Electrification and hybridization show great potential for improving fuel economy and reducing emission in heavy-duty vehicles. However, high battery cost is unavoidable due to the requirement for large batteries capable of providing high electric power for propulsion. The battery size and cost can be reduced with advanced battery control strategies ensuring safe and robust operation covering infrequent extreme conditions. In this paper, the impact of such a battery control strategy on battery sizing and fuel economy is investigated under various military and heavy-duty driving cycles. The control strategy uses estimated Li-ion concentration information in the electrodes to prevent battery over-charging and over-discharging under aggressive driving conditions. Excessive battery operation is moderated by adjusting allowable battery power limits through the feedback of electrode-averaged Li-ion concentration estimated by an extended Kalman filter (EKF). Battery terminal voltage is controlled within allowable operating limits while maximizing battery power availability with smaller batteries. HEV simulation shows trade-off between the battery sizing and the fuel economy both qualitatively and quantitatively. The results provide valuable information for battery sizing in a sense of balancing the battery cost and fuel economy in development of heavy-duty HEVs.