According to media reports, on the premise of Lexus independently building a factory in China, it will take the lead in realizing the production of the all-new UX hybrid version and a new all-electric model. While the new cars are sold in the Chinese region, they will also be sold simultaneously to overseas markets such as Japan. In response to the relevant news that it will take the lead in producing two new energy products in China, both Toyota China and Lexus China responded to reporters, “Rumored news, no comment.”
Previously, there was a market rumor that Toyota was negotiating with the relevant departments in Shanghai on the possibility of building a wholly-owned factory, expecting to obtain treatment similar to that of Tesla, including tax reductions, policy support, land subsidies, and the ability to directly own and control the factory without a local joint venture partner. For this move, foreign media believe that Toyota may use this factory to produce electric vehicles of the high-end brand Lexus.
As a luxury brand under Toyota, Lexus is no longer as popular in the Chinese market as before. On the one hand, it is the change in the car purchase preference in the domestic market. New energy vehicle brands represented by self-owned brands and new forces have shown rapid growth, to a certain extent squeezing the market share of some luxury brands and imported cars. On the other hand, it is the improvement of consumers’ perception of the brand image, and the high-end image of imported brands has begun to weaken. The data shows that from January to May 2024, the sales volume of the Lexus brand in China was 69,147 units, an increase of 28% year-on-year. Previously, Lexus launched a pure electric medium-sized SUV – RZ in China, with a price range of 355,900-379,900 yuan, but compared to fuel vehicles, the sales volume of RZ is very mediocre, with only 445 units sold in the cumulative sales in the first five months.
As for the possibility of Lexus being produced domestically, it is actually not the first time that it has been rumored. There are relevant reports almost every two or three years. The previous background was that the tariffs on foreign imported cars gradually decreased, and the sales volume of Lexus imported cars increased year after year. In addition, the transportation distance from Japan to China is very short, and Lexus really has no need for domestic production. However, from the current market situation, the days of Toyota and Lexus in the Chinese market are not as good as before. As the core luxury brand of Toyota, Lexus must take the lead in leading the electrification transformation. In addition, electrification and intelligentization are the development directions of automobiles in the future, and Chinese automobiles have taken the lead in the global market because of this advantage.
China is Toyota’s third-largest market, after the United States and Japan. But the slow progress of electrification has also made it difficult for Toyota to make a splash in the Chinese new energy market. Toyota is trying hard to change its gradually lagging situation in the Chinese market.
Last year, Toyota Motor Corporation decided to further strengthen the local research and development of intelligent and electrification technologies to ensure the competitiveness of its own new energy products. In August 2023, “Toyota Motor R & D Center (China) Co., Ltd.,” the largest R & D center of Toyota in China, was officially renamed Toyota Intelligent Electric Vehicle R & D Center (China) Co., Ltd. The engineers of the R & D centers of the three joint venture companies, GAC Toyota, FAW Toyota, and BYD Toyota, will all join the R & D projects led by IEM by TOYOTA. Denso Corporation and Aisin Seiki Co., Ltd. will also participate in the R & D activities of IEM by TOYOTA to accelerate the research and development of electrified powertrains.
In addition, Toyota has also reached a cooperation with Huawei to jointly create a solution for smart cars. Toyota has already made advance layouts in the research and development of localized technologies and actively binds and cooperates with domestic suppliers. Perhaps the independent factory building of Lexus is an important foothold for Toyota’s electric localization.
