Battery replacement and fuel costs are the major recurring costs over a lifetime for HEVs. Here, the authors attempt to identify the optimal operating points for the minimum and maximum state of charge (SoC) along with power ratings of the motor and fuel converter to increase the battery life and fuel economy without any detrimental effect on vehicle performance. The simulations have been carried out on Ford C-Max Energi (2016) as a representative for PHEVs based on the Urban Dynamometer Driving Schedule (UDDS) and Highway (HWY) driving cycles. The software used for these simulations is the Future Automotive Systems Technology Simulator (FASTSim), developed by the National Renewable Energy Laboratory (NREL). The optimal determined values of the parameters led to a 3.8% reduction in the present value of the lifetime cost while improving the battery lifetime by over 18%. At the same time, a 4.3% improvement in the driving range have also been observed. This study will help in achieving optimal cost reduction in these vehicles.