It all started with the launch of the Prius, the world's first mass-produced hybrid vehicle, in Japan in 1997. The secondgeneration Prius, equipped with the Toyota Hybrid System II, was then introduced in 2003.

The emphasis has always been on delivering both environmental performance and power and Toyota has now expanded the use of its hybrid system to minivans, SUVs, rear-wheel-drive cars and other vehicles.

Hybrid vehicles have been enjoying good sales in over 40 countries. Toyota has plans for sales of one million hybrid units a year by the early part of the 2010s.

But there are reports that the company may have a problem with the use of the lithium-ion batteries it was planning to use in the next generation Prius, due out in 2008.

The company has refused to comment on reports that the decision to postpone the use of these more powerful batteries was made for safety reasons.

Last February, Toyota president, Katsusaki Watanabe said that the new Prius would use the new batteries. The lithium-ion batteries store more energy than the nickel-metal hydride batteries currently in use but there have been cases of them catching fire due to internal short-circuits.

Sony had to make huge recalls of their lithium-ion batteries last year after there were reports of fires in several laptops.

Nissan plans a hybrid car by 2010 and an electric car a few years later and has set up a joint venture with NEC to produce lithium-ion batteries starting in 2009.

Mitsubishi Motors has also set up a joint venture with another company to make the more powerful batteries for use in electric cars.