Shanghai is taking a significant step towards regaining its status as China’s top vehicle production hub with Toyota Motor’s decision to manufacture electric vehicles (EVs) in the city. Since 2022, Shanghai has been overtaken by Shenzhen and Guangzhou in car production, but the new investment marks a turning point.
Toyota announced it will begin producing pure EVs at its fully owned facility in the southwestern Jinshan district by 2027. The plant, with an annual capacity of 100,000 units, will leverage Shanghai’s robust supply chain, logistics network, and skilled workforce to manufacture Lexus-branded EVs. The Shanghai Commission of Commerce welcomed the investment, highlighting China’s continued attractiveness to foreign investors and pledging support to ensure smooth business operations.
This move makes Toyota the second foreign carmaker to establish a wholly owned vehicle plant in China, following Tesla’s Gigafactory in Shanghai’s Lingang free-trade zone, which began production in late 2020.
Despite a national increase in car production, with 26.8 million units produced in 2024—a 5% rise from the previous year—Shanghai’s output dropped by 16.2% to 1.81 million units. This placed the city behind Shenzhen, which produced 2.93 million vehicles, as well as Chongqing and Guangzhou. Until 2021, Shanghai was the country’s leading car production center, contributing 10.7% of national output with 2.83 million vehicles that year.
Industry experts believe Shanghai has a strategic advantage due to its location in the Yangtze River Delta, a major automotive hub where more than half of China’s car component manufacturers operate. In addition to Tesla, the city hosts joint ventures with global automotive giants like General Motors and Volkswagen. However, foreign automakers are working to catch up with domestic brands in the EV sector, as local manufacturers continue to dominate the market.
China remains the world’s largest automotive market, with pure electric and plug-in hybrid vehicles accounting for around 60% of global sales. In 2024, Shanghai produced 1.2 million of these vehicles, reflecting a slight decline of 4.8% from the previous year.
Shenzhen-based BYD, the world’s leading EV producer, delivered 4.27 million units in 2024, marking a 41.3% year-on-year increase. BYD also surpassed Volkswagen to become China’s largest automaker for both electric and conventional vehicles, highlighting the rapid shift towards electrification in the country’s automotive sector.
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