In previous work, an approach based on maximizing the efficiency of an internal combustion engine while ignoring the power conversion efficiency of other powertrain components, such as the electric motor and power battery or ultracapacitor, was implemented in the steady-state optimization of an internal combustion engine for hybrid electric vehicles. In this paper, a novel control algorithm was developed and successfully justified as the basis for maximal power conversion efficiency of overall powertrain components. Results indicated that fuel economy improvement by 3.9% compared with the conventional control algorithm under China urban transient-state driving-cycle conditions. In addition, using the view of the novel control algorithm, maximal power generation of the electric motor can be chosen.