A complete analytical design and analysis procedure of permanent magnet motors for ‘in-wheel’ traction application system is developed. Method to obtain minimum power requirement and optimal torque-speed profile to meet acceleration performance is explained. Analytical design procedure to optimize electric motor parameters, such as, back emf and torque constants, inductance and magnet thickness is developed that are based on the torque-speed requirement of the system. The optimization technique focuses on minimizing the power and volt-ampere rating of the entire electrical system. The design process is validated through experiment and field-testing. Although the paper is focused on electric bicycle system, the approach is also applicable to electric and hybrid electric vehicles.