NEW YORK (Reuters) - Mitsubishi Motors Corp will begin supplying electric cars to PSA Peugeot Citroen Group as early as next year on an original equipment manufacturer (OEM) basis, the Nikkei business daily reported.

Under the arrangement, shipments of the Japanese company's i MiEV passenger car to the French automaker could reach more than 10,000 a year by 2011, the Nikkei said.

The plug-in vehicle, which is powered by a high-performance lithium ion battery, is due to debut in Japan in the summer.

It runs about 100 miles (160 km) on a single charge.

Europe is expected to become a leading market for electric cars as governments rush to offer incentives.

The French government is providing subsidies of up to 5,000 euros ($6,800) as well as tax breaks for buyers of electric cars, the Nikkei noted.

Mitsubishi Motors had envisioned producing 2,000 i MiEVs in the year to March 31, 2010, ramping up to 4,000 and 10,000 units in the following two years.

The i MiEV is expected to be priced at about 2 million yen ($21,580) in 2011, said the Nikkei, which did not cite sources for its report.

Mitsubishi Motors rival Nissan Motor Co is developing electric vehicles with French partner Renault SA.

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