Engine retard operation scheduling and management in a hybrid vehicle

A hybrid vehicle includes a powertrain having a retarded diesel engine, an electric machine and energy storage system. The engine and motor are operatively coupled through one or more planetary gearsets and selective coupling paths in accordance with application and release of various torque transfer devices to a drivetrain via an output. Regenerative and retarded engine braking are coordinated to provide priority to energy return to an energy storage system in accordance with predetermined power flow limits.