The inventive parallel drive system is particularly well suited to be supported at the axle of the vehicle. A coupling arrangement includes a clutching mechanism and a gear reduction device that selectively couple an electric motor to the drive wheels for providing torque to the wheels alone or in combination with input from an internal combustion engine. The drive torque can also be provided exclusively from the internal combustion engine. The inventive arrangement also allows for the electric motor to be used as a generator during coasting or braking, for example.