Safety is a critical feature for all passenger vehicles, making fail–safe operation of the traction drive system highly important. Increasing demands for traction drives that can operate in challenging environments over wide constant power speed ranges expose permanent magnet (PM) machines to conditions that can cause irreversible demagnetization of rotor magnets. In this paper, a comprehensive analysis of the demagnetization vulnerability in PM machines for an electric vehicle (EV) application is presented. The first half of the paper presents rotor demagnetization characteristics of several different PM machines to investigate the impact of different design configurations on demagnetization and to identify promising machine geometries that have higher demagnetization resistance. Experimental verification results of rotor demagnetization in an interior PM (IPM) machine are presented in the latter half of the paper. The experimental tests were carried out on a specially designed locked-rotor test setup combined with closed-loop magnet temperature control. Experimental results confirm that both local and global demagnetization damage can be accurately predicted by time-stepped finite element (FE) analysis.