Toyota will buy hybrid car batteries from Sanyo as the automaker struggles to meet growing demand for its hybrid vehicles due to a shortage of battery supply.

Toyota will begin buying lithium ion batteries for hybrid cars from Sanyo in 2011, as Toyota’s battery joint venture with Panasonic can’t keep up with demand.

The world’s biggest automaker plans to buy about 10,000 battery units per year from Sanyo, the Nikkei reported.

Late last year, Panasonic agreed to buy Sanyo in a deal valued over $9 billion, with a tender offer likely to take place once regulatory hurdles are cleared. Toyota holds a 60% stake in Panasonic EV Energy, while Panasonic holds 40%.

Demand for hybrid vehicles has surged in Japan, helped by tax breaks and subsidies under a government initiative to promote fuel-efficient cars, but Toyota has said production of its hybrids is being held back by a supply bottleneck for batteries.

The Prius hybrid was Japan’s best-selling car in July for the third consecutive month. Toyota also said this week it had received about 10,000 orders for the Lexus HS250h sedan, the premium brand’s first dedicated hybrid car, in its first month of sale in Japan. The company is targeting sales of 500 units in Japan and a month and 2,400 units a month in North America, despite a languishing auto market.

Toyota is the world’s biggest seller of hybrid vehicles and sold more than 400,000 last year and has already sold more then a million Prius hybrids globally. The company plans to sell one million gas-electric hybrids per year sometime during the early 2010s