The terms transaxle and transmission are sometimes confused with the latter being used in place of the former. While both components transmit power from a vehicleâs engine to the wheels, they are two different things. Transmissions are usually found in rear-wheel-drive vehicles and serve one purpose: to send engine power to the driveshaft via an array of different gear ratios. Transaxles are used in front-wheel-drive cars and serve the same purpose as a transmission but also adopt the job of the differential Ââ which is a completely separate component on rear-wheel-drive models. Since the axles that drive the wheels (or CV axles) are connected to the transaxle, a power-splitting differential system must be used to allow for proper power distribution to the wheels. In essence, then, a transaxle is a transmission and a differential all in one integrated assembly. Keep on reading to find out more about each of these drivetrain parts, the main differences, and how each system works.