A permanent magnet motor/generator that includes a stator, a rotor provided with a plurality of permanent magnets at a peripheral surface thereof and having a central axis which coincides with the central axis of the stator, a rotatable shaft upon which the rotor is coupled, and an actuator for moving the rotor with respect to the stator axially along the rotatable shaft a sufficient distance to completely decouple the rotor from the stator so as to eliminate magnet induced torque drag. When the permanent magnet/generator is used in parallel hybrid vehicles, the ability to completely decouple the rotor from the stator greatly improves range and efficiency. In addition, by progressively engaging the rotor with the stator a desired voltage output can be obtained upon deceleration.