UPDATE 1-BMW, Toyota to work on electric car batteries-source


* Cooperation to be announced on Thursday - source

* News comes after Toyota announcement of plug-in Prius

* BMW shares flat, Toyota closed up 1.9 percent (Adds detail on announcement, background on partnerships)

MUNICH, Nov 29 (Reuters) - German carmaker BMW and Japanese rival Toyota Motor are planning to cooperate on research into lithium-ion batteries for electric cars, a source familiar with the situation told Reuters on Tuesday.

It was also reported over the weekend that the two were in talks for a partnership on 'green' vehicles, with BMW set to provide the Japanese firm with diesel engines.

The two companies are expected to announce the cooperation at a joint press conference at 0700 GMT on Thursday in Tokyo, the source said.

BMW and Toyota both declined to comment.

Under Akio Toyoda, who became chief executive in mid-2009, Toyota has forged partnerships with a string of companies including Tesla, Microsoft, Salesforce.com and Ford Motor Co to co-develop hybrid trucks.

Senior sources at Toyota said they believed BMW was a good match as a partner, with corporate cultures that could work well together.

Toyota earlier on Tuesday unveiled a plug-in Prius hybrid car with high-capacity lithium-ion batteries ahead of the Tokyo Motor Show, touting it as the world's most practical green car.

A tie-up between Toyota and BMW comes at a time when rivals Nissan Motor Co, Renault SA and Daimler AG are working on various joint projects, sharing engines and other technologies to save on R&D costs that are ballooning with the need to meet stricter environmental regulations.

Since an electric car often costs twice as much to buy as a conventional car powered by a combustion engine, researchers are searching for a way to make the lithium-ion lighter and less expensive.

Toyota has said it was willing to share its hybrid technology with rivals and also has plans to supply Mazda Motor Corp. It is not new to working with other brands on engines either, co-developing many of its sports car engines with motorcycle maker Yamaha Motor, in which it has a small equity stake.

BMW shares were flat at 52.99 euros at 1105 GMT, Toyota closed up 1.9 percent. (Reporting by Irene Preisinger in Munich and Chang-Ran Kim in Tokyo; Writing by Victoria Bryan; Editing by Erica Billingham and Helen Massy-Beresford)

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