This paper proposed a novel fault-tolerant control method based on control allocation via dynamic constrained optimization for electric vehicles with XBW systems. The total vehicle control command is first derived based on interpretation on driver's intention as a set of desired vehicle body forces, which is further dynamically distributed to the control command of each actuator among vehicle four corners. A dynamic constrained optimization method is proposed with the cost function set to be a linear combination of multiple control objectives, such that the control allocation problem is transformed into a linear programming formulation. An analytical yet explicit solution is then derived, which not only provides a systematic approach in handling the actuation faults, but also is efficient and real-time feasible for in-vehicle implementation. The simulation results show that the proposed method is valid and effective in maintaining vehicle operation as expected even with faults.