Toyota Motor is looking to build a new electric-vehicle plant in China, with plans to mainly produce its upscale Lexus models.

Sources close to the matter say the automaker is working to acquire land in Shanghai for the project. They expect the new factory to become operational as early as 2027.

Toyota plans to update all Lexus models it produces worldwide to electric vehicles by 2035.

This comes as Japanese automakers, which largely stick with traditional combustion-engine vehicles, are struggling in the Chinese market, where EV manufacturers are engaged in a fierce price war.

Mitsubishi Motors decided in October last year to withdraw from China. This year, Nissan Motor and Honda Motor closed some of their factories in the country.

Toyota saw sales in China fall 9.3 percent in the January-October period to approximately 1.41 million units, compared to the same period a year earlier.

Experts say Toyota is seeking to make up lost ground in China's expanding EV market.