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Our reporter Yin Limei and Tong Haihua reported from Beijing

"We have no comment on online rumors."

On the afternoon of July 26,ToyotaA Chinese executive responded to a reporter from China Business News in the following way:LexusThere are rumors that it will be localized.

In the past month or so, Lexus will follow suitTeslaThe news of building a wholly-owned factory in Shanghai, China to produce high-end pure electric vehicles continues to ferment, attracting attention from both inside and outside the industry.

At present, Toyota and Lexus have not released any exact information.

According to a report by Bloomberg at the end of June, Toyota Motor is discussing with the Shanghai government the establishment of a wholly-owned factory that Toyota will use to produce high-end pure electric vehicles for its luxury brand Lexus.

The report also said that Toyota is seeking similar treatment as Tesla for building a wholly-owned factory in China, including tax exemptions, policy support, land grants, and the ability to operate directly without a local joint venture partner. It is reported that in the future, the new cars produced by the factory will be sold in the Chinese market as well as to Japan and other overseas markets.

The reporter noticed that, in fact, the news that Lexus is about to be localized is not the first time. As early as 2006, Lexus had revealed that it was considering localization. In 2018, there were also relatively definite rumors that Lexus was about to be localized, but these rumors were ultimately just "false alarms."

"Tesla has built a very good electric vehicle supply chain in Shanghai. Toyota and Lexus may be looking for such an opportunity. Lexus also wants to reap the dividends of my country's new energy vehicle industry chain. Toyota's promotion of Lexus localization must have tactical and strategic considerations. I think Toyota will most likely take this step." Lu Shengyun, founder of Qianjue Shenzhi Consulting and former Roland Berger Consulting project manager, said in an interview with reporters.

Yang Jigang, a researcher on the "New Four Modernizations of Automobiles" industry and partner of Beijing Zhixing Taolue Management Consulting Co., Ltd., told reporters in an interview that if Lexus really wants to build a wholly-owned factory in China, it is not difficult to guess that Lexus made this decision because it took a fancy to China's mature new energy vehicle industry chain supporting system.

Lu Shengyun holds a similar view. He believes that compared with foreign markets, China's auto industry has two obvious advantages: the first is the technical advantages in electronic architecture, smart cars, smart cockpits, etc., and the second is that we have very significant industrial chain advantages. In contrast, Europe and the United States and other regions are too slow in the transformation of the auto industry, and their industrial chain supporting facilities have not been able to keep up. China's new energy vehicle industry chain is not only complete but also competitive. At present, many automakers are taking advantage of China's industrial chain technology and cost advantages to achieve "reverse output" to multinational automakers.

A typical example is the Volkswagen Group andXpeng MotorsOn July 22, Xiaopeng Motors announced that it had signed a strategic cooperation and joint development agreement on electronic and electrical architecture technology with Volkswagen Group. Both parties will devote all their efforts to developing industry-leading electronic and electrical architecture for Volkswagen's CMP and MEB platforms produced in China.

"From batteries to complete vehicles, from R&D to manufacturing, from parts to software and hardware, from technology systems to solutions, no single market in the world has the advantage of a 'full industry chain'. At the same time, the experience of survival and competition in the Chinese market can help Lexus grow rapidly in the field of electric vehicles, greatly saving time and trial and error costs." Yang Jigang said that after Lexus is localized, its product prices will have a relatively large room for decline, allowing it to cover more consumer groups. Previously, BBA (BMW、Benz、Audi) have also achieved double-digit growth in sales after being produced domestically.

During the interview, Yang Jigang further told reporters that Lexus has three strategic considerations behind its consideration of localization in China:

First, it is based on the consideration of regional strategy in the Chinese market. In terms of sales volume and market share, compared with luxury car brands such as BBA, which are in the first echelon of the luxury car market in China, Lexus has always been in the second echelon of the luxury car market. Localization will help it reduce costs and enhance its comparative competitive advantage. At the same time, it can also "feed back" Lexus to markets outside of China through reverse exports.

The second reason is the consideration of electrification strategy. At present, the electrification transformation of the entire Toyota automobile system is progressing slowly, and its luxury car brand Lexus is even more sluggish in the electrification transformation. If Lexus wants to promote the electrification transformation, the Chinese market, as the market with the most complete global new energy vehicle industry chain, will help it greatly reduce the R&D cycle and cost, and quickly bring electric vehicle products to the market.

Third, in the global luxury car market, brands including BBA have encountered obstacles in their electrification transformation, especially Mercedes-Benz and BMW, which have announced that they will slow down the promotion of their comprehensive electrification strategies. This means that in the luxury electric vehicle market segment, there is no brand with absolute advantages. Lexus hopes to become a leader in the luxury electric vehicle market and seize this market share.

It is worth noting that the negotiations between Lexus and the Shanghai government on building a factory are more likely to be a mutual willingness on both sides.

"For China, we currently have needs to attract foreign investment, promote foreign circulation, and strengthen foreign capital's investment confidence in China. Foreign companies investing in China is also something that local governments at all levels welcome. As an important window for China's opening up to the outside world, Shanghai has shouldered this responsibility," said Lu Shengyun.

However, in Lu Shengyun's opinion, the current production capacity of China's automobile industry is in a state of oversupply, and it will not be so fast for Lexus to get the relevant procedures for building a wholly-owned factory.

Lexus is a luxury car brand under Toyota Motor Corporation. It entered the Chinese market in 1994 and officially established a franchise dealer network in China in 2005, selling its cars in the Chinese market in the form of imports.

Currently, Lexus sells 11 models in the Chinese market, with a starting price of RMB 268,800 to RMB 1,199,000. Among them, the only pure electric model currently sold in the Chinese market isLexus RZmodels, and plug-in hybrid models include RX 450h+ and NX 400h+.

According to the plan, Lexus will transform into a pure electric vehicle brand in 2035. At the 2024 Beijing International Auto Show held at the end of April this year, Lexus' next-generation pure electric concept model LF-ZC and pure electric flagship concept model LF-ZL made their debut in the Chinese market. Among them, the next-generation pure electric concept model LF-ZC is scheduled to be launched in 2026.

Official data show that in 2023, Lexus brand global sales will reach 824,300 vehicles, a year-on-year increase of 32%, a record high. Among them, the sales share of electrified models has reached a new high, reaching 47%.

In terms of regional performance, demand in the North American and Japanese markets is particularly strong. In 2023, Lexus' sales in the North American market will be 355,600 units, a year-on-year increase of 24%; sales in the Japanese market will be 94,647 units, a year-on-year increase of 129%. In 2023, Lexus' sales in the European market will be 69,202 units, a year-on-year increase of 46%; sales in the Middle East market will be 46,472 units, a year-on-year increase of 60%.

In 2023, Lexus' sales in the Chinese market only increased slightly, up 3% year-on-year to 181,400 vehicles.

(Editor: Zhang Shuo, Reviewer: Tong Haihua, Proofreader: Yan Yuxia)