An electric drive system of a vehicle comprises a motor, a position sensor, an inverter, sensors to sense current and voltage supplied to the motor, and a controller to control the motor by controlling the inverter based on data from the position sensor and the sensors and a torque command. The controller estimates a motor torque using a motor model, calculates the motor torque, and generates a first state of health for the electric drive system based on a difference between the estimated and calculated motor torques. The controller generates, in response to the first state of health being less than or equal to a first threshold, a second state of health for at least one of the position sensor, the sensors, and the motor, and determines whether one of the position sensor, the sensors, and the motor is faulty based on the first and second states of health.