A rotary electric machine, such as an automotive alternator or an automotive engine starter motor, is provided which includes a rotor and a stator. The stator is equipped with an annular stator core which has a plurality of magnetic pole teeth facing inwardly and a stator winding. The stator winding includes conductive portions disposed inside slots each of which is formed between adjacent two of the magnetic pole teeth and connecting portions which connect the conductive portions and extend from the slots to define coil ends. The stator core is formed by bending a laminate of strips which extends substantially straight into an annular shape and machining an inner circumferential surface of the laminate to have a high circularity, thereby permitting an air gap between the rotor and the stator to be minimized to improve the performance of the rotary electric machine.