Energy storage systems play a crucial role in the overall performance of hybrid electric vehicles. Therefore, the state of the art in energy storage systems for hybrid electric vehicles has been discussed in this paper along with appropriate background information for facilitating future research in this domain. Specifically, we have compared the key parameters such as cost, power density, energy density, cycle life, and response time for various energy storage systems. For the energy storage systems employing ultra capacitors, we have presented the characteristics such as cell voltage, cycle life, power density and energy density. Furthermore, we have discussed and evaluated the interconnection topologies for the existing energy storage systems. We have also discussed the hybrid battery-flywheel energy storage system as well as the mathematical modeling of the battery-ultracapacitor energy storage system. Toward the end, we have discussed energy efficient powertrain for hybrid electric vehicles.