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Interior permanent magnet (IPM) motor is widely used for many industrial applications and has relatively high torque ripple generated by reluctance torque which results in noise and vibration. Since the configuration of the stator has great influence on reluctance torque, design optimization is necessary to improve the torque performance of IPM motor. In this paper, structural optimization based on the level set method is formulated to reduce torque ripples by minimizing the difference between torque values at defined rotor positions and the constant target average torque value under the constrained material usage. The nonlinear ferromagnetic material boundary of the stator is implicitly represented through an embedded level set function and the movement of the material boundary is driven by the normal velocity derived from optimality and convergence conditions of the level set equation. The proposed method is applied to design the optimal stator configurations of a traction motor of hybrid electric vehicle and presents the improved torque characteristics of IPM motor.