Japanese automaker Honda Motor Company has agreed to purchase batteries to power its hybrid-electric vehicles made in the US from rival automaker Toyota Motor Corporation, according to reports in Japan this week citing sources close to the company.

According to the reports, Honda is looking to source batteries produced at Toyota's factory in North Carolina from the 2025 fiscal year, which begins next month. The plant is expected to start shipments to Honda in April.

So far Honda has sourced batteries for its US-made electrified vehicles from manufacturers located outside the US, mainly from Japan. But the Japanese automaker is looking to increase local sourcing in the US, with the new US government under President Donald Trump threatening to impose import tariffs of 25% on its main trading partners.

The deal, if confirmed, would be a rare example of collaboration between the two automakers and would also help Toyota increase output and capacity utilization at its US battery plant.

Honda sold around 310,000 hybrid-electric vehicles in the US in 2024, accounting for more than 20% of its total sales in that market. The company said it aims to double global hybrid vehicle sales, excluding China, to 1.3 million units by 2030.