1 -The circumferential cooling system, which provides highly effective, integrated but low-cost motor cooling, is introduced. This work is focussed particularly on magnetic effects, which arise from the special construction of the stator core. An explanation for the existence of inter-laminar flux is given and equations for the prediction of its absolute value are derived. Two approaches, an analytical and a numerical one, for the estimation of power losses due to inter-laminar flux are introduced. In agreement with the calculation results, measurements prove that power losses due to axial flux are very small and are not a concern for the design of a circumferentially cooled machine.