Click to enlarge

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

This alliance could lead to Sanyo batteries and other electronic components being fitted in future Volkswagen group models, the report said.

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

Reuters also reported that Audi will manufacture electric cars within 10 years.