Brushless Direct Current (BLDC) motors are the type of Permanent Magnet Synchronous Motors (PMSMs) with trapezoidal back-EMF. Due to high proliferation of BLDC motors in industrial applications, these motors are extensively been operated for longer durations. During the continuous heavy operation, these motors are subjected to environmental, physical and thermal stresses which can lead to faults. Fault can be on the stator windings or on the Permanent Magnets (PMs) of the rotor of a machine, which can manifest into electrical quantities like currents and/or voltages, magnetic quantities like flux density and thermal characteristics of a machine. This paper shall explore in detail about the demagnetization fault in PMs of a BLDC motor. Modeling of a machine can be done through different available techniques such as Electrical Equivalent Circuit (EEC) based method or analytical method which accounts several assumptions in order to simplify the analysis. While the Numerical Methods (NM) such as Finite Element Method Magnetics (FEMM) gives more authoritative solutions. This paper aims to combine both these approaches and contribute by developing a novel Hybrid EEC-FEMM model for a closed loop BLDC motor drive using a Hysteresis Current Control (HCC) technique. The developed model is simulated both under healthy and faulty conditions. In order to simulate the effects of fault in the machine, demagnetization is introduced in the PM through various methods like change in magnetic coercivity, placement of broken magnets, partial demagnetization and lastly by replacement of a PM with a non-magnetic material which is an extreme case of demagnetization. The investigation on the machine performance through change in quantities like stator current, back-EMF, electromagnetic torque, mechanical speed and magnetic flux density is analyzed. Further using the Maxwell 2D tool, a Finite Element (FE) model of a BLDC motor is developed and its performance is examined under both healthy and demagnetization fault conditions. The experimental validation of demagnetization fault supports the inferences drawn from the simulation results. INDEX TERMS Brushless direct current (BLDC) motors, demagnetization, electrical equivalent circuit (EEC), finite element method (FEM), hysteresis current control (HCC), numerical method (NM), permanent magnet (PM), permanent magnet synchronous motors (PMSMs).