The issue with electric and hybrid vehicles has long been their batteries. Be it the lack of capacity, complexity, development cost or failure rates, the automotive world will be turned on its head once a battery technology capable of withstanding everyday use without limitation hits the market. Until then, Lithium Ion batteries are the way to go.
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The current Toyota Prius and Lexus hybrid vehicles use Nickel-Metal hydride batteries, which have proven reliable but not sufficient for electric vehicles or new-generation plug-in hybrid cars looking for extended electric-power-only range.

Toyota will eventually buy lithium ion batteries on mass from Japan's Sanyo Electric Co., a move away from Primearth EV Energy Co., which has supplied the Big T's Nickel-Metal hydride batteries for some time (and is 80.5 percent owned by Toyota).

So far it's unconfirmed which new vehicles will gain Lithium-Ion technology but Japanese sources have suggested the MPV-sized Prius which is expected to hit Japanese showrooms next year could be the first.

Primearth was originally founded by Panasonic and Toyota (60:40 shareholding split) but is now majority owned by Toyota whilst Panasonic has bought a majority stake in Sanyo, one of the leading companies in Lithium-ion technology.

Sanyo will also supply lithium-ion batteries to Suzuki and Volkswagen.

The Nissan LEAF and Mitsubishi i-MiEV, the first two mass produced electric cars in the world, both use lithium-ion batteries (so does your mobile phone).