A free piston internal combustion engine coupled with a linear generator is proposed for hybrid vehicle application. The engine works on CI two-stroke cycle with direct fuel injection. Uniflow was chosen for an efficient scavenge process. The exhaust valve timing and lift are to be dynamically controlled by electromechanical driven poppet valves, developed by FEV.A numerical simulation model of the proposed engine has been generated in this paper. The piston dynamics, cylinder scavenge process, combustion process, and friction characteristics are coupled together for systematic analysis with the code. It is meant to be a tool for prediction and optimization of the engine design and control parameters, such as fuel injection timing, valve/port timing, and electric power output. The analysis results are discussed in this paper.