Sanyo to make batteries for Volkswagen cars

Sanyo and Volkswagen announced an agreement on Wednesday to make lithium-ion batteries for hybrid electric vehicles, turning up the competition in the field for energy-efficient cars.

Sanyo intends to open a factory to make the batteries in 2010 and Volkswagen plans to introduce a car with them the same year, according to a Bloomberg report. The first car to get the batteries will be an Audi AG, Reuters reported.

The pact also calls for the two companies to make software to electronically control the batteries.

Sanyo already provides nickel metal hydride batteries for Ford and Honda.

Lithium-ion batteries are growing in favor with carmakers. The Tesla Roadster uses lithium-ion batteries, as will the Chevy Volt when it is released in two years.

The Sanyo factory will have the capacity to supply batteries to power between 1.7 million and 1.8 million hybrid vehicles a year, the company told Bloomberg.

A hybrid electric vehicle runs on a battery and a conventional gasoline engine. The batteries are charged by the engine and regenerated power from braking.