress. At present, Toyota has not responded to this matter.

In 2023, Koji Sato succeeded Akio Toyoda as the new president of Toyota Motor. After taking office, he immediately promoted the "priority development of electric vehicles" strategy, and pointed out that in order to provide consumers with more attractive pure electric vehicles, Toyota must simplify car structures, and completely change their operating methods with pure electric vehicles as the first goal.

Koji Sato positions Lexus as the leader of Toyota's future electrification. According to the company's previous plan, Toyota will develop a new electric vehicle model for the Lexus brand before 2026. This new model will make significant improvements in the battery and chassis architecture, and may abandon the e-TNGA platform currently used by Toyota.

The discussion of Lexus's localization in China started more than ten years ago. In 2006, Lexus once stated that if the sales volume in the Chinese market could break through 30,000 units, it would consider producing in China. Later, this number was adjusted to 50,000 units, and then to 100,000 units. By 2016, Lexus's annual sales in China exceeded 100,000 units for the first time, but the company's attitude at the time was "not considering localization".

Analysts believe that Lexus's previous reluctance to manufacture in China mainly included two aspects of concerns. On one hand, they believed that localization would face the risk of product quality reduction, and on the other hand, Toyota did not want to share the higher profits of the Lexus brand with its local partners.

In the first five months of 2024, Lexus sold 72,275 units in China, an increase of 33.4% year-on-year. Of these, the ES series sold 45,937 units, a year-on-year increase of 58.16%. Despite the increase in sales, the terminal price of Lexus has begun to decline. Taking the ES 200 Excellence Edition as an example, the maximum discount reached 80,000 RMB, which is in stark contrast to the situation in the past few years where prices had to be increased for purchase.

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