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As an energy storage device, the flywheel has significant advantages over conventional chemical batteries, such like higher energy density, higher efficiency, longer life time, and less environment pollution. Flywheel technology have been widely used in varies of areas, including power system, space craft, and hybrid electric vehicles (HEV). An effective flywheel system mainly attribute to its good motor /generator (M/G) design. This paper describes the design of a permanent magnet synchronous machine (PMSM) as an M/G suitable for integration in a flywheel energy storage system within a large HEV. The operating requirements of the application include wide power and speed ranges combined with high total system efficiency. The machine described in this paper has been designed to meet these requirements together with a number of additional constrains that include restricted dimensions, voltage and current limits. Along with presenting the design, essential issues upon PMSM design including cogging torque, iron losses and total harmonic distortion (THD) are investigated, and certain strategies as solutions to those issues have been introduced and compared. An iterative approach combining lumped parameter analysis with 2D finite element analysis (FEA) is used, and the final design is also presented showing great performances.