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Permanent magnet synchronous machines (PMSM) are considered a viable option in various types of applications. However, particularly in consumer and low-power industrial applications, the price may be a factor that limits the use of PMSMs. In addition to a different technology, the main reason for the high price of PMSMs is the use of expensive neodymium or samarium-cobalt magnets. Their use is necessary only if a high motor torque T to linear current density A ratio (T/A) is required. Ferrite permanent magnets are low cost, abundant, and have negligible eddy current losses in low-frequency applications such as motor drives. They have a much lower energy product (BHmax) than the most modern magnets. Because of the high prices of rare earth magnets, many parties are seeking for opportunities to use ferrites instead. In the case of rotor surface ferrite magnets, the air gap flux density remains low. The air gap torque producing tangential Maxwell stress is proportional to the product of the air gap flux density Bδ[ Vs/m2] and the linear current density A [A/m]. If the flux density is low and A cannot be increased, the rotor has to be made larger than in machines having a high air gap flux density. In the case of multiple pole machines, the outer rotor approach, with its low rotor yoke height, offers an interesting alternative. The air gap diameter of these machines can be made larger than in conventional inner rotor type motors without increasing the machine outer dimensions. In this paper, an outer rotor PMSM with ferrite magnets is analyzed and tested. The machine characteristics in a fan drive are compared with an induction machine of the same power.