The invention provides a vehicle including an AC rotating electric machine, an inverter and an electronic control unit, and a control method thereof. When an overcurrent abnormality occurs, i.e., phase current of a motor-generator exceeds a permissible value, in a high rotational speed region, the electronic control unit performs control (upshift control) for shifting up an automatic transmission provided between the motor-generator and driving wheels, or control (neutral control) for bringing the transmission into a released state, so as to reduce the rotational speed of the motor-generator. If phase current is detected even when an all-gate turn-off command is generated to the inverter while the rotational speed of the motor-generator is reduced to be within a low rotational speed region under the upshift control or neutral control, the electronic control unit determines that a short-circuit fault occurs in the inverter.