Downshift during regenerative braking helps to improve the energy efficiency of electric vehicles. Two main problems are involved in the downshift process. One is the determination of optimal downshift point, and the other is the cooperative control of regenerative braking and hydraulic braking. In order to achieve a systemic solution to these problems, a hierarchical control strategy is brought forward for an electric vehicle with a two-speed automated mechanical transmission. For the upper controller, an off-line calculation and on-line look-up table method is adopted to obtain the optimal downshift point, and a series regenerative braking distribution strategy is designed. For the medium controller, a nonlinear sliding mode observer is designed to obtain the actual hydraulic brake torque. For the lower controller, cooperative control of regenerative braking and hydraulic braking is given to ensure brake safety during downshift process, and a resembling pulse width modulation method is proposed to regulated the hydraulic brake torque. Simulation results and hardware-in-loop test show that the proposed algorithm is effective in improving the energy efficiency of electric vehicles. (C) 2016 Elsevier Ltd. All rights reserved.