Toyota to buy batteries for hybrids from Sanyo-source

Reuters, Wednesday August 19 2009
* Toyota to use Sanyo batteries from 2011 - source
* To lift global output target by 150,000 units in '09-Nikkei
* Sanyo shares jump as much as 17 percent
* Analyst says Sanyo shares overbought (Adds analyst comment, details)
TOKYO, Aug 19 (Reuters) - Toyota Motor Corp will buy batteries for hybrid cars from Sanyo Electric Co to keep pace with growing demand for cleaner vehicles, a source familiar with the matter said, sending Sanyo shares up 17 percent at one stage.
Shares of Sanyo were up 13 percent at 253 yen in afternoon trade, while Toyota rose 1.7 percent, mirroring a rise in other auto stocks.
Toyota, the world's biggest automaker, will first use Sanyo's lithium-ion batteries from around 2011, said the source, who spoke on condition of anonymity because the information is not yet public.
The maker of the popular Prius hybrid will first procure about 10,000 battery units per year from Sanyo, the world's biggest rechargeable battery maker, the source said.
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.
Demand for gasoline-electric vehicles has surged in Japan, helped by tax breaks and subsidies under a government initiative to promote fuel-efficient automobiles, with the Prius ranking as the country's best-selling car in July for a second straight month.
But customers placing orders for the Prius have to wait about eight months before delivery due partly to a shortage of batteries.
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.
OVERBOUGHT?
Toyota now procures its nickel-metal hydride batteries from Panasonic EV Energy Co, a joint venture with Panasonic Corp. Panasonic plans to take control of Sanyo, and is awaiting regulatory approval.
Panasonic EV Energy has said it plans to double production capacity to around 1 million units a year by the middle of 2010.
To further ease the supply bottleneck, 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.
But analysts warn that retail investors are mainly behind the surge and that they may be overreacting to the growth potential.
"I think (Sanyo shares) are overbought," said Osamu Hirose, an analyst at Tokai Tokyo Research Center.
"There's a lot of expectation about the company's rechargeable and solar cell business, but at the current price it's hard to imagine that any institutional investors would be buying," he said.
According to Thomson Reuters, no brokerage has a "buy" rating on Sanyo, which has a price-to-earnings ratio of 69 times its estimated earnings.
GS Yuasa Corp, which has battery ventures with both Honda Motor Co and Mitsubishi Motors Corp, has an estimated PER of about 145 times.
Separately, the Nikkei business daily said Toyota told its suppliers the previous day that it planned to raise its global production target for 2009 to 5.95 million units, up from 5.8 million. (Reporting by Kentaro Hamada, Mayumi Negishi and Chang-Ran Kim in TOKYO and Renju Jose in BANGALORE; Editing by Chris Gallagher)