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This paper proposes a traction drive system for electric vehicles (EVs) with two separate induction motor drive-based wheels. In this case, an electric differential (ED) is developed. To handle EV stability while cornering or under slippery road condition, the proposed traction drive uses direct torque control and an adaptive-flux-and-speed-observer-based algorithm. EV-specific experimental tests on a digital signal processor TMS320LF2407 are carried out to show the effectiveness of the proposed adaptive ED in terms of robustness and stability.