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This paper proposes an approach to optimize the economy performance of a two-speed electric vehicle (EV) by combining gear shifting schedule design and gear ratios selection. Mathematic models for the two-speed EV subsystems are developed, including those of the battery module, electric machine, the driver, transmission and vehicle. Then a procedure for obtaining the optimal gear ratio pairs and corresponding shift schedule for the two-speed EV is presented in detail. The optimized EV powertrain parameters can not only ensure that basic requirements in dynamic performance are achieved, but realize the optimal economic performance of the EV as well. In order to investigate the effectiveness of the proposed method for EV design, simulations based on the developed powertrain model is conducted using different test driving cycles, including NEDC and constant speed. Results of these simulations validate the effectiveness of the proposed optimization method.