This info is from the link I posted earlier.
Theory of operation

high voltage unit of the HSD
HSD replaces a normal geared
transmission with an electronic system. All car
powertrains drive a
driveshaft that turns the
drive wheels of the car. Because an
internal combustion engine delivers energy best only over a small range of
torque and
speed the crankshaft of the engine is usually attached to a switchable gear train that matches the needed torque at the wheels to the torque that can be delivered by the engine.
HSD replaces the gear box,
alternator and
starter motor with a pair of electrical
motor-generators, a computerized shunt system to control them, a
mechanical power splitter that acts as a second
differential, and a
battery pack that serves as an energy reservoir. A
motor-generator is a
transducer that converts
electricity to
motion or vice-versa. The mechanical connections of the system allow the computer to convert mechanical power from the engine between three forms: extra torque at the wheels (under constant rotation speed), extra rotation speed at the wheels (under constant torque), and electricity. This achieves the benefits of a
continuously variable transmission,
except that the torque/speed conversion uses electricity rather than direct mechanical connection. An HSD car cannot operate without the computer and both motor-generators, though in principle it could operate while missing the gasoline engine. In practice, HSD cars can be driven a mile or two while
out of gas, as an emergency measure to get to a
gas station.
One of the motor-generators (MG2 in Toyota manuals; sometimes called "MG-T" for "Torque") is mounted on the driveshaft, and thus couples torque into or out of the driveshaft: feeding electricity into MG2 adds torque at the wheels. The engine end of the driveshaft has a second
differential; one leg of this differential is attached to the gasoline engine and the other leg is attached to a second motor generator (MG1 in Toyota manuals; sometimes "MG-S" for "Speed"). The differential relates the rotation speed of the wheels to the rotation speeds of the engine and MG1, with MG1 used to absorb the difference between wheel and engine speed. The differential is an
epicyclic gearset (also called a "power split device"); that and the two motor-generators are all contained in a single housing that is bolted to the
engine. Special couplings and sensors monitor rotation speed of each shaft and the total torque on the driveshaft, for feedback to the control computer.
The drive works by shunting electrical power between the two motor generators and the battery pack to even out load on the gasoline engine. Because a power boost is available for periods of acceleration, the gasoline engine can be sized to match only the average load on the car, rather than the peak load on the car: this saves fuel because smaller engines are more power efficient. Furthermore, during normal operation the gasoline engine can be operated at its ideal speed and torque level for power, economy, or emissions, with the battery pack absorbing or supplying power as appropriate to balance the demand placed by the
driver.