An axial flux electric machine comprises a stator including a plurality of stator core segments each comprising a lamination comprising a plurality of layers. A first soft magnetic composite (SMC) portion is arranged adjacent to the plurality of layers of the lamination. An insulating layer arranged between circumferential side surfaces of the plurality of layers of the lamination and the first SMC portion. A rotor is arranged axially adjacent to the stator and including a plurality of permanent magnets. The rotor and stator are configured to generate magnetic flux that is aligned parallel to an axis of rotation of the rotor.