Global automobile corporations are seeking ways to maintain their competitiveness in the Chinese market. Although local corporations continue to exert pressure with low prices, investments persist as the world's largest electric vehicle market scale and the government's willingness to attract foreign investment intersect.
Toyota recently announced plans to build an electric vehicle production plant for its premium brand Lexus in Shanghai, China. The expected operational date is 2027, with initial production capacity projected at around 100,000 units per year. The Lexus electric vehicle plant being established will be solely funded by Toyota without a joint venture with a Chinese corporation. Toyota previously operated joint ventures with local automobile corporations Guangzhou Automobile and Dongfeng Motor in China, and Lexus vehicles have largely been produced in Japan for export to China.
As the electrification speed of Chinese automobile corporations accelerates, the presence of global automobile corporations in the local market is diminishing. Some corporations are reducing or withdrawing their operations in China, but it is believed that they will find it difficult to easily give up the world's largest electric vehicle market.
China is the world's largest electric vehicle market and producer, accounting for about 60% of the approximately 14 million electric vehicles sold worldwide in 2023. From January to November of last year, electric vehicle sales in China exceeded 10 million, with estimates suggesting that total sales will surpass 12 million by the end of the year.
Additionally, the Chinese government is showing a willingness to attract foreign capital, creating an atmosphere where discussions about promoting local business are ongoing behind the scenes. After foreign investment in China sharply declined due to geopolitical risks and the impact of U.S. policy support, the Chinese government is making efforts to attract investment from foreign corporations.
Toyota is the second automobile corporation after Tesla to establish a wholly-owned factory in China. In 2018, the Chinese government relaxed regulations to allow foreign corporations to enter the market solely for electric vehicles, and Tesla began operating its Gigafactory producing electric vehicles in Shanghai the following year.
Tesla also began construction on a battery factory called Megafactory near the Gigafactory last May, and it has been reported that it recently passed the Chinese government's inspection for completion. The Megafactory has begun trial production and is expected to enter mass production of batteries in the first quarter.
Hyundai Motor, which has been downsizing its operations including selling off its factory in China, also announced new investment plans. Last December, Hyundai Motor invested approximately 800 billion won in its Chinese subsidiary Beijing Hyundai. Beijing Hyundai is a joint venture between Beijing Automotive Group (BAIC) and Hyundai Motor, with BAIC also investing the same amount to launch its first electric vehicle in China next year.