Electric vehicles (EVs) with induction motor (IM) drives require energy optimization due to their limited energy storage capacity. Among the energy optimization methods currently available, a loss model-based controller (LMC) is a satisfactory technique, since it converges rapidly to an optimal operating point. Some of the simplifications applied to LMCs, such as neglecting the core loss and leakage inductances, affect IM drive performance negatively in terms of loss minimization. To overcome this problem, this paper presents an efficient LMC combined with direct torque control (DTC). The proposed method is based on the idea that the magnetizing current is much higher than the core loss current. Using the sum of the stator current and the rotor current instead of the magnetizing current, modelling the losses is simplified and the optimal stator flux is determined easily. A simulation study is carried out to evaluate the performance of the proposed scheme with an EV application during an FTP-75 urban driving cycle. A prototype 3 kW IM drive with a TMS320F28335 digital signal processor (DSP) is built to validate the simulation results. A significant efficiency improvement is obtained at low loads. Both simulation and experimental results demonstrate that the proposed DTC improves efficiency and decreases torque ripple.