Toyota to buy batteries for hybrids from Sanyo

Toyota Motor Corp will buy hybrid-car batteries from Sanyo Electric Co, a source familiar with the matter said, as the automaker struggles to meet growing demand for the fuel-sipping vehicles due to a shortage of battery supply.

Toyota now procures its batteries from Panasonic EV Energy Co, a joint venture with Panasonic Corp. Panasonic plans to take control of Sanyo and is awaiting regulatory approval.

Demand for gasoline-electric vehicles has surged in Japan, helped by tax breaks and subsidies under a government initiative to promote fuel-efficient automobiles, but Toyota has said production of its hybrids is being held back by a supply bottleneck for batteries.

Its Prius hybrid was Japan's best-selling car in July for a second straight month, but customers placing orders have to wait about eight months before delivery.

Toyota also said this week it had 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. It aims to sell an average 500 units a month.

Toyota, the world's biggest automaker, will first use Sanyo's lithium-ion batteries from around 2011, said the source, who confirmed a report in the Nikkei business daily and spoke on condition of anonymity because the information is not yet public.

Toyota will first procure about 10,000 battery units per year from Sanyo, the world's biggest rechargeable battery maker, the source said. Toyota aims to sell at least 1 million hybrid vehicles a year in the early 2010s.

A Toyota spokeswoman said nothing had been decided about procuring lithium-ion batteries from Sanyo. A Sanyo spokesman declined comment, citing company policy on deals with potential and existing customers.

The news sent Sanyo's shares up 17 percent at one point. They ended the day 10 percent higher at 247 yen, while Toyota inched up 0.3 percent.


Panasonic EV Energy has said it plans to double battery production capacity to around 1 million units a year by the middle of 2010.

To further ease the supply shortage, Toyota has said it is considering a wide range of options, including procurement from a second source and further capacity expansion at the battery venture.

Sanyo, which has a battery tie-up with Volkswagen AG, told Reuters in June that it had secured customers for its lithium-ion batteries in the United States, Japan and Europe as it seeks a 25 percent share in the global market for auto-use rechargeable batteries by 2015.

Other battery makers such as Toshiba Corp and the joint venture between Nissan Motor Co and NEC Corp are also looking to supply their batteries to a broad customer base to bring costs down.

Shares of battery makers have been popular as batteries look set to become a core component in electrified cars, including plug-in hybrids and pure electric vehicles.