Mitsubishi Heavy Industries, Ltd (MHI) has recently developed small-size, light-weight and high-power IPM motor and inverter for electric vehicles. This paper describes the system configuration of the electric vehicle and hybrid vehicle and the technologies used for the small-size, light-weight and high-power IPM motor and inverter developed by MHI for electric vehicles. With the skillful arrangement of permanent magnets, optimized combination of rotor poles/stator slots, adoption of concentrated winding, etc., the motor is designed to ensure high current density, high torque constant and high power factor in order to realize high power, approximately 2.5 times higher, in terms of power/volume ratio, than the conventional motor. Realization of small size and light weight has also been achieved in inverter through optimization of water-cooling structure and by integrating the power circuit and the control circuit in one board.