An electrical and mechanical design process for a traction motor in a hybrid bus application is studied. Usually, the design process of an electric machine calls for close cooperation between various engineering disciplines. Compromises may be required to satisfy the boundary conditions of electrical, thermal, and mechanical performances. From the mechanical point of view, the stress values and the safety factors should be at a reasonable level and the construction lifetime predicted by a fatigue analysis. In a vehicle application, the motor has to be capable of generating high torque when accelerating, and in normal operation, the losses of the machine should be low to be able to cool the machine. Minimization of the no-load iron losses becomes a very important electrical design requirement if the traction motor and the generator are mechanically connected with an internal combustion engine when it is operating as the only source of torque. The manufacturing costs of the motor are also taken into account in this paper.