Power management of a hybrid energy storage system (HESS) with battery and supercapacitor(SC) is of critical importance for electric vehicles to achieve good driving performance, long traveling range and high energy efficiency. Due to the great differences in dynamic characteristics between battery and supercapacitor, and the complexity of a HESS, proper power management strategy between battery and supercapacitor remains to be challenging. The proposed research in this paper is to develop a power-balance and wavelet-transform based strategy for power distribution in a way such that each device can be utilized optimally. The transient dynamics is first decoupled via wavelet-transform algorithm while the power-balance algorithm is employed to improve system robustness based on the desired velocity-SOC relationship and a fuzzy logical controller. Finally some simulations have been conducted with results shown that the proposed strategy is valid and effective.