An electric propulsion system includes a battery pack and a DC-DC converter. The converter has a bypass switch and semiconductor switches. A traction power inverter module (“TPIM”) rectifies a DC bus voltage on the voltage bus to produce an AC bus voltage. An electric machine is connected to the TPIM and energized via the AC bus voltage. A controller calculates required output power from the converter based on a requested operating mode, and speed and torque of the electric machine. When the output power exceeds a threshold, the bypass switch closes to bypass the converter. When the output power is less than the threshold, the controller uses a minimum loss voltage from a loss map as a target control voltage of the converter to optimize efficiency of the electric propulsion system.