A method in a motor controller for an electric motor is disclosed. The method includes receiving a motor current measurement, a motor reference voltage or measured voltage, and an estimated temperature from the electric motor, determining a reference flux linkage estimate (λpm,ref) from a lookup table based on the motor current measurement and the estimated temperature, determining a back-EMF (electromotive force) estimate based on the motor current measurement, the motor voltage and the estimated temperature, determining an observed flux linkage estimate (λpm,obs) from the back-EMF estimate, determining a magnetic strength as a ratio of the observed flux linkage estimate to the reference flux linkage estimate, and determining that a rotor magnet has been demagnetized to an unacceptable level when the magnetic strength is below a threshold level.