Summary The sensorless speed control of permanent magnet synchronous motor (PMSM) is gaining popularity in hybrid electric vehicle (HEV) applications leading to its enhanced safety, reliability, and cost savings. Speed control using vector control for PMSM‐fed HEV requires the speed encoder. When the speed sensor information fails, the inverter must ensure power delivery to the PMSM continuously by estimating the speed; this mode of operation is referred as limp‐home mode in HEV. In this paper, a speed sensorless scheme has been proposed for PMSM‐based HEV during limp‐home mode operation. This paper presents a model reference adaptive system (MRAS) speed estimator based on an adaptive neural network controller (NNC) for speed estimation of PMSM. In the HEV application, in case of speed/position encoder failure, the speed of the PMSM can be estimated by stator flux using stator current.The proposed method employs stator currents in the reference model to eliminate the DC drift problem. Furthermore, the NNC is employed in the adaptation mechanism to improve the Federal Test Procedure (FTP75) driving cycle performance. The performance of the proposed control scheme has been validated with dSPACE 1104 R & D rapid development controller using vector control for the PMSM during variable speed and torque, including the zero‐speed applications This paper presents a model reference adaptive system (MRAS) speed observer based on an adaptive neural network controller for speed estimation of permanent magnet synchronous motor (PMSM) fed hybrid electric vehicle. When the speed sensor information fails, the inverter present in the power train of the vehicle must continuously ensure power delivery to the PMSM by estimating the speed; this mode of operation is referred to as limp‐home mode in EV. The proposed method employs stator currents in the reference model to eliminate the DC drift problem. The ANN‐based stator current MRAS speed observer has been tested for different driving cycles, such as FTP75, Indian urban, Indian highway drive cycle, and staircase reference input. The proposed control scheme enhances the system's dynamic performance by achieving better control and accuracy in speed regulation at different driving cycles, which is verified by comparing standard deviations (SDs) and relative error of speed response.