Lexus is a world-renowned luxury automotive brand under the Japanese Toyota Group. In 1983, Eiji Toyoda proposed a concept that shook the automotive world: creating a flagship model capable of challenging the world's top luxury sedans to prove that Japanese cars could also produce top-tier luxury cars. After years of secret R&D, the LS400 and ES250 made their debut at the Detroit Auto Show in the United States in 1989. They not only rewrote the global luxury car landscape but also launched the Lexus legend.
Unlike traditional automotive and motorcycle giants, Lexus's initial brand slogan was "Passionate Pursuit of Perfection," later changed to "Pursuing Perfection." Since 2013, it has been upgraded to "Amazing in Motion," shifting the brand's focus from early lean manufacturing to an emotional mobility experience.
In just over a decade, Lexus surpassed the sales of century-old luxury brands Mercedes-Benz and BMW in the United States, topping North American luxury car sales for the first time in 1999 and subsequently holding this honor for consecutive years. In 2005, after establishing a foothold in the North American market, Lexus officially entered the Japanese domestic market as an independent brand, becoming a truly global luxury automotive brand. In the same year, it entered Mainland China through official channels, opening a 20-year chapter of development in China.
The rise of Lexus is not only a challenge to the strength of European and American luxury brands but also the ultimate embodiment of Japanese manufacturing craftsmanship and "monozukuri" culture.
North America: In 1983, Toyota Chairman Eiji Toyoda launched the "F1 Project" (Flagship 1) in a classified meeting, with a clear goal: spare no cost to create a world-class luxury sedan. It was a ten-year effort costing over $1 billion, with 4,500 prototype vehicles produced for testing. In 1989, the first-generation LS400 and ES250 made their debut at the Detroit Auto Show. With their quietness, smoothness, and reliability, they quickly stirred up the US luxury car market. At the time, the media famously stacked a champagne tower on the LS400's hood during a test; when the vehicle started, the champagne tower remained motionless. This classic advertising campaign has since been recorded in history books. Starting in 1999, Lexus replaced traditional European and American luxury brands, topping the North American luxury car sales chart multiple times, proving that Japanese cars could also stand firm in the high-end market and lead the overall segment.
China Market: The more than 20 years since Lexus entered the Chinese market is one of the most dramatic luxury car development narratives globally. In its early years, as the Southern "Lingzhi," relying on parallel and unofficial import channels, it quickly established its reputation and high-end goodwill. In 2005, official channels expanded comprehensively. The construction standards for its 4S dealerships were strict: a minimum of 50 million RMB in registered capital and at least 8,000 square meters of owned land, with construction costs often reaching hundreds of millions, making it the only nationwide 4S dealership system built uniformly to 5-star hotel standards in China.
Around 2015, with the second takeoff of China's economy, Lexus entered a golden age of crazy price markups. The ES was marked up by 20,000-30,000 RMB, the LX by hundreds of thousands, and the LM by nearly a million RMB. Between 2020 and 2021, almost the entire vehicle range was hard to find. Its highest annual sales exceeded 200,000 units, reaching the highest sales volume since entering China, and it even became the only imported luxury brand that did not trade price for volume that year.
After 2022, the turning point of the era arrived suddenly. The rise of high-end New Energy Vehicle (NEV) brands in China completely eliminated Lexus's golden rule of "trading pure imports for high premiums." After 2023, Lexus's terminal price system gradually loosened. By 2025, the main model ES had a terminal ex-showroom price of only 199,900 RMB. Price markups became history, and discounts and price cuts became the standard posture for maintaining market share.
Electrification: Lexus's electrification pace in the Chinese market has always been slow. Although it launched hybrid technology earlier and significantly increased the proportion of hybrids in total sales, it long ignored pure electric vehicle R&D. Market response to its main pure electric models, the RZ and UX300e, was average. To save its faltering electrification future, Toyota made a firm decision: in 2025, it officially announced the establishment of a wholly-owned new energy company in Jinshan District, Shanghai, focusing on pure electric vehicle and battery R&D and production, with a huge investment of approximately 14.6 billion RMB. This project is expected to begin local production in 2027. This is the first foreign automotive enterprise to build a factory in China in a wholly-owned status since Tesla, and it is also the first landing of Toyota's latest pure electric technology outside Japan.
Lexus's product line covers a wide range, including compact sedans, full-size luxury sedans, luxury SUVs, full-size flagship off-roaders, and the pure electric family, spanning multiple segments.
Sedans: Since its inception, the ES has been Lexus's sales pillar. The next-generation ES, officially launched at the Beijing Auto Show in April 2026, is an important milestone for the brand's transition to electrification. The new car no longer offers a pure fuel version; it is equipped with the fifth-generation THS hybrid system, with a pure electric version planned for release in the second half of 2026.
The IS model, as the brand's remaining sports sedan, has experienced a very long product lifecycle. The new generation IS is expected to be released globally in 2026, offering fuel, hybrid, and pure electric powertrains. The flagship LS and two-door GT sports car LC continue to play the role of flagship totems, upholding the ultimate design and craftsmanship of luxury sedans. However, the LS series has been explicitly replaced by the brand with a multi-functional, multi-family concept model.
SUVs: Lexus has the broadest role in the luxury SUV race. The mid-size SUV RX had sales of only about 34,000 units in the Chinese market in 2025, facing pressure from electrification. The entry-level SUV UX will not produce a pure electric version in the 2026 redesign plan. The hardcore off-roader GX and full-size flagship LX bring the dual niche premiums of off-roading and yachting. The TX, as the main three-row SUV supplied specifically for the US market, will see a model year refresh in 2027. The brand is also developing a pure electric three-row large SUV, expected to be launched in 2027 to attract family users with concerns for space, technology, and mid-to-high environmental needs.
BEVs: The RZ is the first mass-produced vehicle in Lexus's dedicated pure electric sequence. It sold about 12,000 units globally for the year, and market acceptance still has room to grow. In 2026, the RZ will introduce F Sport high-performance models for its high-end versions, while providing new intelligent handling features such as steer-by-wire technology and simulated shifting. Lexus hopes to reverse the concerns of too few pure electric product types and a too-slow iteration rhythm with multiple new-generation native pure electric models such as the LF-ZC produced at the Shanghai Jinshan factory.
Additionally, the main SUV sequences—the UX, NX, and RX—all offer hybrid versions, relying on efficient hybrids to maintain competitiveness.
In a global traditional luxury brand environment where prices are falling, Lexus's 2025 market performance data not only reversed market sentiment but also showed vastly different resilience in North America and China.
In 2025, Lexus delivered 882,231 new vehicles globally, a year-over-year increase of about 4%, setting a new sales record for three consecutive years. The sales proportion of all-electric models, including hybrids, plug-in hybrids, and pure electric vehicles, exceeded the 50% threshold for the first time, reaching 52%. However, the proportion of pure electric vehicles is still far lower than hybrids (the RZ accounted for only 12,000 units of annual sales).
North America remains Lexus's largest global market. In 2025, approximately 408,070 vehicles were sold in the North American region, surging by about 7.5% and contributing 46.3% of global total sales. The core contributing models—the RX, NX, and TX—remain the core. The RX's steady demand in the US saved the brand from the predicament of a partial pure electric transformation.
In 2025, when almost all secondary luxury brands slid, Lexus's annual sales in China reached 182,458 units, a slight increase of 0.3% year-over-year, making it the only brand in the secondary luxury camp to maintain positive growth. Although this number is a significant decline compared to peak sales of 230,000 units in 2021, in the headwind environment where the global imported car market overall fell by over 30%, this counter-trend performance is precious and shows extremely strong brand resilience.
However, this growth has structural concerns. In 2025, for every three Lexus vehicles sold, two were from the ES model, indicating excessive reliance on a single model. The RX's annual sales in the Chinese market were about 34,000 units, the NX about 18,000 units, while flagship vehicles like the LS, LX, and LM had cumulative annual sales of less than 5,000 units, unable to share the overall sales pressure.
Entering early 2026, Lexus's global growth did not slow down: global sales in January 2026 were 67,042 units, a year-over-year surge of 13.1%. The US grew by 13.4%, Asia grew by 21.3%, but the Chinese market must beware of the "cash-waiting-to-buy" psychology due to months of excessive terminal price concessions and localization expectations. In February 2026, a huge sales collapse signal of an 18% decline appeared, increasing the urgent need for the Shanghai factory localization process to land quickly from the retail data level.
Lexus's technology path has always followed the Toyota Group's principle of "multiple technology routes running in parallel," possessing the ability to self-select from traditional hybrid to pure electric transition, but its steps in intelligence and pure electric architecture still appear lagging.
Fifth-generation THS Hybrid System: The fifth-generation THS hybrid system equipped on the next-generation ES uses a new 2.0L Atkinson cycle engine and a high-power motor in collaborative drive. The system's combined power reaches 145 kilowatts, matching an E-CVT continuously variable transmission, with a combined fuel consumption of only 4.39 liters per 100 km. Previous generation models were also equipped with plug-in hybrid systems with E-Four electric AWD, with the WLTC pure electric range standard raised to the leading tier.
Pure Electric Platforms and Solid-State Batteries: The brand's existing pure electric vehicles still rely on the GA-K and e-TNGA platforms for ICE-to-electric conversion production and R&D. To cope with new challenges, Toyota decided to use body unified die-casting, self-driving body production lines, and other international cutting-edge processes for the first time at the new Jinshan factory in Shanghai, while simultaneously laying out the R&D trial of next-generation full solid-state batteries. The initial key products in the 2027 production stage are the mass-produced version of the LF-ZC sport coupe pure electric concept car announced in early 2026. This electric sports car will further boost the brand's ability to activate first-generation solid-state battery technology in mass-produced vehicles by the end of 2026.
Intelligence: Intelligent cockpit and intelligent driving standards are serious shortcomings of Lexus. For 2026, the new ES model specifically developed a new generation LEXUS Interface multimedia system for Chinese market users, supporting continuous natural dialogue, wake-free voice operation, and "what you see is what you say" functions. The intelligent driving standard configuration is a new generation Lexus Intelligent Safety System LSS+4.0, with a transparent chassis function and 360-degree panoramic surveillance system. However, overall, compared to the strong product power of China's local luxury new forces with full-domain OTA and Urban NOA, Lexus in the intelligence dimension is still in the awkward stage of catching up or lagging behind.
Lexus's global production system has undergone a structural reshaping from "global integration, Made in Japan" to "tri-polar, global shift," especially with the new Shanghai Jinshan wholly-owned factory as a strategic pivot point.
Before 2025, Lexus's ES sedan was produced at the Kentucky plant, and the TX was assembled at the Indiana plant. The brand recently started integration actions in its US manufacturing system: ES production will be batch transferred back to Toyota's Tahara Plant in Japan, and Lexus will no longer retain a dual-plant joint production structure in the US, instead focusing on production with hybrid vehicles as the core at the Indiana plant. At the same time, Canada maintains production of the RX and NX, two core SUVs, to supply the North American market.
In June 2025, the Lexus new energy project located in Shanghai Jinshan officially broke ground. This represents the latest Toyota technology landing outside Japan in an overseas layout. It will undertake the R&D and trial of pure electric vehicles and next-generation solid-state battery manufacturing, marking a significant sign of the degree of openness of China's automotive industry. After formal production in 2027, the initial production capacity is expected to reach 100,000 units per year, and in addition to serving the Chinese market, it will also export back to Japan and other overseas regions.
The Kyushu plant continues to bear the important task of outputting global core hybrid models. In Southeast Asia and the Middle East, Lexus insists on maintaining its supply barrier by relying on imports from Japan.
Facing the increasingly polarized global luxury car market after 2026, Lexus's strategic core is no longer a single-point bet on pure electricity, but a collaborative transformation of "hybrid + electric premium + solid-state battery."
Electrification: The brand announced in mid-2025 that it would officially adjust its original plan to shift all series to pure electric vehicles by 2035, steadily advancing on new diverse routes: using mature hybrid vehicles to secure profits, using scarce and expensive large-size pure electric SUVs and high-performance sports cars to enhance brand premium, without pursuing full electrification of its lineup with a must-win mindset. This means that including the 7th generation ES, the new generation IS, and even the flagship LS and LC follow-up products will retain pure HEV hybrid and fuel models for the long term.
Product Plans: Between 2026 and 2028, Lexus will frequently launch the next-generation IS to revitalize sports sedan appeal. The classic two-door sports car LC will accompany the new car—the LFA spiritual successor, a pure electric supercar—expected to debut for the first time by the end of 2026. A large three-row pure electric SUV is scheduled for launch in 2027. The initial goal is to digest North American and Chinese new energy multi-purpose vehicle needs, building the new energy pillar face in the SUV system together with the TX model.
Key Challenge: The production timeline of the Shanghai Jinshan factory is slightly later than that of competitors, and there is still window period anxiety. When pure electric vehicle competitiveness is not favored by the market, the brand will fall into the predicament of "import stagnation, local slow start." However, strong brand assets and a powerful technology network covering the globe, including sibling companies such as Toyota, still provide precious backup time for Lexus's long-term range during its transformation.
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