The original free-swinging piston engine with the oscillating rotating generator distinguishes by its compactness, minimum frictional losses, full-balanced mechanical system, possibility of four-stroke operation of the engine, possibility of the multifuel operation of the engine, optimal magnetic circuit of the electrical generator, etc. Because the engine can optimally operate over whole range of the output power, it enables to improve electrical system of the hybrid vehicle by usage of supercapacitors; and optimised energy flows. In this way the competitive hybrid electric vehicle can be created.