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Hybrid electric vehicle (HEV) concept has, combining conventional internal combustion engines and electric drives, gained more and more interest due to its environmental friendly features. A PMSynRel based electric drive is considered as a good option due to its high torque density and high efficiency. To reduce the overall cost of HEVs, the position resolvers can be replaced by Hall-sensors or using sensorless control. However, the dynamics of such electric drives may be degraded. The main objective of this MSc project is to develop torque dynamics of such electric drives when operating with/without a position sensor. The developed torque dynamic can be used to analyze the limits of hall senor/sensorless strategy when, e.g. anti-oscillation control isrequired. The torque dynamic is presented as a matrix based transfer function extracted from the speed responses and torque responses using Identification Tool Box in Matlab. Firstly, the transfer function was derived by means of simulations in both time and frequency domains. Secondly, similar procedures were applied to extract the transfer functions based on the experimental results.