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Energy usage evaluation and condition monitoring for electric machines are important in industry for overall energy savings. They are often expected to be implemented in an integrated product because of many common requirements such as data collection. Because of the uninterrupted characteristic of industrial processes, traditional methods defined in IEEE Standard 112 cannot be used for these in-service motors. This paper proposes a truly nonintrusive method for in-service motor-efficiency estimation based on air-gap torque using only motor terminal quantities and nameplate information, with special considerations of motor condition monitoring requirements. Rotor speed and stator resistance, the stumbling blocks of most in-service testing methods, are extracted from motor input currents instead of being measured. The no-load test, which is required for calculating the rotational loss and core loss, is eliminated by using empirical values. Stray-load loss is assumed according to the motor horsepower as suggested in IEEE Standard 112. Finally, the proposed method is validated by testing three induction motors with different configurations. Experimental results show that the proposed method can estimate motor efficiencies with less than 2% errors under normal load conditions.