Japanese carmaker Toyota on Wednesday that it will build a wholly-owned subsidiary in Shanghai to develop and produce Lexus-branded electric vehicles and batteries.

The subsidiary, which will be located in Shanghai's Jinshan district, will start production in 2027, said Toyota in a statement.

The initial production capacity is expected to be around 100,000 units per year, with approximately 1,000 new jobs planned at the start of operations.

Toyota will be the second carmaker to establish a wholly-owned vehicle-producing subsidiary in Shanghai, with US carmaker Tesla being the first to do so.

Lexus, which is Toyota's high-end arm, sold over 181,000 vehicles last year in China, which was its second largest market after North America.

Besides the facility planned in Shanghai, Toyota has been partnering with FAW and GAC to produce and market Toyota-branded vehicles in China.