This work focuses on the conceptual design and optimization of a near series prototype of a high-power thermoelectric generator system (TEG system) for diesel-electric locomotives. The replacement of the silencer in the exhaust line enables integration with already existing vehicles. However, compliance with the technical and legal frameworks and the assembly space requirements is just as important as the limited exhaust back pressure, the high power density and the low life cycle costs. A special emphasis is given to the comparison of cascaded two-stage Bi2Te3 and Mg2Si0.4Sn0.6/MnSi1.81 modules with single-stage Bi2Te3 modules, both manufactured in lead-frame technology. In addition to the numerous, partly competing boundary conditions for the use in rail vehicles, the additional degree of freedom from the cascaded thermoelectric modules (TEM) is considered. The problem is investigated by coupling one-dimensional multi-domain simulations with an optimization framework using a genetic algorithm. The achievable electrical power of the single-stage system is significantly higher, at 3.2 kW, than the performance of the two-stage system (2.5 kW). Although the efficiency of the two-stage system is 44.2% higher than the single-stage system, the overall power output is 22.8% lower. This is because the lower power density and the lower number of TEM more than compensates the better efficiency. Hence, the available installation space, and thus the power density, is a critical constraint for the design of TEG systems. Furthermore, for applications recovering exhaust gas enthalpy, the large temperature drop across the heat exchanger is characteristic and must be considered carefully within the design process.