This paper investigates the heat dissipation in the hub motor of an electric two-wheeler using lumped parameter (LP), finite element (FE) and computational fluid dynamic (CFD) models. The motor uses external rotor permanent magnet brushless DC topology and nearly all of its losses are generated in the stator. The hub motor construction restricts the available conductive paths for heat dissipation from the stator to the ambient only through the shaft. In contrast to an internal rotor structure, where the stator winding losses are diffused via conduction, here convection plays a major role in loss dissipation. Therefore, a LP thermal model with improved convection modelling has been proposed to calculate the temperature of the components inside the hub motor. The developed model is validated with the FE thermal model and the test data. In addition, CFD tools has been used to accurately model the internal and the external flow as well as the convective heat transfer of the hub motor. Finally, an optimization study of the hub motor has been carried out using the CFD model to improve heat transfer from the stator.