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Accurate high level system simulation is difficult to obtain without first capturing the behavior of the individual components through physical testing and measurements. Early in the design phase the individual components have yet to be built and tested, thus compromising the accuracy of the simulation. In this early period of the design stage, the component models are created by relying solely on their constitutive relationships. Furthermore, it is difficult to incorporate physical effects such as spatial harmonic and nonlinearities into such constitutive based models. Once the design stage reaches the component level, there exists a number of physics simulators for every discipline involved: thermal, mechanical, electromagnetism and fluid dynamics; these simulators, based on numerical methods, provide high fidelity detailed information about the component. However, having an accurate multi-physics virtual model of a system at the 3D level and at the system 0D level remains a challenge. This paper will introduce a methodology to apply simulation at every step of the design cycle, from the early functional design stage to the detailed component optimization to the verification stage of the vehicle dynamics. It involves system simulation, component level multiphysics analysis using numerical methods, Reduce Order Models techniques and embedded software import. The example used to demonstrate this is the fuel consumption analysis of a hybrid electric vehicle.