Japanese auto giant Toyota will develop and produce Lexus all-electric models in Shanghai, with production starting in 2027.

Toyota China announced on Wednesday that Toyota Motor Corp. and the Shanghai Municipal Government have reached a cooperative intent on jointly contributing to initiatives related to China's green and low-carbon development.

Based on the cooperation, Toyota has decided to set up a wholly-owned company for the development and production of Lexus all-electric vehicles and batteries in Jinshan District, Shanghai.

Toyota said the new company will develop Lexus-branded all electric models, reflecting the expectations of Chinese customers in products at Chinese speed, which it plans to put into production in 2027.

The Shanghai Municipal Commission of Commerce noted that Toyota's move is a good example of China's attractiveness to foreign investment and that Shanghai welcomes global investors, including Japanese companies, to invest in the city.