In this paper, a direct liquid cooling method is proposed for a radial-flux permanent-magnet motor. To demonstrate the feasibility of the cooling method, a test motor with a rated output of 205 kW was designed, constructed, and tested in an actual vehicle application, an electric city bus. The energy consumption tests were conducted by applying a heavy-duty chassis dynamometer capable of simulating the inertia, weight, and road loads that the buses are subjected to in the normal on-road operation. The electricity consumption on the real bus route of the Espoo line 11 in Finland was 0.61 kWh/km. The test results of the cooling solution show that the motor is capable of meeting the most challenging requirements of the load cycle even with a full payload. The highest winding temperature rise in the test driving cycles was only 26 °C, which proves the effectiveness of direct-liquid-cooled coils in a vehicle motor.