Right on the heels of Toyota's announcement that they would collaborate with Matsushita Electric Industrial Co. to build a battery plant, Volkswagen has come out swinging and announced their own partnership with Sanyo Electric Co. to develop lithium-ion batteries that will be used in hybrid vehicles. Sanyo will spend $769 million to increase the production of these batteries, however there are no plans for the companies to follow exactly in Toyota and Matsushita's footsteps by operating a plant together. Instead Sanyo will expedite their production of the batteries with the goal of beginning mass production no later than 2011.

Sanyo is already the supplier of nickel metal hydride batteries for companies such as Ford and Honda, with their products being used in the Ford Escape hybrid and the Honda Civic hybrid.

Earlier this year at the Geneva Auto Show, Volkswagen announced their efforts to reduce fuel consumption would be made with the introduction of the Golf TDI Hybrid concept, a car that looks like the classic VW Golf, but features an electric motor and high-tech diesel.

"Our focus in future will be directed more strongly at making electrically powered automobiles alongside ones driven by more efficient combustion engines," Volkswagen Chief Executive Martin Winterkorn said in Germany. "This cooperation is an important step for us."

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