Toyota is shifting its production strategy by planning to manufacture a new Lexus electric SUV in China before Japan. The company will utilize its new manufacturing facility in Shanghai, where construction began in June 2025. Production is scheduled to commence next fall, with an initial output of approximately 1,000 vehicles per month.
The automaker intends to scale production to tens of thousands of units by 2028. To improve efficiency and reduce costs, the new model will incorporate advanced manufacturing techniques, such as gigacasting. This decision follows the cancellation of earlier plans to develop a flagship next-generation Lexus electric vehicle in Japan using similar methods.
The move comes as Toyota faces increased pressure in the Chinese market, which accounted for roughly 60% of global electric vehicle sales in 2025. Through July, Toyota reported sales of just under 810,000 vehicles in China, representing an 18% decline compared to the same period in 2025. The company currently produces other electric models in China through joint ventures with GAC and FAW.
Toyota is adapting to the rapid development cycles in China, where new vehicles are now produced in as little as two years, compared to the traditional four to five years. By leveraging local advanced technology, batteries, and production methods, the company aims to compete with domestic manufacturers like BYD, whose CEO has projected that the firm will surpass Toyota in global sales within five years.