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For a hybrid electric vehicle (HEV) with an internal combustion engine, simply operating the engine in its regions of high efficiency does not guarantee the most fuel efficient operational strategy. This paper defines an operational strategy for a HEV through calculating individual powertrain component losses and comparing those losses across possible operational modes. The results of these calculations define how the vehicle can decrease fuel consumption while maintaining low vehicle emissions. The results presented are meant only to define a literal strategy; that is, an understanding as to why the vehicle should operate in a certain way given driver demands, vehicle speed, and powertrain limitations.