As some of today's bus industry is moving toward electrically powered, low-emission buses, very compact drivetrain package, the driveline design which links electrical motor to spiral bevel or hypoid gears can become a significant challenge especially under severe environment and certain design constraints. The drive axle layout under consideration is depicted in the Figure 1. A design that have an integral shaft extended from cone apex (narrow end) of the pinion to connect to electrical motor is considered. In this design the undercut situation of the shaft by cutter tip during gear tooth generation becomes very critical. The purpose of this paper is to study the effect of cutter radius to provide a solution which is able to avoid or alleviate the interference condition and/or to determine undercut-free shaft diameter and location.Equations of actual gear root line and cutting path are derived based on the simulation of cutting tool motion on the gear blank during the manufacturing process. The contents of this paper are complemented with numerical examples that the difference of undercut impact on shaft diameter between different cutter size by computerized simulation of cutting tool path. To verify the interference phenomenon by computerized simulation, the experiment has been performed. In addition, bending stress analysis by finite element method is carried out to evaluate the strength of gear design.