In this article, a novel fault-tolerant design process of the spoke-type interior permanent magnet (IPM) motor is proposed to prevent the increase of cogging torque and torque ripple due to partial demagnetization fault and to minimize the motor size. First, unlike other research papers on the irreversible partial irreversible demagnetization of permanent magnet (PM), in this article, the effect of partial irreversible demagnetization faults on the cogging torque and torque ripple for the fault cases is investigated. Then, a novel fault-tolerant design process is proposed to solve the problem of partial demagnetization faults that increase the cogging torque and torque ripple. In the novel fault-tolerant design process, first, to solve the problem of increasing cogging torque and torque ripple due to the partial demagnetization fault, a process for implementing a uniform irreversible PM demagnetization is proposed. Second, to compensate for the motor torque constant decreased by degraded PM, which is caused by irreversible demagnetization of PM, a torque compensation coefficient is also proposed. The proposed fault-tolerant design process is applied to the motor design for the integrated electric brake (IEB) system that requires high torque density. In the optimal design process, Latin hypercube sampling (LHS), a kriging method, and a genetic algorithm are utilized. To verify the effectiveness of the proposed fault-tolerant design process, it is compared with the conventional optimized design results in which irreversible demagnetization of PM is not allowed at all to prevent the partial demagnetization faults. As a result of comparing the optimal design results, the proposed optimization model utilizing the fault-tolerant design process can significantly reduce the motor volume by 12.9%, compared to the conventional optimization model.