This paper presents a novel power electronic module (PEM) for chassis-by-wire in passenger cars. The PEM is supposed to be installed in a close-to-wheel position, which provides electrical interfaces with a power harness and signal harness. When the vehicle is driving, the PEM works as a dynamic vibration absorber (DVA) to diminish the negative effects of un-sprung mass. Based on the vibration system model, the mechanical principles are analyzed and the design parameters are mathematically optimized. For a comparison of different configuration schemes with an in-wheel motor (IWM), we take the condition of a vehicle driving at a speed of 15 m/s on a C-class road to examine indicators of vehicle body acceleration, wheel dynamic load, and suspension dynamic deflection. The calculation results prove that the system has advantages in ride comfort and wheel grounding characteristics. For the detailed design of the machine, we build a digital virtual prototype for simulation. Compared to the initial state, the optimized DVA configuration has obvious suppression in component vibration, including the vehicle body, the IWM, and the PEM. The frequency sweep analysis proves a robust result, which ensures that the frequency and amplitude are both within the vibration tolerance range of PEM operations.