Sanyo Electric Co is to supply nickel metal hydride (Ni-MH) battery systems for hybrid electric vehicles (HEV) to PSA Peugeot Citroën.

PSA Peugeot Citroën will use the batteries for its Peugeot 3008 Citroen DS5 Hybrid4 models to be made from 2011.

"Given the growing public concern for environmental protection, Sanyo is strengthening its business by intensively developing rechargeable batteries for environmentally friendly vehicles, which are expected to see a surge in demand in the coming years," the company said.

Sanyo is already providing HEV Ni-MH batteries to Ford and Honda and has been carrying out joint development with Volkswagen for next-generation Ni-MH battery systems since January 2006, and lithium-ion battery systems since May 2008.

The statement from Sanyo failed to disclose the size of the deal. However, one local report said the Japanese group had plans to provide the battery systems for several tens of thousand Peugeot Citroen cars a year.