Abstract: This paper proposes a hierarchical sizing method and a power distribution strategy of a hybrid energy storage system for plug-in hybrid electric vehicles (PHEVs), aiming to reduce both the energy consumption and battery degradation cost. As the optimal size matching is significant to multi-energy systems like PHEV with both battery and supercapacitor (SC), this hybrid system is adopted herein. First, the hierarchical optimization is conducted, when the optimal power of the internal combustion engine is calculated based on dynamic programming, and a wavelet transformer is introduced to distribute the power between the battery and the SC. Then, the fuel economy and battery degradation are evaluated to return feedback value to each sizing point within the hybrid energy storage system sizing space, obtaining the optimal sizes for the battery and the SC by comparing all the values in the whole sizing space. Finally, an all-hardware test platform is established with a fully active power conversion topology, on which the real-time control capability of the wavelet transformer method and the size matching between the battery and the SC are verified in both short and long time spans.