Tokyo-based Toyota Motor [1] (NYSE: TM [2]) said it plans to start selling plug-in hybrid vehicles by 2010.

That would put the new cars in direct competition with the Chevy Volt from Detroit's General Motors [3] (NYSE: GM [4]), another plug-in hybrid expected to be released that year.

Toyota said the first sales of its lithium-ion battery-equipped plug-in hybrid vehicles would be to fleet customers in the U.S. and elsewhere.

The company said it plans to produce the lithium-ion batteries for the new cars through a joint venture with Japan's Matsushita.

The venture, Panasonic EV Energy, operates a battery factory in Omori in central Japan.

Unlike current hybrids, which use an internal combustion engine and electric power, plug-ins can be recharged from a standard electric outlet, extending the distance they can go on electric power.

Toyota said it started testing plug-in hybrids on public roads last year in Japan, the U.S. and Europe.

In the U.S., the automaker said tests began in November with the cooperation of the University of California, Berkeley, and the University of California, Irvine, under California's Alternative Fuel Incentive Program.