Toyota to build Lexus EV in China first

Toyota Motor will build a next-generation electric vehicle in China before any other market, according to a report by Nikkei Asia. The Lexus-branded model is scheduled to begin production in autumn next year at Toyota's new factory in Shanghai.

This move represents a significant shift. Toyota has long prioritized developing and producing advanced models first in Japan. The decision underscores the strategic importance of the Chinese market for the automaker's electric future.

Production and manufacturing details

The report states initial output will be around 1,000 vehicles per month in the first year. Production is expected to scale up to tens of thousands of units annually by 2028.

The new model will reportedly feature leading-edge technology, including gigacasting. This manufacturing technique allows multiple aluminium body components to be moulded into a single large section. It can reduce the weight of those areas by up to 20%. Estimates suggest this could increase driving range by several percent.

Gigacasting is also intended to improve body rigidity and streamline the assembly process. This helps shorten manufacturing time on the plant floor.

Market context and competitive landscape

China's market dominance is a key factor. According to research firm GlobalData, the parent company of Just Auto, China led the global battery electric vehicle (BEV) market last year with 8.57 million vehicles sold, capturing a 60% share. That volume was approximately three times higher than Europe's sales and more than 100 times greater than Japan's. GlobalData projects China's BEV sales will climb to 11.41 million vehicles by 2030.

Toyota is adjusting its product plans by market. The company halted development of a sleek next-generation electric coupé in Japan this spring. In China, demand is expected to be stronger for electric SUVs.

Competition in China is intense. New launches include a large SUV introduced in June by BYD. Toyota's existing electric vehicle range in China already includes a budget SUV and a saloon fitted with displays from Huawei Technologies.

Broader corporate outlook

Recently, Nikkei Asia also reported Toyota plans to produce 10.5 million vehicles worldwide in 2027, including Lexus models, as hybrid demand rises. Output in Japan is expected to total at least 3.5 million vehicles, above the three million-unit benchmark Toyota maintains to preserve domestic manufacturing capabilities and employment.

For the first quarter of its 2027 financial year, Toyota reported net income of Y1.47tn ($9.32bn), up 75.6%. The company raised its full-year guidance. Consolidated sales revenue for the three months to 30 June 2026 was Y13.52tn, up 10.4% year-on-year, while operating income fell 8.8% to Y1.06tn.