Under the deal, BAE Systems will integrate Caterpillar CX Series Transmissions into its recently launched HybriDrive parallel propulsion system.

The HybriDrive parallel system is designed to address the needs of vehicles with duty cycles that require higher operating speeds and less frequent stops.

The Cat CX family of transmissions delivers reliable performance, rugged durability, fuel economy and Cat product support necessary for on- and off-highway applications.

The company said HybriDrive parallel system, in final stages of development, will see it first road trials this year and is expected to be deployed in markets around the world in 2012.

BAE Systems power and energy management general manager Steve Trichka said this agreement brings two industry leaders together to develop a product that will surpass marketplace expectations for cost, performance and support.

Caterpillar designs and manufactures integrated powertrain systems that maximize vehicles versatility and transmission performance.

BAE Systems is a developer and producer of hybrid electric propulsion and power management systems for heavy-duty vehicles.