According to the Nikkei business daily rival Japanese automakers Toyota Motor and Nissan Motor Co  will work with Matsushita Electric Industrial Co and other Japanese companies to set up common standards for lithium-ion batteries being developed to power next-generation cars.

Earlier in May Toyota, which leads the industry with its gas-electric hybrid Prius and Matsushita had announced a joint venture, Panasonic EV Energy Co, to set up two plants to make batteries for environment-friendly gas-electric hybrid vehicles.

Their venture aims to increase production of nickel-metal hydride batteries while aiming to start mass production of next-generation lithium-ion batteries.

Apart from Toyota's alliance with Matsushita, other auto makers in alliance to develop lithium-ion batteries include Nissan with NEC Corp group and Mitsubishi Motors with G S Yuasa Corp.

Lithium-ion batteries, commonly used in laptop computers and mobile phones, are seen as a key component to improving the performance of pure electric vehicles and plug-in hybrid cars  as they are said to produce more power and are smaller than nickel-metal hydride batteries, which are now used the Prius.

Toyota says the lithium-ion batteries may be used in plug-in hybrids, which can be recharged from a home electrical outlet.

The report credits the initiative for setting up a common global standard for lithium-ion batteries to an affiliate organisation of the Japanese ministry of economy, trade and industry, that brings together nine automobile firms, six battery makers and utility Tokyo Electric Power Co to draft the standards that include testing and charging methods, vehicle safety and other areas.

The group aims to push for its specifications to be adopted by the International Organisation for Standardisation as the global standard for lithium-ion batteries.

A common standard would help battery makers cut development costs and enable Japanese automakers gain an edge over their US and European rivals who are in a race to introduce zero emission hybrids as consumer preference steadily shifts to greener vehicles against a backdrop of rising fuel prices.