Lexus, localization boots on the ground.

Just after the start of the year, Shanghai's investment promotion has ushered in new news:

The second wholly foreign-owned automobile factory in China has landed in Jinshan District.

First time to start localized production layout, Toyota intentionally laid "chess game".

Shanghai district governments, parks, enterprises, are actively forwarding exposure.

Careful people found that the Shanghai neighborhood investment promotion office, investment promotion bureau than the district level of the reaction is greater.

In particular, the front-line investment promotion people take advantage of the situation to publicize, the circle of friends screen to tell each other, plus a sentence:

Invite all entrepreneurs, come to the next door neighbor in Jinshan, Shanghai, XXX inspection, welcome Toyota supporting enterprises into the XXX.

It is clear that, with Shanghai as the center of the circle, the surrounding areas of the Toyota supporting projects with the advantages of the local industrial chain, to fight for the opportunity of local investment opportunities.

01 From a variety of remarks A glimpse of the phenomenon of investment

This time, we saw some comments:

Each district focuses on a different, in a targeted investment, rather than competing for the same project.

This is Shanghai's investment work, strengthening the city's "chess", the optimal solution given by the district.

Some people have mentioned that all districts have reserve projects, "in the hands of food, the heart does not panic".

There are also those who say that all districts within Shanghai are disciplined and can't "cut off" projects halfway.

But from the Shanghai district level, investment competition has been fully penetrated in the grassroots street.

See Suzhou's first-line investment people, with the Lexus hot spot, launched an investment offensive:

Eagerly looking forward to, Toyota-related upstream and downstream enterprises, into the Suzhou, investment in Suzhou, rooted in Suzhou.

A Jiashan regional investor replied, "Jinshan's next-door neighbor is us, and Kunshan is still far away.

Really, Jinshan District, Shanghai, west of the junction with Pinghu, Zhejiang Province, Jiashan, the distance is also relatively close.

On the surface, it is just a way of publicizing. In fact, some phenomena can be glimpsed from it.

For the region next door, quite concerned about the dynamics of industrial development in Shanghai.

Particularly the neighboring cities, has been a continuous investment in strong "offensive".

The closer you are to Shanghai, the easier it is to seize investment opportunities.

As an international city, Shanghai has been attracting the attention of foreign-invested enterprises. 7,318 new foreign-invested enterprises were established in Shanghai in 2024.

In other words, there were more than 600 foreign-invested enterprises on average every month last year.

And these new enterprises are especially skewed toward wholly foreign-owned enterprises.

This time, after nearly a year of negotiations, Lexus' all-electric plant has landed in Jinshan, Shanghai.

On the one hand, it's another milestone in the liberalization of China's auto industry.

On the other hand, Toyota's participation in the new energy market is also an important point.

You should also see that some keywords are also presented:

Wholly-owned factory, the first phase of the program annual output of 100,000 vehicles, 2027 production, is not the second "Tesla" ......

In fact, said In fact, Lexus domestic news has been rumored for almost 20 years, this year is finally boots on the ground.

This time, in addition to facing market pressure and wanting to devote itself to electric vehicles, Lexus may still see Tesla's success in China and want to replicate Tesla's "Shanghai Miracle".

Taking the Shanghai Lingang super factory as the center, it has established a supply chain "circle of friends" with a radius of about 500 kilometers and a transportation drive of about 4 hours in the Yangtze River Delta region.

This supply network covers a number of manufacturing towns such as Shanghai, Suzhou, Nanjing, Ningbo, Shaoxing and Nantong, and brings together industry leaders such as Ningde Times, Huichuan Technology, Junsheng Electronics, and Sanhua Intelligent Control.

The whole industry chain from power battery, on-board chips to self-driving system, and new energy auto parts such as passenger car interiors provides strong support for Tesla's efficient production.

So, the primary goal of Lexus to build a factory in China is to retain the Chinese market, followed by linking up with the Yangtze River Delta supply chain system. Whether or not this trial run can be successful is crucial to whether or not it will increase investment in the future.

02 After investing in China, many parties have been benefited

Back in 2006, Lexus had publicly stated that it would consider localization if the annual sales volume of the Chinese market exceeded 30,000 units.

But that goal was gradually raised to 50,000 and 100,000 units, with little movement until annual sales in China exceeded 200,000 units.

This time, Toyota will invest 5 billion yuan in the plant, which will have an initial annual capacity of about 100,000 vehicles and is expected to create about 1,000 new jobs.

Compared with Tesla's 50 billion yuan large investment, this investment is small, in line with Lexus' conservative style.

Industry sources said Toyota, as the world's leading automaker, must not aim to become the second Tesla, but to establish itself as Detroit in the new energy era.

It is understood that in 2024, China's electric vehicle penetration rate exceeded 50%, BYD, Azure, Ideal and other local brands have risen rapidly, intelligent, electrified field has a certain market share.

A number of experts pointed out that, unlike the earlier catfish effect when Tesla built its plant, Lexus built its plant to provide another model for many international luxury brands looking for a way out.

We can see that compared with Tesla's Shanghai mega-factory, the Lexus factory occupies a larger area and is geographically closer to the core industrial chain of the Yangtze River Delta.

As we all know, the Yangtze River Delta region is home to a large number of auto parts suppliers, and new energy support is the key to attracting a large number of new car-making forces.

According to the plan, the utilization rate of local parts in the new plant will exceed 95%. This means that Lexus will be deeply integrated into the Yangtze River Delta's mature supply chain system.

From a number of local automotive suppliers in Shanghai, we know that local supply chain companies are trying to squeeze into the Lexus supply chain system.

With the upstream cost compression environment, the ability to get a stable payback of foreign projects can ease the cash flow pressure.

Toyota mentioned that the models produced at the Shanghai plant are not only for the Chinese market, but will also be exported to Japan and other parts of Asia, complementing the capacity of Toyota's U.S. battery plant in North Carolina.

This point shows that utilizing the cost advantages of China's supply chain for R&D and production is fully capable of driving global technology iteration and upgrades.

Lexus, with Toyota at its back and a strong reserve of electrification technology, should adjust its strategy in time to adhere to a multi-path electrification strategy, and make the most of the brand's competitive advantage in electrification through domestic production.

So why Shanghai again?

Shanghai FTZ's location advantage, many foreign companies are more concerned.

For example, here "five free and one convenient" (investment, trade, capital, transportation, personnel freedom) policy, and then there is the famous "Shanghai speed", can be done within six months to complete the signing of the contract to put into production.

Looking at the analysis of Shanghai's automotive industry layout, the northwestern part of the SAIC is rooted in Jiading, and Tesla is developing in full swing in Lingang.

Unlike Shanghai Jiading and Lingang, Jinshan District is not the traditional automobile industry base in Shanghai, but also has a certain automobile industry foundation.

As far as the automobile industry is concerned, it is difficult to achieve leapfrog development by simply relying on a decentralized layout and a multi-point blossoming model. The presence of Lexus may stimulate the local economy and create a more competitive automobile industry cluster.

Located in the southwestern part of Shanghai, Jinshan District faces Hangzhou Bay and is located in the geographic center of the Yangtze River Delta's 1-hour economic circle.

In December 2022, Jinshan District, relying on the existing automotive R&D and design resources, auto parts industry and industrial base, and location advantages, set up the Jinshan District New Energy Auto Parts Industry Alliance, with dozens of related enterprises in the district joining the alliance, to provide Lexus with industrial resources and a collaborative and innovative environment for the construction of a plant here.

We understand that Jinshan District is also a key base for Shanghai's hydrogen supply and new materials industry, which coincides with Toyota's focus on hydrogen energy.

In November last year, the Jinshan government website publicized a document on Jinshan Industrial Zone, a land unit plan. The plan for a land unit has been adjusted to introduce a new energy vehicle and cutting-edge battery industry project.

Toyota and Lexus also mentioned in their official announcement that they will cooperate with relevant enterprises upstream and downstream of the industry chain, hydrogen energy, intelligent autonomous driving, battery recycling and relevance to realize the goal of green and low-carbon transformation.

The official announcement undoubtedly provides strong evidence for the content of the original public announcement.

So it's only logical that Shanghai has become Lexus' choice, while Lexus' borrowing and empowerment complement each other.

The presence of Lexus will help Jinshan District optimize and upgrade its industrial structure, create a large number of employment opportunities through the booming development of the new energy automobile industry, stabilize the local employment situation, and promote high-quality growth of the regional economy.

In the four first-tier cities of Beijing, Guangzhou and Shenzhen, Beijing has BAIC, Xiaomi and Ideal, Shenzhen has BYD and Huawei, Guangzhou has Guangzhou Automobile Group and Xiaopeng, and Shanghai, in addition to SAIC, has a key business card in the field of new energy at the moment, which is Tesla.

For Shanghai, from the traditional automobile industry town to the "first city of new energy vehicles" is not only the inevitable demand for industrial upgrading, but also the key to enhance the city's overall competitiveness.

Overall, Lexus' sole proprietorship in Shanghai is a brand transformation and self-help.

With the increasingly fierce competition in the market, these questions are worth pondering in the process of Lexus' localization:

What exactly is the core competitive point in the future? Can all-solid-state batteries be commercialized ahead of schedule? When will hydrogen fuel cell passenger cars take their place in the market?

Building a plant in China is both an opportunity and a challenge. After all, the current new-energy vehicle market is extremely competitive, and the future direction of the market is likely to be highly variable.

Toyota's investment in China is also a microcosm of the domestic automotive industry's move from a "manufacturing powerhouse" to a "technological powerhouse," meaning that China is becoming the core engine of change for the global automotive industry.