High demands to power performance, high cycle and calendar life as well can be met by NiMH batteries, making this battery system very suitable for HEV applications. The hydrogen storage alloy plays an important role with respect to power performance and life duration. Power performance and cycle life behaviour are related to each other by the electrochemical and mechanical properties of the alloy, via a more or less reciprocal relationship. In terms of power performance at medium-discharge rates, the charge transfer reaction at the hydrogen storage alloy interface was found to be crucial for the temperature-dependent behaviour of the cell, whereas at discharge rates above about 15C diffusion limitation was found especially at the negative electrode. The alloy corrosion is taking place in alkaline media, leading to the formation of surface films and a change of the chemical composition, especially in near surface regions of the alloy particles. Consecutive electrochemical cycles lead to mechanical stress and finally cracking of the alloy particles. Stability against corrosion and pulverisation on one hand and good electrochemical performance on the other hand both depend on the chemical composition of the alloy, its morphological properties and the cycling regime used.