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This paper presents a causal optimal control-based energy management strategy for a parallel hybrid electric vehicle (HEV). This strategy not only seeks to minimize fuel consumption while maintaining the state-of-charge of the battery within reasonable bounds but to minimize wear of the battery by penalizing the instantaneous battery usage with respect to its relative impact on battery life as well. This impact is derived by means of a control-oriented state-of-health model. The results indicate that the proposed causal strategy effectively reduces battery wear with only a relatively small penalty on fuel consumption. Ultimately, in terms of cost of fuel and battery replacements, the total cost of ownership over the entire life of the vehicle is significantly reduced.