This paper discusses whether it is possible to improve the motor efficiency by a two-speed transmission in an electric bus, and if so, to what extent. Based on the China Bus Urban Cycle, an 8-meter electric bus was studied via simulation in Matlab/Simulink. The comparison of motor efficiency between two different configurations was made: direct drive and drive through a two-speed transmission. In the first part of the simulation, the speed ratios of the two-speed transmission were chosen as 1.5 and 3.5. The motor efficiency was improved by 1.22% for driving and 1.66% for generation. To find out the maximum improvement and corresponding optimal speed ratio combination, scanning experiment of the lower ratio and upper ratio was conducted in the second part. As much as 1.66% improvement of driving efficiency and 2.20% of regenerating efficiency was achieved. Moreover, two 3-D maps (drive and regenerate) were derived, in which X-axle and Y-axle represented upper gear ratio and lower gear ratio respectively and Z-axle for the improvement of efficiency. Moreover, two 3-D maps were generated to show the relationship between efficiency and lower/upper gear ratios. These two maps revealed optimal speed ratio combination and provided reference for choosing ratios. This study shows that two-speed transmission has potential to improve overall operating efficiency of traction motor, and also provided a method to determine the optimal speed ratio combination.