Audi and Japanese electronics giant Sanyo are planning to work together on a new pilot hybrid project for the Volkswagen Group.

According to Germany’s Süddeutsche Zeitung newspaper, the pair plan to work on high performance batteries as part of a EUR1bn project.

An alliance could lead to Sanyo batteries and other electronic components being fitted in future Volkswagen group models.

Volkswagen does not have much hybrid vehicle development on the table as plans were scaled down under CEO Martin Winterkorn. His predecessor, Bernd Pischetsrieder, had plans for hybrid vehicles, but Winterkorn assessed the EUR2,000 add-on price to be too high and the business case too weak.

Wolfgang Hatz, responsible for R&D at Audi, has said in the past that although hybrids can deliver carbon savings, particularly from urban use, they are an expensive solution. There are plans for a hybrid Touareg and a hybrid Q7 but no other models at present.

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Süddeutsche Zeitung said the Sanyo parternship could lead to hybrid technologies being used in small cars.