This paper describes the motor and inverter of Nissan's newly developed parallel hybrid system for rear-wheel-drive hybrid vehicles. The new system incorporates a high-power lithium-ion battery and a one-motor-two-clutch powertrain to achieve both highly responsive acceleration and better fuel economy. As the main components of the hybrid system, both the motor and the inverter have been developed and are manufactured in house to attain high power density for providing responsive acceleration, a quiet EV drive mode and improved fuel economy.Because the motor is located between the engine and the transmission, it had to be shortened to stay within the length allowed for the powertrain. The rotary position sensor and clutch actuator are located inside the rotor to meet the size requirement. High-density winding of square-shaped wire and a small power distribution busbar also contribute to the compact configuration. High torque density and efficiency were achieved to meet the system requirements by optimizing the magnetic circuit using bread-loaf-shaped magnets.The inverter is sized to a 12V battery, which it replaces in the engine compartment. The following main inverter parts were newly developed to obtain more efficient cooling characteristics than the previous parts using existing technology: A power module configuration with semiconductor devices directly mounted onto the busbar.A specially designed sheet that is inserted between the power module and the heat sink to improve heat conductivity without reducing withstanding voltage.A water-cooled heat sink made of high heat conductivity aluminum.These technologies work to enhance current density and result in a more compact package at lower cost.