The main contribution of this paper is the application of Loss Minimization control algorithm of a three-phase squirrel-cage induction motor which is used in parallel with an internal combustion engine (ICE), in hybrid electric vehicles (HEY). During steady state operation of the electric motor, the electric motor's optimal motor flux profile minimizes the electric motor losses and maximizes the overall HEN efficiency, hybridization factor (HF). During steady state operation of the direct torque controlled (DTC) induction motor, loss minimization is achieved by adjusting the magnitude of the stator flux reference as a function of the vehicle driver (pedal acceleration) and the coordinated control. The proposed stator flux optimization method initially uses a Loss Model Controller (LNIC) which provides the real time fast gross approximation or the optimum motor flux and sequential uses a real time fuzzy logic search controller (FLSC). The FLSC control system, provides the real-time refinement of the motor's flux adjustment on the basis or search during the steady states. Due to the FLSC the electric motor's flux level fluctuates in steps until the measurement of electric motor's input electric power settles at a minimum. The dynamic model of the electric motor and the suggested control algorithm designed by using the MATLAB/Fuzzy Logic Toolbox. The control algorithm is validated by numerical results by using the digital signal processor of eZdspF212 (TM). Experimental results will be available upon conclusion of the laboratory testing on a 10 hp, 500 kg HEY in which an 5 hp IM is coupled in parallel with an ICE on the drive shaft of the wheels.