People visit the booth of Toyota at the Automobile Exhibition Area during the seventh China International Import Expo (CIIE) in east China's Shanghai, Nov. 5, 2024. [Photo/Xinhua]

In a strategic move to bolster its presence in the world's largest automotive market, Japanese automaker Toyota Motor Corp. announced on Wednesday that it will construct a new wholly-owned electric vehicle (EV) manufacturing plant in Shanghai.

The plant, located in Jinshan District in southwest Shanghai, will develop a new battery electric vehicle under the Lexus brand, with production scheduled to begin in 2027, according to a Wednesday press release of Toyota, the world's top-selling automaker.

The initial production capacity will be around 100,000 units per year, and it is expected to create approximately 1,000 new jobs during the start-up phase, it added.

The new plant marks a significant investment in enhancing Toyota's R&D and production capabilities specifically tailored for the EV sector in China, the world's largest auto exporter.

In its press release, the company noted that the new move is based on the belief that a "quicker supply of products that meet customers' needs is important in China, where there is a high demand for new energy vehicles."

Jinshan District said in an official statement that it welcomes global investors, including Japanese enterprises, and will continue to foster a world-class business environment that is market-oriented, law-based and internationalized, while providing higher-quality, more efficient and targeted services for enterprises to invest and develop.

China's new energy vehicle industry has experienced exponential growth, propelled by a dual engine of robust technological innovation and the government's unwavering dedication to green development and sustainable transformation. This strategic synergy has not only catalyzed unprecedented market demand but also accelerated the industry's dynamic expansion.

Echoing such initiatives, global EV makers have been reinforcing investment in the Chinese market.

In December 2024, U.S. carmaker Tesla kicked off trial production at its second plant in Shanghai, just seven months after the construction began. The factory is dedicated to manufacturing Tesla's energy-storage batteries, Megapack, with mass production expected to fully start in the first quarter of 2025.

In January, Chinese EV maker XPENG and Germany automobile giant Volkswagen announced that they have signed a Memorandum of Understanding for strategic collaboration on a superfast charging network in China.

Through the strategic cooperation, XPENG and Volkswagen Group China aim to provide customers with a superfast charging network that features over 20,000 charging piles and covers 420 cities across China, according to a statement from XPENG.

With China emerging as a dominant force in the global automotive manufacturing sector, its industrial and supply chain advantages have become increasingly pronounced, noted Bai Ming, a researcher with the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.

"From Volkswagen to Tesla, and Toyota's new project, the continued investment by leading automakers underscores the appeal of China's high-level openness and the robust strength of its manufacturing industry," Bai added.

Toyota on Wednesday also raised its net profit forecast for the fiscal year ending March 2025 to 4.52 trillion yen (about 29.5 billion U.S. dollars) from its earlier estimate of 3.57 trillion yen amid production recovery and the weaker yen.