Toyota has revealed plans to establish an electric vehicle (EV) plant in Shanghai dedicated to its luxury Lexus brand, coinciding with an upward revision of its annual net profit and sales forecasts.

The world’s leading automaker announced on Wednesday that it anticipates a net profit of approximately 4.52 trillion yen ($29.5 billion) for the financial year, up from a previous estimate of 3.57 trillion yen. Additionally, Toyota has raised its full-year sales projection to 47 trillion yen from 46 trillion yen.

The new wholly-owned company will focus on developing and producing Lexus battery electric vehicles (BEVs) and batteries in Shanghai, with production expected to commence after 2027.

The facility is projected to create around 1,000 jobs, with an annual production capacity of approximately 100,000 vehicles.

Despite challenges faced by many foreign automakers in China, such as lackluster consumer spending and intense competition, Toyota’s strategy of offering a diverse range of vehicles, including hybrids, has proven successful in markets like the United States.

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While Toyota reported increased unit sales for hybrid electric vehicles between April and December, total vehicle sales in China declined from 1.5 million to 1.4 million during the same period.

Honda and Nissan, Japan’s second and third largest automakers, are reportedly in talks for a merger to enhance their positions in EV and self-driving technology, although discussions may be faltering due to differing proposals.