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In this paper, the tradeoff relationship between the Air Conditioning (A/C) system performance and vehicle fuel economy for a hybrid electric vehicle during the SC03 drive cycle is presented. First, an A/C system model was integrated into Ford’s HEV simulation environment. Then, a system-level sensitivity study was performed on a stand-alone A/C system simulator, by formulating a static optimization problem which minimizes the total energy use of actuators, and maintains an identical cooling capacity. Afterwards, a vehicle-level sensitivity study was conducted with all controllers incorporated in sensitivity analysis software, under three types of formulations of cooling capacity constraints. Finally, the common observation from both studies, that the compressor speed dominates the cooling capacity and the EDF fan has a marginal influence, is explained using the thermodynamics of a vapor compression cycle.