Chrysler may be lagging behind its cross-town rivals on hybrid vehicle technology, but the Michigan automaker has no plans to be left behind when it comes to electric and plug-in vehicles. As such, Chrysler announced on Monday that A123 Systems will be providing the next-generation lithium-ion batteries for its forthcoming electric vehicles.

A123′s batteries are based on the ‘lithium iron phosphate’ chemistry, which promises a number of significant advantages over traditional lithium batteries. For one, the batteries are able to endure 2000 deep cycles, which is double the capability of ‘lithium cobalt oxide’ batteries, which are common to consumer electronics and used in the Tesla Roadster. Moreover, the batteries can withstand rapid charging without damage, which means an electric car’s battery could be filled in as little as 10 minutes if a high-output plug is available.

A123 is also working on a version of its battery that could last for 8,000 deep cycles, which could equate to a useful lifespan of 1.6 million miles for an EV with a 200-mile battery pack. It’s worth pointing out that the lifespan is defined as the period of time battery is able to hold at least 80 percent of its original advertised capacity. So after 2,000 or 8,000 deep cycles the batter would not be garbage — it simply would hold 20 percent less energy than when it was new.

As part of the alliance, A123 will establish a new facility in Michigan for battery production. Earlier this year General Motors announced a similar deal with LG Chem to produce batteries for its upcoming Chevrolet Volt, making Michigan a hotbed for lithium-ion battery production. A123 also worked on GM’s Volt project.

“The most significant challenge to electric vehicles is battery technology,” said Frank Klegon,vice president of Chrysler’s product development. “The diligent selection of strategic partners like A123 Systems helps Chrysler achieve its leadership in electric-drive systems and vehicles.”

Officially dubbed Nanophosphate Lithium ion prismatic battery cells, Chrysler has yet to announce what vehicle the A123 batteries will debut in, but Chrysler hopes to have an electric vehicle in showrooms by 2010. Chrysler’s first EV will likely be based on the Dodge Circuit, but range-extending electric vehicles, such as the Chrysler 200C EV concept, likely won’t be far behind.