There is a growing interest in hybrid electric vehicles due to environmental concerns. Recent efforts are directed toward developing an improved main component systems for the hybrid electric vehicle applications. Soon after the introduction of electric starter for internal combustion engine early this century, despite being energy efficient and nonpolluting, electric vehicle lost the battle completly to internal combustion engine due to its limited range and inferior performance. Hybrid Electric vehicles offer the most promising solutions to reduce the emission of vehicles. This paper describes a method for cost reduction estimation of parallel hybrid electric vehicle. We used a cost reduction structure that consisted of five major subsystems (three-type and two-type motor) for parallel hybrid electric vehicle. Especially, we estimated the potential for cost reductions in parallel hybrid electric vehicle as a function of time using the learning curve. Also, we estimated the potentials of cost by depreciation.