In this paper, the results of a finite-element (FE) analysis carried out to study the effects of armature reaction on axial-field permanent-magnet (PM) brushless dc (BLDC) motor is presented. The results of the conventional and FE analyses carried out to calculate the self- and mutual inductances of the motor are also given. The FE method enables accurate analysis to get the effects of armature reaction, especially in PM motors. Analysis is carried out on a 3-hp, three-phase, 48-V, 16-pole, 800-r/min axial-flux PM brushless dc motor designed for the direct drive of an electric two wheeler. The slotless stator sandwiched by two disc rotors is the topology of the motor. The rated torque is 48.19 N · m, and the peak torque required for acceleration of the vehicle is 80 N · m. In the analysis, the stator coils of the motor are excited at no-load, full-load, and peak-load conditions, and the effects of these loadings on the developed torque as well as flux densities in different parts of the motor are observed. It is observed that the reduction in flux density is not linear with the armature current but increases drastically with the current. At peak load, the air-gap flux density is 0.087 T and the reduction in peak torque because or armature reaction is calculated as 2.8%. The coil inductance comprises the air-gap inductance and the end-turn inductance. Slot leakage inductance is not considered because of the slotless geometry of the stator. The equation used for the coil inductance is Lc=2Ns(Lg+Le).