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* Panasonic and Sanyo aim to keep lead in lithium ion cells
* Sanyo to spend 15 billion yen on hiking capacity-Nikkei
* Company to use government subsidy to raise output-sources (Adds details, background)
By Reiji Murai
TOKYO, Dec 24 (Reuters) - Sanyo Electric Co (6764.T) plans to raise its production capacity for automotive lithium-ion batteries as soon as the financial year starting in April, two sources with knowledge of the matter told Reuters on Friday.
The news came after the Nikkei business daily said earlier that the company would spend about 15 billion yen ($181 million) on doubling to four the number of production lines at its Kasai plant in centralJapan.
The company, which has a further production line in Tokushima, southern Japan, is expecting a government subsidy for the new investment, said the sources, who requested anonymity because the plan has yet to be officially announced.
Sanyo will become a wholly owned subsidiary of Panasonic Corp (6752.T) by April, and the group is battling Asian rivals such as LG Chem (051910.KS) and Samsung SDI (006400.KS) for the lead in the nascent market for batteries used in environmentally friendly electric and hybrid vehicles.
Sanyo and Panasonic have a combined share of about 26 percent of the global market for lithium-ion cells, almost all of which are used in consumer products like laptop computers and mobile phones, according to research firm Techno Systems Research.
That puts them at the head of the pack in a field where volumes will be vital to holding down prices and retaining competitiveness.
Sanyo has contracts to supply lithium ion car batteries to six automakers, a senior company executive said last month. [ID:nTOE6AH00E]
Sanyo produces lithium-ion batteries for vehicles made by the Volkswagen AG group (VOWG_p.DE) and Suzuki Motor (7269.T), while media reports say it is also set to produce forToyota(7203.T) and the Nikkei said on Friday it would supply Ford Motor (F.N). (Reporting by Reiji Murai inTokyoand Amruta Sabnis inBangalore; Writing by Isabel Reynolds; Editing by Chris Gallagher)
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