Due to possible overheat, abrasion or mechanical vibrations, demagnetization fault is inevitable in permanent magnet synchronous motors (PMSMs), which could greatly decrease the motor's efficiency and hence an electrified vehicle's performance. This paper, from an energy efficiency point of view, proposes to analyze the tolerance ability of different electrified vehicles on motor demagnetization faults, via PMSM flux density degradation modeling, efficiency estimation and dynamic programming (DP) based powertrain energy management. The relationship between different demagnetization levels and resultant motor efficiencies is obtained, and analyzed according to the motor operation area. Demagnetized PMSM is adopted in a pure electric vehicle (PEV), a hybrid electric vehicle (HEV) and a plug-in hybrid electric vehicle (PHEV) for energy efficiency analysis. Tolerance analysis indicates that the powertrain efficiency decrease caused by motor demagnetization is more severe under urban driving conditions, especially with PEV and PHEV configurations compared with HEV. A demagnetization threshold investigation is also given in this paper.