The demand for the development of hybrid electric locomotives is increasing due to increased demand and cost of diesel oil, uncertainty in the steady supply of oil, and increased emissions standards. Electrical energy is lost from diesel-electric locomotives in the form of heat during dynamic braking. Using a regenerative braking system can improve the overall efficiency as it can be used later to provide traction force during acceleration. The objective of this study is to evaluate experimentally battery performance considering different discharge and charge rate, and investigate the thermal management requirements and thermal runaway effect of the batteries under a variety of environmental conditions. This was done in an environmental chamber, which controls temperature and humidity. This chamber is also fitted with an external window designed to allow thermal imaging from outside the unit. The batteries were monitored with thermal sensors and a thermal imaging camera while they were run through different load scenarios. Loads were applied using a computerized battery analyzer, which allows control over discharge rates and load cycles. Results indicate high discharge rates, above 1 C, and low operating temperatures, below 20 °C, greatly diminish capacity.