A condition of impaired speed and torque control of a parallel electrically variable transmission due to factors beyond nominal modeling and estimation errors is diagnosed under low speed operation. The transmission includes at least one electric machine and a motor torque controller for regulating the transmission input speed and output torque. The motor torque controller includes an open-loop control path based on predetermined torques and accelerations and a closed loop control path based on input speed error. The presence of a larger than expected closed-loop correction magnitude, combined with low output speed and one or more other conditions is used to diagnose a condition of potential torque error, in which case the transmission control is altered to prevent unwanted operation.