A discussion on the utility of physics-based compact thermal models to guide the design, integration, operation and control of thermally sensitive vehicle components is presented. Effective component selection requires honest and accurate representation of the key performance attributes expressed by physics-based models. Parallel developments and lessons learned from the Electronics Industry on component packaging and characterization is discussed. An example application of a physics-based model driven design is presented for an Electrical Energy Dissipater design used on typical hybrid vehicles. Low fidelity models are used early in the design to support system requirements decomposition into discreet design attributes. High fidelity thermal and electromagnetic models are used to explore the design space and to optimize performance metrics. Accurate and robust reduced order thermal models are used for the continuous prognostic, diagnostic monitoring and control of the device.