Computer simulation of a hybrid vehicle has revealed that improvements in fuel economy up to 30%, and a significant reduction in emissions can be realized without sacrificing the basic performance characteristics normally found in the conventional vehicle.The vehicle under consideration (classified as a series hybrid) is equipped with a heat engine and electric drive. The data presented in the paper indicates that engine size optimization is a crucial factor in the development of a viable hybrid vehicle. Fuel economy and emissions were taken as optimization criteria. An optimization task was carried out to find the optimal point between two extremes. One extreme is an all-electric vehicle, no heat engine but with large batteries. This is a zero emissions vehicle, but with limited driving range and prohibitively long refueling time. Another extreme is an engine-electric drive vehicle with no battery. This vehicle will provide adequate driving range, however, will have no improvements in fuel economy and emissions.The vehicle’s control strategy is designed in such a way as to secure engine steady state operation. The values of unburned hydrocarbon, carbon monoxide and NOx per minute for the speed/load related to the steady state operation were provided by manufacturers. These values were integrated over a driving cycle period to estimate emissions per cycle.The importance of a control strategy is also discussed. The paper emphasizes that engine optimization can only be carried out after an appropriate control strategy has been developed.