A hybrid electric drive system for a hybrid powered vehicle which includes a combustion engine, and a transmission. An electric machine and the combustion engine are coupled to the transmission in the hybrid electric drive system providing engine and/or electric machine drive power for the vehicle. A clutch is mechanically communicating with and positioned between the combustion engine and the transmission to decouple the combustion engine from the transmission. An energy storage system is configured to transfer and receive power with the electric machine, and is configured to recharge using power from the electric machine. A hybrid system controller is configured to respond to a regenerative braking mode of the vehicle. While the hybrid electric drive system is in the regenerative braking mode, the hybrid system controller is configured to initiate shifting of the transmission into one or more selected gears relating to one or more selected electric machine speeds.