In this paper, the effects of certain component faults on the performance of three-phase inverter-fed induction motors are analyzed under indirect field-oriented control. Simulations of faults in the current sensors, speed encoder, three-phase inverter, and motor are presented. Sample hardware faults verifying the simulation results are also presented. Performance requirements are set based on typical performance measures of electric vehicles. These requirements are then used to determine whether or not the system survives a fault. A simple fault detection and isolation scheme using multiple speed encoders is also tested. The construction of a Markov reliability model of the overall system is a direct application of the results, and allows quantifying global reliability measures.