Hybrid electrical vehicles (HEVs) are becoming more and more popular nowadays in automobile market due to virtues such as energy saving, environmental friendly and low noise. A simple mechanical structure called "planetary gears" are widely used in HEVs to allow the internal combustion engine (ICE) constantly working at its high efficiency region and save energy by decoupling the speed of the ICE and the wheel-load. Despite its advantages, planetary gears also introduce several problems to the HEV system such as vibration, abrasion and mechanical maintenance fee. In this paper, a novel axial flux magnetic-field-modulated dual-mechanical-port dual-electricalport (AF-MFM-DMP-DEP) machine is proposed for HEVs applications to replace the whole hybrid-electric powertrain in HEVs. By cooperating a magnetic-field-modulated (MFM) machine and a conventional synchronous PM machine, the proposed machine is capable of decoupling both speed and torque of the ICE and the wheel-load electrically. Without the usage of mechanical speed decoupling devices, the hybrid system mechanical transmission loss could be avoided while the vibration, abrasion and maintenance fee of the system could be reduced. Based on the proposed machine, a HEV system is constructed and its operating modes are illustrated. Firstly, the machine structure, operation principles and operation modes are introduced. After that the torque transmission capability is verified by quasi-3D FEA. Four models of different gear ratio are established to determine the influence of gear ratio variation and the optimization gear ratio is 2:13.