(Yicai) April 22 -- Toyota Motor signed a cooperation agreement with the Shanghai government today, under which the Japanese auto giant will establish a new energy vehicle plant in the city.

Toyota will invest CNY14.2 billion (USD1.94 billion) in the new plant, which will produce vehicles for its premium Lexus brand, and will cover research and development, manufacturing, and sales.

The factory will be the second wholly owned auto plant to be opened by a foreign manufacturer in China, after Tesla's Shanghai Gigafactory.

The deal comes just over two months after Toyota and the Shanghai authorities announced a plan to work together, with “Shanghai speed” touted as a reason for the rapid progress of the initiative.

“Shanghai is an important stop in the vast world,” Tatsuro Ueda, an executive director at Toyota. said in a speech delivered entirely in Chinese at the signing ceremony. “Toyota looks forward to cooperating with more local suppliers, showcasing the advanced technologies of China's NEV industry to the world, and jointly promoting Chinese technologies to feed back into the global market.”

Contraction work on the project is scheduled to start this June, with the first vehicles due to roll off the assembly line in 2027, according to Peng Xijun, general manager of Shanghai Xinjinshan Industrial Investment Development.

Peng noted that the policy support, industrial resources, and business environment provided by Shanghai for the Lexus project have ensured fast and efficient service for Toyota.

“From announcing the partnership on Feb. 5 to completing the land transaction on April 1, it took just over a month -- more than four months faster than the usual six-month timeline,” he said.

Peng revealed that a lot of preparatory work has already started in the city’s Jinshan district where the project is located, helping to accelerate the progress.

Jinshan has also provided Toyota with temporary offices, as well as accommodation and catering services, Peng added. For example, more than 3,000 apartments that can be occupied immediately have been arranged around the project.

“The phrase we hear most often from Toyota staff is ‘your work is so fast,’” Peng pointed out.

As well as producing electric Lexus vehicles, the new plant will also make Toyota's advanced power batteries, aiming to help reduce production costs, enhance the competitiveness of Toyota's products in the Chinese market, and promote the electrification process of the Lexus brand globally.

Under the agreement, both parties will also collaborate extensively across the intelligent EV industry chain, including smart driving, hydrogen energy, auto battery recycling, logistics, and supply chain development.

Editors: Tang Shihua, Tom Litting