The world’s biggest automaker Toyota Motor Corp. (TM) is planning to source lithium-ion batteries for its hybrid vehicles from Sanyo Electric Co. to keep pace with the growing demand for electric cars.

Sanyo, the world’s largest maker of rechargeable batteries, will supply cells for about 10,000 vehicles every year. Sanyo aims to quadruple sales to automakers by 2015 as demand for gasoline-electric cars increases. Toyota will begin using the lithium-ion batteries in 2011.

Panasonic EV Energy Co., Toyota’s joint venture with Panasonic Corp. (PC) is currently the sole supplier of nickel-metal hydride batteries. Panasonic plans to take over Sanyo and double production capacity to around 1 million units a year by the middle of 2010. The deal is awaiting regulatory approval.

Lithium-ion batteries have higher output and capacity than the nickel-metal hydride type that Toyota uses in the Prius and other hybrid vehicles. Demand for gasoline-electric vehicles has surged in Japan, helped by tax breaks and government subsidies to promote fuel-efficient automobiles.

Recently, Toyota stated that it has received about 10,000 orders for the Lexus HS250h sedan, the premium brand’s first dedicated hybrid car, in its first month of sale in Japan. The company aims to sell an average of 500 units a month. It plans to increase global production to 5.95 million units, up from the initial target of 5.8 million. Toyota also expects to sell 6.53 million units this year, up from an earlier projection for 6.5 million.

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