A high performance bidirectional DC/AC converter is required for low emission and high efficiency propulsion systems, such as electric vehicles (EVs) and hybrid electric vehicles (HEVs). In order to increase the reliability of the drive system, this paper presents the design, analysis, and implementation of a cost effective sensorless control scheme for the extensively used brushless DC motors and alternators. Taking into consideration cost and ease of implementation, the commutation signals are obtained without the motor neutral voltage, multistage analog filters, A/D converters, and the complex digital phase shift (delay) circuit which are indispensable in the conventional sensorless control algorithms. In the proposed approach, instead of detecting the zero crossing point of the nonexcited phase back EMF to the neutral voltage, the commutation signals are extracted directly from the specific average line to line voltages with simple RC circuits and comparators. As a result, the proposed control algorithm can be easily implemented with the low cost CPLDs or 8-bit micro-controllers. Because of the inherent low cost property, the proposed control algorithm is particularly suitable for cost sensitive products such as electric bikes, electric scooters, hybrid electric scooters, home appliances, automotive components, etc. Theoretical analysis and experimental results show that the proposed control algorithm exhibits satisfactory performance over a wide operation range in both motor and alternator operations.