Japan has drawn up an action plan to spearhead efforts to develop the next generation of more environmentally friendly vehicles and batteries to help reduce its reliance on oil.

Under the plan, Japan aims to foster the introduction of state-of-the-art environmentally friendly vehicles in stages, a panel set up by the Ministry of Economy, Trade and Industry said in a report on Monday.

The government should also set up a project to develop next-generation batteries to power such automobiles, through cooperation with local battery makers and research institutes, it said. It also plans to offer incentives to make such vehicles widespread in Japan, in addition to developing infrastructure, it added.

By 2010, Japan will aim to mass produce two-seater electric vehicles capable of running about 80 kilometers (50 miles) per charge, as well as 30 percent more fuel-efficient hybrid vehicles, the panel said.

The panel also hoped that after 2030 local car makers would start full-scale mass production of electric vehicles, powered by batteries manufactured at a 40th of the cost of current versions.

Japan, which has a target of 50,000 fuel-cell vehicles on Japanese roads in 2010, aims to raise the number of such vehicles in use to 5 million by 2020.

Japan, the world's third-largest oil consumer, wants to cut its transportation sector's reliance on oil to around 80 percent by 2030 from about 100 percent now.