This paper investigates the potential of thermoelectric generator (TEG) used in hybrid vehicle. A model of a parallel hybrid vehicle equipped with a TEG in the exhaust manifold is presented. This model is made up by three sub-models: a parallel hybrid vehicle model, an exhaust model and a TEG model. The model is based on a quasi-static approach, which runs a fast and simple estimation of the fuel consumption, CO2 emission, electrical energy consumption and generation using backward formulations. The model is validated against both experimental and published data. Based on this model, the potential of fuel saving and CO2 reduction of per year is calculated based on average road usage. The model also can be used as a flexible tool to analysis of the sensitivity and influence of design parameters on TEG performance in a vehicle system view. The analysis results give an effective way to optimize the TEG, especially when in some cases, the optimization requirements contradictory.