Toyota mulling fully owned Lexus electrified vehicle plant in Shanghai
According to a new report from Bloomberg, Toyota seeks tax breaks, policy support, and land grants also from Shanghai. While Shanghai is keen on such foreign investments, the central government may need to approve any exceptions it intends to make for Toyota. Thus, the execution of the new rumoured project is still uncertain. Wholly-owned foreign automotive plants are rare in China. Bloomberg’s sources also say that setting up a factory with full ownership and control over the establishment is unusual in the country.
When Tesla opened the Gigafactory Shanghai in 2019, that was the first wholly-owned automotive production facility in the country. Gigafactory Shanghai subsidiary benefitted from a reduction in the corporate income tax rate as well. Between 2019 and 2023, it paid a 15% corporate income tax, 10% lower than the statutory rate (25%). Tesla owns the building and holds the land use rights (for an initial term of 50 years), and it treats the latter as operating lease right-of-use assets.
Toyota is facing strong competition from BYD and other home brands in China and its sales have declined three times consecutively in the country. Building a wide range of heavily localised new energy vehicles (PHEVs and BEVs) may help it regain strength. The company wants to make Lexus a BEV-only brand in China by 2030, and even in Western Europe and North America.
Currently, the Lexus range comprises only three PHEVs—Lexus NX, Lexus RX, and Lexus TX—and two BEVs—Lexus UX and Lexus RZ. Toyota will introduce the production version of the Lexus LF-ZC pure electric sedan concept in 2026 and later an evolution of the Lexus LF-ZL electric SUV concept. In the distant future, it plans to release a Lexus LFA successor to serve driving enthusiast customers of its luxury brand.
Toyota aims to offer 30 BEVs globally between its two brands and manufacture up to 3.5 million BEVs annually by 2030. The company is developing new technologies to reduce 10-80% charging speed to just around 20 minutes and increase the driving range to up to 1,000 km.
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