Japanese auto giant Toyota Motor Corporation announced on Feb 5 that it will establish a new wholly owned subsidiary in Shanghai's Jinshan district to develop and produce fully electric cars — known as battery electric vehicles or BEVs — and batteries.

Under the partnership with the Shanghai municipal government, Toyota — which has been present in the Chinese market since 1964 — is looking to contribute to China's goal of achieving carbon neutrality by 2060.

The new company in Shanghai will have its focus on sectors including hydrogen energy, automated driving technology and battery recycling and reuse.

It will seek to expand cooperation with the entire industrial chain in the Yangtze River Delta region, while providing quicker product supplies and better services to cater fully to the demands of Chinese consumers.

The newly formed company will develop a new BEV under the Lexus brand and its production is set to start from 2027, according to the corporation.

The partnership is also said to demonstrate the appeal of the Chinese market to foreign funds.

According to the Shanghai Municipal Commission of Commerce, the city has always welcomed global investors, and will continuously deepen opening-up efforts to create a market-oriented, law-based and internationalized business environment.

Moreover, it will provide high-quality, efficient and tailored services for foreign businesses, the commerce commission added.