The hybrid transmission consists of the power split device, the generator, the electric motor and the reduction gears, etc. The power from the engine is split into two by the power split device. One of the output shafts is connected to the motor and the wheels while the other is connected to the generator. In this way, the motive power from the engine is transmitted through two routes, i.e., a mechanical route and an electrical route.

An electronically controlled continuously variable transmission is also provided, which can change speed while continuously varying the rpm of the engine and the rpm of the generator and the electric motor (in relation to vehicle speed).

THS II also reduces friction loss by about 30% by using ball bearings in the transmission and low-friction.

The power split device uses a planetary gear. The rotational shaft of the planetary carrier inside the gear mechanism is directly linked to the engine, and transmits the motive power to the outer ring gear and the inner sun gear via pinion gears. The rotational shaft of the ring gear is directly linked to the motor and transmits the drive force to the wheels, while the rotational shaft of the sun gear is directly linked to the generator.

Because the maximum possible rpm of the generator has been increased, it can draw on higher engine rpm, thereby producing higher output. As a result, the amount of electricity created by the generator is increased, and this increased amount feeds the motor, thus leading to an increase in driving power.

A 1.5-liter engine is used, which achieves high efficiency by using the Atkinson Cycle, one of the most heat-efficient, high-expansion ratio cycles. Because the expansion ratio ((expansion stroke volume + combustion chamber volume)/combustion chamber volume) is increased by reducing the volume of the combustion chamber and the chamber is evacuated only after the explosion force has sufficiently fallen, this engine can extract all of the explosion energy.

In conventional engines, because the compression stroke volume and the expansion stroke volume are nearly identical, the compression ratio ((compression stroke volume + combustion chamber volume)/combustion chamber volume) and the expansion ratio are basically identical. Consequently, trying to increase the expansion ratio also increases the compression ratio, resulting in unavoidable knocking and placing a limit on increases in the expansion ratio. To get around this problem, the timing for closing the intake valve is delayed, and in the initial stage of the compression stroke (when the piston begins to ascend), part of the air that has entered the cylinder is returned to the intake manifold, in effect delaying the start of compression. In this way, the expansion ratio is increased without increasing the actual compression ratio. Since this method can increase the throttle valve opening, it can reduce the intake pipe negative pressure during partial load, thus reducing intake loss.

VVT-i (Variable Valve Timing-intelligent) is used to carefully adjust the intake valve timing according to operating conditions, always obtaining maximum efficiency. Additionally, the use of an oblique squish compact combustion chamber ensures rapid flame propagation throughout the entire combustion chamber. High thermal efficiency, coupled with reductions in both the size and weight of the engine body through the use of an aluminum alloy cylinder block, and a compact intake manifold, etc., help improve the fuel efficiency.

The engine's top revolution rate has been increased from the 4,500 rpm in conventional engines to 5,000 rpm, thereby improving output. Moving parts are lighter, piston rings have lower tension and the valve spring load is smaller, resulting in reduced friction loss. Furthermore, the increase of 500 rpm produces faster generator rotation, increasing the driving force during acceleration and further improving fuel efficiency.