Power-split hybrid electric vehicles (HEV) employ a speed reduction gear (SRG) mainly to enhance acceleration performance. However, the full potentials of an additional gear on fuel economy and acceleration performance have not yet been thoroughly investigated due to a vast design space: 432 configurations with three design variables (i.e. two planetary gear ratios and a final drive gear ratio). In this paper, a systematic speed reduction gear design methodology is proposed to analyze the impact of a speed reduction (multiplication) gear on the performance of input- and output-split HEVs and select an optimal configuration. First, the physical and virtual design spaces of SRG (SMG) are defined and the relationship between two design spaces are identified. Second, performance metrics are evaluated within the virtual design space using the proposed simplified lever. The proposed approach completely eliminates the redundancy present in the physical design spaces, and thus, the impact of SRG (SMG) on the performance of input- and output-split configurations can be analyzed with the minimum computational burden. Lastly, the selected gear ratio is converted back to the physical planetary gear connections. The results confirm that SRG (SMG) can potentially either improve or deteriorate the acceleration performance and the fuel economy of split HEVs. Therefore, the full potential of speed reduction or multiplication gear should be thoroughly analyzed when designing split hybrid electric vehicles.