One of the most dominant manufacturing methods in the production of electromechanical devices from sheet metal is punching. In punching, the material undergoes plastic deformation and finally fracture. Punching of an electrical steel sheet causes plastic deformation on the edges of the part, which affects the magnetic properties of the material, i.e., increases iron losses in the material, which in turn has a negative effect on the performance of the electromagnetic devices in the final product. Therefore, punching-induced iron losses decrease the energy efficiency of the device. FEM simulations of punching have shown significantly increased plastic deformation on the workpiece edges with increasing tool wear. In order to identify the critical tool wear, after which the iron losses have increased beyond acceptable limits, the simulation results must be verified with experimental methods. The acceptable limits are pushed further in the standards by the International Electrotechnical Commission (IEC). The new standard (IEC TS 60034-30-2:2016) has much stricter limits regarding the energy efficiency of electromechanical machines, with an IE5 class efficiency that exceeds the previous IE4 class (IEC 60034-30-1:2014) requirements by 30%. The simulations are done using Scientific Forming Technologies Corporation Deform, a finite element software for material processing simulations. The electrical steel used is M400-50A, and the tool material is Vanadis 23, a powder-based high-speed steel. Vanadis 23 is a high alloyed powder metallurgical high-speed steel with a high abrasive wear resistance and a high compressive strength. It is suitable for cold work processing like punching. In the existing literature, FEM simulations and experimental methods have been incorporated for investigating the edge deformation properties of sheared surfaces, but there is a research gap in verifying the simulation results with the experimental methods. In this paper, FEM simulation of the punching process is verified using an electrical steel sheet from real production environment and measuring the deformation of the edges using microhardness measurements. The simulations show high plastic deformation 50 μm into the workpiece edge, a result that is shown to be in good agreement with the experimental results.