Toyota has been rather slow to adopt lithium-ion technology compared to some other automakers, but it seems like they want to catch up.. Japan's Nikkei is reporting that the company is increasing its lithium-ion battery production sixfold to 200,000 packs per year. The article says that the goal is to upgrade the Prius family, which currently uses NiMH batteries except for the plug-in model.

It's no clear if only the next generation of the Prius will get the li-ion batteries, or if the current generation will get the upgrade. I'd say the former is more likely, but that depends on when the next generation comes out (the second generation, which started with the model year 2004 in the US, was around for 6 years -- if they wait as long before introducing the fourth generation, then I think it's likely that they'll upgrade the Prius to li-ion batteries before then).

A switch to lithium-ion would have many benefits, even for the non plug-in hybrid models. At equal energy storage capacity, lithium-ion is significantly lighter than NiMH. That should help improve fuel economy, and possibly increase storage space in the car. If they match the weight, then the new li-ion batteries will store significantly more energy than the old NiMH, meaning that the hybrids will be able to operate in electric-mode for longer periods and at higher speeds. Another way to save fuel.

So even if they just put a li-ion pack in the current generation Prius, without changing anything else, we should see MPG improvements.

This increased li-ion battery production will also no doubt help when Toyota finally decides to do a bigger push in electric-only models. Hybrids are fine, but they are a compromise.

Via GCC

See also: Toyota: 5 million hybrids sold worldwide, 2 million in U.S.