New bZ7 aimed at Chinese market, Toyota builds factory in Shanghai

On Wednesday, the Toyota bZ7 all-electric sedan debuted at the 2025 Shanghai Auto Show as the first joint venture (GAC-Toyota) car equipped with Huawei’s HarmonyOS cockpit system, and developed specifically for the Chinese market. The official launch is expected to occur later this year.

A Toyota bZ7 concept car previously appeared at the 2024 Guangzhou Auto Show. This time, the mass-production version debuted at the Shanghai Auto Show.

Notably, the roof has a lidar, which implies advanced driving assistance capabilities (ADAS). Given that Huawei already supplies the HarmonyOS cockpit system, the ADAS may come from the Huawei ADS advanced driving system.

Compared with the concept car, the digital exterior mirrors have been replaced, and physical door handles have been added. Inside, ambient lighting can be seen at various spots. A floating central control screen, an embedded instrument panel, a three-spoke steering wheel, and wireless charging panels are on the center console. A panoramic sunroof is also present. At this time, the powertrain specs have not been announced officially.

In the first quarter, the GAC-Toyota joint venture sold 171,477 vehicles, including 66,066 in March alone, a 19.3% year-on-year increase. The bZ series currently has the bZ3X and bZ4X for sale on the Chinese market.

New Lexus factory in Shanghai

Toyota Motor Corporation and the Shanghai Municipal Government signed a strategic cooperation agreement on April 22, establishing a significant partnership to see the Japanese automotive giant develop new energy vehicles in China’s economic hub.

The deal’s centrepiece is a wholly-owned Lexus electric vehicle factory to be built in Shanghai’s Jinshan District. The agreement marks a pivotal moment for both Toyota and Shanghai. It represents the second major foreign automaker to establish a wholly-owned manufacturing facility in China after Tesla’s Shanghai Gigafactory and the first such venture by a Japanese automaker.

According to officials at the signing ceremony, Toyota will invest 14.6 billion yuan ($2.02 billion) in the project, with an initial land acquisition of about 112 hectares. The facility will integrate research and development, manufacturing, and sales functions, focusing on producing Lexus-branded electric vehicles and advanced battery technology.

Extensive localization

The localization strategy appears extensive, with reports indicating that domestic component usage in the Lexus vehicles will exceed 95%, significantly reducing costs and potentially allowing 15-20% price reductions compared to imported models.

This move represents a dramatic shift in Toyota’s China strategy, historically relying on joint ventures. The decision comes amid increasing competition in China’s electric vehicle market, where Toyota’s electric models account for less than 1% of its sales.

For Shanghai, the Lexus project becomes its second globally influential new energy vehicle project after Tesla’s Gigafactory, further strengthening the city’s position as a global new energy vehicle industry cluster.

China is a core market for Toyota EVs

The agreement comes as Toyota aims to expand its global electric vehicle lineup to approximately 15 models by 2027, with a production target of about 1 million electric vehicles annually. The Chinese market is considered “absolutely core” to Toyota’s goal of selling 1 million pure electric cars globally by 2030.

As both Toyota and Lexus race to catch up with Chinese manufacturers and other international competitors in the electric vehicle space, the success of this project could determine Toyota’s future direction in the rapidly evolving automotive landscape.