The Nikkei is reporting that Sanyo Electric Co. has signed an agreement with PSA Peugeot Citroen to supply nickel-metal hydride batteries for diesel-electric hybrids. Peugeot wants to be the first car maker to put diesel-electric powertrains into production vehicles. The French auto company will use the batteries in the 2011 Peugeot 3008 SUV and the Citroen DS5 luxury car.

Both of the upcoming vehicles will use diesel engines to power the front wheels and electric motors to move the rear wheels. This is the fifth partnership of its kind for Sanyo, which already supplies nickel-metal hydride batteries to Honda and Ford and has agreements to provide lithium-ion batteries to Toyota and Volkswagen.

Sources: Nikkei via Green Car Congress, Reuters