In electrical vehicle applications, power density plays a significant role in improving machine performance. The main objective of this paper is to design and analyze the performance of in-wheel outer rotor permanent magnet synchronous motor (PMSM) used in electric vehicles based on a previously designed model. The key challenge is to achieve the best machine performance regarding the highest torque density and lowest torque ripple. This work also aims at reducing the machine cost by using permanent magnet (PM) material, which has less energy density than the PM used in the previously designed model. An optimization procedure is carried out to improve the generated torque, keeping the same aspects of size and volume of the selected machine. On the other hand, the other specifications of the machine are taken into consideration and are maintained within the acceptable level. According to their major impact on the machine’s performance, the most important parameters of machine designing is selected during the optimization procedure. This proposed machine is implemented and tested using the finite element software package “MagNet 7.4.1” with Visual Basic 16.0 programming language and MATLAB 9.5 Simulink for post-processing.