May 27 (Bloomberg) -- Toyota Motor Corp. and Matsushita Electric Industrial Co. said they will build a new factory to make batteries for hybrid vehicles, the second such plant the companies have announced in less than a week.

The companies' joint venture, Panasonic EV Energy Co., will spend about 30 billion yen ($289 million) on the factory, which will be located in Miyagi Prefecture in northern Japan, they said in a faxed statement today. On May 23, the companies said they are building a plant in Shizuoka Prefecture, southwest of Tokyo.

The new plants will make nickel-hydride batteries to help Toyota meet its goal of selling 1 million hybrid cars including the Prius annually in the early part of next decade. Drivers are opting for cars that use less gasoline after the price of oil has more than doubled in the past year.

``Toyota is way ahead of everyone else in hybrids,'' said Edwin Merner, president of Tokyo-based Atlantis Investment Research Corp., which manages $2 billion in assets. ``Hybrid cars are in short supply and demand is increasing. If they don't exploit this advantage, they may lose market share.''

The factory in Miyagi will start production in 2010 and will be able to make 200,000 batteries annually when it reaches full operation.

Panasonic EV is 60 percent owned by Toyota, based in central Japan's Toyota City. Matsushita, the world's largest consumer electronics maker, owns a 40 percent stake.

Hybrid Sales

A hybrid vehicle combines a conventional gasoline engine with an electric motor. The motor powers the vehicle at low speeds, and the gasoline engine takes over as the car gains speed. The motor's battery pack is charged by the gasoline engine and power regenerated by braking.

Global sales of Toyota's Prius through April have totaled about 1.03 million vehicles since it went on sale first in Japan in 1997, the company said earlier this month. North America accounted for 58 percent of the total sales and 31 percent were from Japan.

The Prius gets 46 miles per gallon in combined city and highway driving, the best fuel economy of any model rated by the U.S. Environmental Protection Agency.

Toyota gained 1.8 percent to 5,100 yen at the 3 p.m. close on the Tokyo Stock Exchange. Matsushita rose 1.9 percent to 2,375 yen.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net

Last Updated: May 27, 2008 05:10 EDT