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Hybrid electric vehicle technology demands for power modules which are highly reliable, compact, economical and rugged enough to withstand mechanical, electrical and thermal shocks. Increasing the power density of the latest power module is the top most trend in power semiconductor development; similar trend is seen in the hybrid electric vehicle technology more due to the space and weight constraints. Both space and weight are precious in hybrid electric vehicle technology hence power semiconductor manufacturers are finding out ways to make compact and lighter power modules. Even the better modes of cooling systems, higher junction temperature, reduction of losses, size and weight are the main areas focused by the power semiconductor manufactures which in turn lead to optimized design solution for hybrid electric vehicle (HEV). In this paper, the concept of direct cooled power module against the conventional power module, their reliability aspects and their benefits in the hybrid electrical vehicles are discussed. Infineonpsilas latest IGBT power module package the HybridPACK2 for the hybrid electric vehicle application is also briefly discussed in this paper.