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Optimizing/maximizing regen braking in a hybrid electric vehicle (HEV) is one of the key features for increasing fuel economy. However, it is known [1] that maximizing regen braking by braking the rear axle on a low friction surface results in compromising vehicle stability even in a vehicle which is equipped with an ESP (Enhanced Stability Program). In this paper, we develop a strategy to maximize regen braking without compromising vehicle stability. A yaw rate stability control system is designed for a hybrid electric vehicle with electric rear axle drive (ERAD) and a “hang on” center coupling device which can couple the front and rear axles for AWD capabilities. Nonlinear models of the ERAD drivetrain and vehicle are presented using bond graphs while a high fidelity model of the center coupling device is used for simulation.