Soft magnetic composite (SMC) materials possess many unique properties, which are particularly suitable for development of novel structure electric motors for various electric drive systems. The unique properties of SMC material include three-dimensional (3-D) magnetic and thermal isotropy, very low eddy current loss, and prospect of very low cost mass production. Therefore, the application of SMC materials in electrical appliance, particularly in electric motors, has attracted great interest in research. However, SMC materials also have some drawbacks, e.g. low permeability, high hysteresis loss and low mechanical strength, and hence a direct replacement of electrical steels by SMC would not necessarily lead to satisfaction or improvement of motor performance. To fully explore the application potential of the SMC materials, their unique properties should be fully employed and at the same time the effects of their drawbacks should be avoided or minimized. This paper aims to present some key issues on design of SMC electric motors based on the extensive research in the past two decades by various researchers including the authors of this paper. The key design issues are discussed and some conclusions are drawn for future effort in this area.