To enhance the reliability of the powertrain system of automated vehicles, a diagnostic concept to detect various sensor faults is presented in this paper. By analyzing the signals of existing sensors in the vehicle and using a physical model of a powertrain system, the analytic redundancy relations between signals are derived. Based on the structural system analysis theory, eleven residuals are designed in this paper to detect and isolate various sensor faults in the powertrain system, e.g. voltage, current and position sensors. The proposed method has been implemented and simulated in Matlab/Simulink. As a result, the analyzed sensor faults can be detected successfully. This new method shows good robustness against measurement tolerance and model uncertainty.