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Permanent magnet synchronous (PMSM) drives become very popular in many industrial applications. Their construction provides better performance and reliability than DC drives. But there is also one significant disadvantage - actual rotor position knowledge is necessary to control the drive even in the case when only speed control is required. A position sensor has to be used increasing the drive cost. Algorithms for rotor position and speed estimation from electrical quantities have been developed by many authors. This paper presents a new approach of speed and position estimation based on the estimator stability analysis.