A lot of research in the area of automobiles is focused on Hybrid Electric Vehicles (HEV) and Plug-in Hybrid Electric Vehicles (PHEV). The concept of PHEV becomes meaningful only if the system as a whole is efficient. Inorder to build an efficient HEV, it is important to select the best components and of the correct rating. Motor and Battery are important components in any HEV. This paper describes the procedure to calculate the maximum power requirement of any HEV. The features of two most popular motors used in HEV are discussed. Various HEV architectures are also explained briefly in the paper. This paper proposes an algorithm for motor selection and selection of PHEV architecture based on overall efficiency. The algorithm also ensures that motor is not oversized or undersized for a particular vehicle.