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 is discussed in this paper along with appropriate background information for facilitating future research in this domain. Specifically, we compare key parameters such as cost, power density, energy density, cycle life, and response time for various energy storage systems. For energy storage systems employing ultra capacitors, we present characteristics such as cell voltage, cycle life, power density, and energy density. Furthermore, we discuss and evaluate the interconnection topologies for existing energy storage systems. We also discuss the hybrid battery–flywheel energy storage system as well as the mathematical modeling of the battery–ultracapacitor energy storage system. Toward the end, we discuss energy efficient powertrain for hybrid electric vehicles.