In a drive system of a vehicle, the drive power of an engine is divided by a planetary gear set to drive two power transfer shafts. One of the two shafts includes a continuously variable transmission unit and a clutch. The output sides of the two shafts are coupled to a common power output shaft, which is coupled to an AC motor. In a power transfer condition of the clutch, the vehicle is driven with only the output drive power of the engine or both drive powers of the engine and the AC motor. In a power interruption condition of the clutch, the vehicle is driven with only the drive power of the AC motor. The kinetic energy generated at deceleration of the vehicle is converted into electric energy by the AC motor thereby to perform regenerative braking.