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This paper develops and analyzes an online methodology to detect demagnetization faults in surface-mounted permanent magnet synchronous motors. The proposed methodology, which takes into account the effect of the inverter that feeds the machine, is based on monitoring the zero-sequence voltage component of the stator phase voltages. The theoretical basis of the proposed method has been established. Attributes of the method presented here include simplicity, very low computational burden, and high sensibility. Since the proposed method requires access to the neutral point of the stator windings, it is especially useful when dealing with fault tolerant systems. A simple expression of the zero-sequence voltage component is deduced, which is proposed as a fault indicator parameter. Both simulation and experimental results presented in this paper show the potential of the proposed method to provide helpful and reliable data to carry out an online diagnosis of demagnetization failures in the rotor permanent magnets.