Toyota to build Lexus EV factory in China amid Nissan-Honda merger: Reports

Japan’s biggest automaker Toyota plans to establish an electric vehicle (EV) factory in China’s industry city, Shanghai for its luxury Lexus brand, Japanese media reported Tuesday.

The world’s top-selling automaker plans to launch its factory in China by 2027, operating it without a local partner, Japan’s Nikkei business daily reported, citing sources. This would make it the first Japanese vehicle factory of its kind in China.

Toyota declined to confirm the plan when contacted by Agence France-Presse (AFP).

Public broadcaster NHK said Toyota hoped that building the new plant would help it catch up in the Chinese market. China surpassed Japan as the world’s largest vehicle exporter last year, driven by its dominance in EVs, a sector where Japanese companies have fallen behind due to their focus on hybrid vehicles.

Honda and Nissan, Japan’s number two and three automakers after Toyota, agreed on Monday to launch talks on a merger to help them strengthen their position on EVs and self-driving tech. Citing “dramatic changes in the environment surrounding both companies and the automotive industry”, Honda and Nissan said they plan to list a holding company in August 2026.

Toyota’s strategy to offer a range of vehicles, including hybrids, has paid off in markets such as the United States. The planned Shanghai factory would mainly produce Lexus models, the Nikkei said, adding that Toyota mostly sells Japanese-made Lexus vehicles in China.