An electric bus system has been operating in the downtown area of Chattanooga, Tennessee for more than four years. The buses use traditional hard-switched IGBT inverters driving special induction motors with a speed sensor (tachometer) and two embedded flux-sensing windings to provide rotor speed and flux information to the motor controller for implementation of high performance field oriented control (vector control). The induction motor is oil-cooled and equipped with an internal planar gear reduction. The current system has experienced failures in both speed sensors and flux sensors because they are unreliable, susceptible to EMI and must operate in a hostile environment created by oil leaks. A speed- and flux-sensorless induction motor drive system with a new 100 kW soft-switching inverter has been implemented to replace the existing system. The new soft-switching inverter is able to provide 300 A (rms) and 230 V (rms) continuous power to the motor with no voltage surges and reduced dv/dt (<300V/us) at switching. The new inverter also draws ripple-less DC current from the battery. As a result, the new inverter is friendly to the motor and battery. Extended lifetime is expected for both the motor and battery. The new inverter with the speed- and flux-sensorless control has been road-tested and has achieved satisfactory performance. The project was supported under the Department of Energy (DOE) funding and local industry partnership.