This paper involves the study of implementation of an active electronic differential using torque vectoring in an electric rear wheel drive vehicle. The proposed system works in a closed loop taking feedback in real time from sensors which provides inputs for steering angle, throttle position, angular velocity of wheels, yaw rate, yaw acceleration, longitudinal acceleration and lateral acceleration. The objective of this system is to i) increase the stability and the vehicle response to the driver while turning, and ii) use the traction available on the driven wheels more efficiently. The system involves applying a torque difference between the rear driven tires to create a moment about the centre of mass that causes yaw acceleration and aids in turning the car by increasing yaw rate. The effect of drag forces and the lateral forces on the tires have been included. An optimized desired moment is calculated which is applied via torque difference while turning. A Permanent Magnet DC (PMDC) motor model and a model for the motor controller in torque mode have been developed based on experimental response analysis on a jig setup. A detailed race car model for longitudinal vehicle dynamics is derived from forces acting on the car including the effect of losses due to drag forces, rolling resistance, transmission inefficiency and inertial losses. To validate the proposed system, various throttle profiles and steering inputs are simulated on the vehicle model during a turn. The results are compared to the case when vehicle is turning without using torque differential.