Electric and hybrid vehicles are particularly suited for use in urban areas since city transportation is mainly characterized by relatively short driving distances, low continuous power requirements, long idling times and high availability of regenerative braking energy. These characteristics, when carefully incorporated into the design process, create valuable opportunities for developing clean, efficient and cost effective urban vehicle propulsion systems. In the first part of the thesis, we present data collected in the city of Bangalore, India from a very commonly seen mode of transportation for hire in India and other emerging economies, namely a three-wheeled vehicle known as the “auto-rickshaw”. From a statistical analysis, it is shown that the typical range is 72.5 km with a mean speed of 12.5 km/h. More than 60% of the time the auto-rickshaw is stationary or has a speed of less than 5 km/h. From a model of the auto-rickshaw, it is shown from simulations that 4 kW DC motor and about 10 kWh of electrical energy is enough to meet 80% of typical requirement. Based on this finding, in this thesis, a novel parallel hybrid architecture is proposed where two 2 kW DC hub motors are directly mounted on the wheels and an internal combustion (IC) engine output is connected to the stator of the DC hub motors to provide additional power when required. To match load and speed, a continuously variable transmission (CVT) is placed in-between the IC engine and the DC hub motor. The proposed hybrid configuration adds speed to the wheel output unlike the normal power split configuration which adds torque. One of the main objective of this work is to study and compare the performance of the above novel speed-addition and compare with the typical torque-addition configuration. A MATLAB/Simulink model for both the configurations, with DC hub motor and a small IC engine, has been created and the fuel consumption has been calculated. It is shown that the proposed speed-addition concept gives better fuel efficiency for the standard modified Indian Driving Cycle. The models have also been compared for actual driving data and an optimal control strategy has been developed using dynamic programming. It is again shown that the proposed speed-addition concept results in better fuel economy. In the last part of the thesis, a low cost experimental test-bed consisting of an auto-rickshaw IC engine, a CVT and a 2 kW DC hub motor has been developed to validate the speed-addition concept and compare with the torque-addition configuration. The torque-speed curves of the IC engine, the DC motor and both of them together, in the speed and torque-addition configuration, have been obtained. It is shown that the speed-addition concept does indeed work and the obtained results are significantly different from the torque-addition configuration.