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Modular systems provide the ability to achieve product variety through the combination and standardization of components. In this paper, a methodology that combines the system modeling, integration analysis, and optimization techniques for development of modular electrical/electronic vehicle systems is presented. The approach optimizes integration and interactions of the electrical/electronic system elements and creates functional and physical modules for the system. The approach proposed in this paper is systematic and can be used to support product development and decision making in engineering design.