Author | Chai Xuchen

Editor | Wang Xiaojuan

Rumors of Lexus entering China to build a factory have come back; this time, it is likely that it is due to new energy sources.

Recently, there was news that Toyota plans to build a new factory in Shanghai to mainly produce electric models of its luxury brand Lexus. Unlike previous joint ventures, Lexus wants to build a 100% wholly-owned factory in China.

According to information, Toyota has decided on a site for plant construction in Shanghai, and it is expected that the plant will be put into production in 2027. It plans to use more than 95% of parts in China, and new cars produced in the future will not only be sold domestically, but will also be exported overseas at the same time.

Currently, although both Toyota China and Lexus have indicated that they have not responded to this, some people familiar with the matter revealed to Wall Street News that this rumor is true. Negotiations between the two sides have already come to an end, and a few details have yet to be unified.

It is worth mentioning that in June of this year, Akio Toyota, the head of Toyota Motor Corporation, came back to China after a lapse of five years and made a big drift show at the “Toyota GR Carnival” in Shanghai. At the time, it was reported to the outside world that he would promote the localization of Lexus, and Toyota also began negotiations with relevant departments and hoped to obtain treatment similar to Tesla China, from tax incentives to policy support and sole proprietorship operations.

You need to know that since entering the Chinese market in 1994, this Japanese luxury car brand, which insists on high quality and original imports, all of its products have been in short supply. The sales myth created once overshadowed the popularity of the BBA, and it is even more common to pick up cars at higher prices.

Since then, the “scandal” about it entering China to build a factory continued, but in the end, it all went away. People familiar with the matter revealed that Lexus did have the idea of localization before, but senior Toyota executives have always believed that the timing and conditions were not ripe.

And this change in Toyota's attitude indicates that it is preparing to launch a counterattack with high-end new energy vehicles.

According to the “electric vehicle priority” strategy implemented by Toyota, Toyota is expected to invest in 10 pure electric vehicles by 2026, with annual sales volume reaching 1.5 million units, and sales volume of pure electric vehicles will reach 3.5 million units by 2030. Among them, Lexus will play the “vanguard”. At this year's Tokyo Motor Show, Lexus emphasized that it will begin electrification transformation in 2026 and completely become a pure electric brand by 2035.

The rhetoric is due to Toyota being “pressured” by Tesla and China's new energy brands.

In the era of fuel vehicles, Lexus has always been Toyota's profit cow in the Chinese market. However, when intelligence and electrification became mainstream, and after the BBAs were caught up in an internal price war, Lexus, which was once impossible to buy at a higher price, was discouraged.

The once unique Lexus service has been surpassed by new forces such as NIO. The latter not only successfully replicated Lexus's “Champagne Tower”, but its NIO house and babysitting services have also reached many high-net-worth customers.

Since reaching a peak in sales of 0.227 million vehicles in China in 2021, Lexus entered a downward channel, falling to 0.162 million vehicles in the first 11 months of this year, and this is still the result of “price in exchange for volume”. It has maintained its popularity for nearly 30 years.

More importantly, Lexus was uncertain in the face of transformation. It wasn't until February of last year that it released its first pure electric model, the RZ450e, but the configuration, performance, and performance were not outstanding compared to models in the same class.

It can be said that the high-end Japanese brand, which once challenged established luxury cars, seemed to have run out of the crowd and is about to be pulled off the horse. If we want to fix the situation, it is inevitable to speed up the pace of change, and the Chinese market and the gradually improving new energy supply chain may support its turnaround.

Industry analysts point out that in the past few years, China has established a complete parts supply chain in the field of new energy vehicles, and Toyota can take advantage of the momentum to complete the localization of Lexus in the shortest possible time, improve production efficiency and reduce production costs, thus launching new competitive models.

Coincidentally, Volkswagen and Audi are already using China's R&D power to develop cooperative models, and if Toyota wants to electrify electrification courses, the Chinese market is indeed the best soil. Relevant agencies also pointed out that since demand for electric vehicles fluctuates greatly, and China is the largest consumer market for electric vehicles in the world, it is a reasonable choice to place a production base in China.

If Lexus's factory in China can land smoothly, Toyota's high-end new energy counterattack will have a fulcrum.

But that's just the beginning. Although domestic production has many advantages, the key that Lexus will face next is actually how to win back consumers in an environment where market demand changes rapidly and new forces are frantic, and avoid falling into a price war with local brands.

For traditional car giants like Toyota, there are still many hurdles to overcome if they want to make a smooth transition, enable Lexus to localize production and launch high-end electric vehicles in China.