Approximately, 55% of the energy produced from conventional vehicle resources is lost due to heat losses. An efficient waste heat recovery process will lead to improved fuel efficiency and greenhouse gas emissions. Thermoelectric generators (TEGs) are heat recovery devices that are being widely studied by a range of energy-intensive industries. Efficient solid-state thermoelectric devices are good candidates to reduce fuel consumption in an automobile. Thermoelectric materials have had limited automotive applications due to the automotive waste heat recovery temperature range, the rarity and toxicity of some materials, and the limited ability to mass manufacture thermoelectric devices from expensive TE materials. However, skutterudite is one class of material that has demonstrated significant promise in the transportation waste heat recovery temperature domain. Durability and reliability of the TEGs are the most significant concerns in the product development process. Cracking of the materials at hot-side interface is found to be a major failure mechanism of TEGs under thermal loading. Cracking affects not only the structural integrity but also the energy conversion and overall performance of the system. In this paper, cracking of thermoelectric material as observed in performance testing is analyzed using numerical simulations and analytic experiments. This paper shows, with the help of finite element analysis (FEA), the detailed distribution of stress, strain, and temperature is obtained for each design. Finite element (FE)-based simulations show the tensile stresses as the primary factor causing radial and circumferential cracks in the skutterudite. For a TEG design, loading conditions and closed-form analytical solutions of stress/strain distributions are derived. Scenarios with minimum tensile stresses are sought. These approaches yield the minimum of stress/strain fields which produce cracks. Finally, based on these analyses and computational fluid dynamics (CFD) studies, strategies in tensile stress reduction and failure prevention are proposed.