How Lexus plans to build a million electric cars

TOYOTA CITY, Japan — Lexus, which sold fewer than 6,000 electric vehicles worldwide last year, says it will be ready to make 1 million EVs annually by 2030, a mere eight years from now.

But achieving sustainable operations at such volume remains a tricky business, executives say.

Entering the EV era will require Toyota's premium brand to not only engineer battery-electric vehicles but reengineer the production process that builds them, says Takashi Watanabe, chief engineer of Lexus Electrified, the division charged with making the marque gasoline-free.

That will mean more flexible manufacturing — including more EV- dedicated lines and even more mixed production with the mass-market Toyota brand. The shift will also mean relying on a new automotive operating system across the Toyota Group that will speed product development.

Most importantly, it will require greater focus on demand trends with nimble reflexes to turn the company on a dime. Lexus must be ready for unpredictable changes, not only in customer needs, but in charging infrastructure, technology breakthroughs and regulations.

"It is an extremely difficult challenge to shift everything to BEVs and maintain a sustainable business," Watanabe, the former chief engineer of the LC sport coupe, told Automotive News. "We need to reduce the cost of the battery and innovate the entire car manufacturing process."

Speaking this month at Lexus' new "mini-Nürburgring" proving ground, nestled in the forested mountains on the outskirts of Toyota City, Watanabe said the timing of the market's wholesale shift to EVs is a big unknown. That uncertainty means Lexus must be ready for any eventuality as it pursues better technologies, such as solid-state batteries.

Lexus is moving its global brand headquarters to the Toyota Technical Center Shimoyama here in 2024 to better design cars for the swing to EVs.

The center plays a critical role in Lexus' vision pronounced late last year to transform itself into an electric-only brand in Europe, the U.S. and China by 2030 and be prepared to sell 1 million EVs annually by then. The brand aims to be ready to sell only full-electric vehicles globally by 2035.

To shoulder the burden, Lexus EVs may piggyback on production investment with Toyota. Mixed production of the brands is something Toyota Motor has mostly avoided. Lexus lines are held up as paragons of precision production, partly because of their exclusivity.

But the new Lexus RZ electric crossover will be built at Toyota's Motomachi assembly plant on the same line as both the Toyota bZ4X and Subaru Solterra mass-market vehicles. All three are based on the same dedicated EV platform, making combined output more efficient.

Watanabe said Lexus will consider more mixed production with Toyota to achieve economies of scale, even as Lexus weighs building out its own dedicated EV lines.

Such joint output is fairly uncommon today. Across Toyota's global empire, only four lines mix Toyota and Lexus vehicles.

One is a line at the Tsutsumi assembly plant making the Lexus ES sedan alongside the Toyota Camry and Corolla. Another is at the Tahara plant, where the Lexus GX rolls out next to the Toyota 4Runner and Land Cruiser Prado SUVs. The third is the Toyota Auto Body line assembling the Lexus LX and Land Cruiser SUVs. The last is at Toyota's Cambridge, Ontario, plant, where the Lexus NX and Toyota RAV4 compact crossovers are line mates.

Toyota's plant in India makes the ES on the same line with Toyotas — but, to maintain arm's length, during a Lexus-only shift with a separate crew of Lexus workers.

Mixed EV production is made easier in instances where Lexus and Toyota vehicles share platforms such as the e-TNGA architecture that Toyota Motor introduced for its battery-electrics.

Another option, Watanabe said, would be making EVs on lines that already make Lexus hybrids, perhaps by adding a subline to install batteries, motors or other EV-specific components.

At Lexus' Kyushu plant, for example, engineers added production of the UX 300e to the main line making internal combustion and hybrid versions of the compact crossover.

"We are starting now to study what factories, what lines and what products will need to be adjusted," Watanabe said, adding that new manufacturing approaches might be needed.

Going forward, Lexus will be better able to react to market fluctuations thanks to the new Arene automotive operating system being introduced by Toyota's Woven Planet software subsidiary.

Arene, expected to arrive around 2025, will enable programmable cars, making them much more like today's smartphones. Commonized underlying software will speed vehicle development and enable fast upgrades of cars already on the road through over-the-air updates.

Lexus will use this technology to amplify its brand identity with unique services and features, Watanabe said. This is especially important in the EV age, when hardware is expected to become more of a commodity and software emerges as the key brand differentiator.

"Beyond just driving a car, we can provide new value and services," said Tatsuya Ishigaki, assistant chief engineer at Lexus Electrified. "The entire car experience can be enhanced."

Toyota has introduced over-the-air updates in select, top-end vehicles — and will apply the capability to the Lexus RZ crossover going on sale this year. But the system lacks the full flexibility the company hopes to unleash through Arene.

Meanwhile, Lexus stands poised to adjust its portfolio to the latest electrification trends.

If the EV wave starts to ebb, Lexus can always answer with hybrids. But if it grows, Lexus will race to have 1 million EVs on tap. It is just a matter of when that wave crests, Watanabe said.

"We don't know exactly when," he said, "but we will be ready."