Toyota would hold a controlling 51 percent stake, while Panasonic would transition five of its car battery production plants in China and Japan to the new company. This wouldn't affect Panasonic's existing arrangements with Tesla, the tipsters said. If the report is accurate, Toyota and Pansonic would unveil their deal "as soon as this week."

Each side has strong incentives to team up. Toyota has been comparatively slow to get started in EVs, and only recently started ramping up its plans. This could help it catch up in style by ensuring that it has access to affordable, mass-produced batteries. For Panasonic, meanwhile, this is mostly about cornering the market. Between this and the Tesla pact, it could become a dominant force in the EV world.