This paper presents the design and performance details of electric propulsion system for GM's second generation Extended Range Electric Vehicle (EREV). First generation Chevrolet Volts have been driven over half a billion miles in North America from October 2013 through September 2014, 74% of which were all-electric. The second generation of Volt brings a significant mass reduction and increased performance, EV driving range and fuel economy while simultaneously reducing rare earth content in its traction electric motors.The electric propulsion system is built on two electric machines; both PMAC topology. While hybrid-electric vehicles are gaining in popularity in hopes of addressing cleaner, energy sustainable technology in transportation, materials sustainability and rare earth dependence mitigation has not been the first priority in the hybrids available on the market today. Design robustness to material cost volatility is crucial in automotive industry success and therefore designing electric propulsion to minimize or eliminate rare earth usage plays a major role in HEVs success. The objective of this paper is to present the newly redesigned propulsion system for added performance while simultaneously reducing the rare earth and heavy rare earth content by over 85% and 50% respectively and in turn the cost of the system and yielding all around “cleaner” and more sustainable vehicle. From an engineering point of view, this is a tall order by any measure so various technologies were utilized to achieve this goal. The paper will discuss grain boundary dysprosium diffusion process in permanent magnets as means to rare earth reduction in PMAC machines and design challenges surrounding such material use. We will also discuss innovative PMAC topologies employing ferrite magnets to completely eliminate rare earth usage while maintaining the electric drive unit performance. The design of electric machines will be discussed in detail along with performance measurement results as well as thermal and NVH aspects.