Peugeot, Mitsubishi in talks on electric vehicle project

French auto-maker PSA Peugeot Citroen and Japan's Mitsubishi Motors said Wednesday they had launched a feasibility study on the development of powertrains for small commercial electric vehicles.

The study will include an analysis of batteries and their business viability, Mitsubishi said in a statement.

Earlier this year the companies scrapped an ambitious capital tie-up that would have created the world's sixth-largest auto alliance, amid reports of financial discord.

But they agreed to cooperate to share resources and cut costs in a bid to close down on rivals, and plan to launch a car using Mitsubishi's electric i-MiEV system under the Peugeot brand in Europe this year.

Mitsubishi announced a partnership with PSA Peugeot Citroen in April that will see the launch of a compact SUV in Europe in early 2012, based on the existing Mitsubishi RVR in Japan and its European counterpart, the ASX.