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This paper presents test results of a new motor-integrated permanent-magnet gear and clarifies a path for future optimizations. The demonstrator, whose fabrication is also described, is initially targeting electrical traction for vehicles. Basic measured parameters in the forms of back electromotive force, stall torque, and inductances are all in line with finite-element calculations. However, very high rotational losses are present in the demonstrator, and these losses are higher than the calculations. Some of the losses are present due to poor aspects in the fabrication of the demonstrator, while others are identified to be caused by a nonoptimal diameter/length aspect ratio. The torque density is superior, and the copper losses are only a fraction of the copper losses in other traction motors. With the proposed changes to reduce the rotational losses, it is believed that the unit has a great potential for traction applications.